U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21259 / October 22, 2009
Securities and Exchange Commission v. Lambros D. Ballas, Case No. C-09-05036 (JW) (N.D. CA filed Oct. 22, 2009)
SEC CHARGES BROKER FOR REPEATEDLY DISSEMINATING FAKE PRESS RELEASES AND MAKING FRAUDULENT INTERNET POSTINGS
The Securities and Exchange Commission today charged Lambros Ballas, a licensed securities broker at a New York stock brokerage firm, with using phony press releases to manipulate the stock prices of multiple publicly traded companies. Ballas created and then distributed fake press releases purporting to announce good news regarding the companies, including that Google was buying one company at a substantial premium. Ballas then posed as an investor on Internet message boards, touting the announcements he had fabricated. In one instance, Ballas' scheme caused the stock price to increase by over 75 percent within a few hours of the issuance of his phony press release. Among other relief, the SEC is seeking an emergency court order to enjoin Ballas from further fraudulent activity.
The Commission's complaint, filed in federal court in San Jose, Calif., and documents filed in support of the requested emergency relief, alleges:
On September 29, 2009, Ballas issued a phony press release announcing that Pennsylvania biotech company Discovery Laboratories had obtained approval from the U.S. Food and Drug Administration for a drug under development. Ballas then posted a message on a stock message board with a link to what he described as the company's "official press release." In his post, Ballas claimed to have called his "personal broker" who "says it's been confirmed." Discovery Laboratories' stock price shot up nearly 50%.
The next day, September 30, Ballas issued a release falsely claiming that IMAX Corporation had been acquired by Disney. Once again he followed up by posting links to the phony release on a stock message board, telling other potential investors that he had bought 10,000 IMAX shares and that his broker "just called me to tell me at the crack of dawn."
Ballas continued his scheme on October 1, issuing a phony press release stating that California search engine company Local.com was being acquired by Microsoft. Ballas followed this by again posting messages and links to the Local.com release on stock message boards. In one posting he stated: "Local just bought out by Microsoft, at $12.50 per share including patent ownership." In aftermarket trading, Local.com's stock price rose over 75%.
Later that night, Local.com issued a corrective release saying that the Microsoft release had been false â" there was no Microsoft acquisition. Undeterred, the next day Ballas issued another phony release, this time stating that it was Google, and not Microsoft, that was acquiring the company.
The SEC further alleges that for at least one of the stocks he touted, Ballas purchased shares of the company immediately before disseminating the phony press release he had drafted.
In its federal court action against Ballas, the SEC alleges Ballas violated Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. The SEC seeks an ex parte temporary restraining order, a preliminary and permanent injunction, expedited discovery, disgorgement with prejudgment interest, and civil penalties against Ballas.
The Commission appreciates the significant assistance of FINRA, the Financial Industry Regulatory Authority. The Commission's investigation is continuing.
