U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23805 / April 13, 2017
Securities and Exchange Commission v. Mustafa David Sayid, No. 17-cv-2630 (S.D.N.Y. filed Apr. 12, 2017)
SEC Charges Two Lawyers and a Paralegal in a Stock Manipulation Scheme
The Securities and Exchange Commission filed fraud charges yesterday against a New York City-based securities lawyer for orchestrating taking control of two publicly traded shell companies and rigging them and their securities for use in market manipulation schemes for his personal profit. Another lawyer and a paralegal are also charged for their roles in furthering the schemes.
According to the SEC's complaint, filed in federal court in New York City, Mustafa David Sayid used his position as a securities lawyer to gain control of two microcap companies, Nouveau Holdings, Ltd. and Striper Energy, Inc. According to the SEC's complaint, from 2012 to 2015, Sayid caused the two companies to issue convertible debt to him that could be redeemed for company stock for purported legal fees owed to him. The complaint charges that Sayid profited by selling the convertible debt to a pair of stock manipulators, setting them up to dump large blocks of the company's stock in the over-the-counter markets. Sayid allegedly made multiple false statements to investors and other third parties, while he coordinated with the pump-and-dump operators who were responsible for pumping each company's share price and then dumping the stock.
According to the SEC's complaint, Sayid hired Norman Reynolds, a securities lawyer practicing in Houston, Texas, to issue false opinion letters to persuade Nouveau's transfer agent to remove restrictive legends from millions of shares of Nouveau, which were then sold in a dump of Nouveau's stock. The SEC alleges that Reynolds based his legal opinion on fabricated documentation from Sayid while negotiating for payment from the proceeds of the Nouveau pump and dump.
The SEC alleges that Sayid hid his control of Nouveau and Striper by installing officers and directors at the companies who would follow his direction, including his paralegal, Kevin Jasper of New York City. Jasper aided Sayid's market manipulation schemes by signing false documents at Sayid's direction.
The SEC's complaint charges Sayid, Reynolds, and Jasper with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, and additionally charges Sayid and Reynolds with violating Sections 5(a) and (c) of the Securities Act.
Jasper, who is cooperating with the SEC's litigation against Sayid and Reynolds, has agreed to the entry of a judgment imposing permanent injunctions of the charged provisions of the federal securities laws, and permanent officer-and-director and penny stock bars, with the issue of any civil money penalties to be determined upon the SEC's motion. The SEC's complaint seeks permanent injunctions, disgorgement and prejudgment interest, civil penalties, officer-and-director and penny stock bars, and a conduct-based injunction against Sayid and Reynolds.
The SEC's action is being handled by Michael Vito, Dahlia Rin, Richard Harper, John McCann, J. Lauchlan Wash, and Celia Moore in the Boston Regional Office.