Court Enters Final Judgment Against Florida Resident Charged with Market Manipulation Scheme

Litigation Release No. 24149 / May 24 , 2018

Securities and Exchange Commission v. Gregory M. Bercowy, Civil Action No. 8:18cv792-T26-CPT (M.D. Fla. filed April 3, 2018)

On May 22, 2018, the U.S. District Court for the Middle District of Florida entered a judgment against St. Petersburg, Florida, resident Gregory M. Bercowy in a case involving a scheme to manipulate the stock price of Aureus, Inc., a penny stock company incorporated in Nevada. Among other things, the court ordered Bercowy to pay a civil penalty of over $500,000.

The SEC's complaint, filed on April 3, 2018, alleged that between August 4 and August 15, 2016, Bercowy, who during the relevant time period was associated with a state-registered investment adviser, sold shares of certain Fortune 500 companies, including Abbott and Apple, in his relative's brokerage account in order to buy over three million shares of Aureus at a total cost of more than $2.8 million. According to the SEC's complaint, while Bercowy was accumulating these shares of Aureus, he entered (and later cancelled) a large number of orders to buy Aureus shares at prices higher than the then-current price of the stock. The orders allegedly were intended solely to maintain or boost the stock's price. The price per share of Aureus securities increased from $0.52 on August 4, 2016, to $1.62 on August 16, 2016. According to the SEC's complaint, Bercowy stated in recorded phone calls with a representative of a brokerage firm that he and others were trying to boost Aureus's stock price.

The final judgment, which was entered against Bercowy by default, enjoins Bercowy from future violations of Section 17(a)(1) and (3) of the Securities Act of 1933 and Sections 9(a)(2) and 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5(a) and (c) thereunder. The judgment also orders Bercowy to pay a civil penalty of $507,513 and permanently bars him from participating in an offering of a penny stock.