SEC Charges Recidivist in Stock Manipulation Scheme
Litigation Release No. 24219 / July 30, 2018
Securities and Exchange Commission v. Howard M. Appel,, No. 18-civ-03200-PD (E.D.Pa. filed July 27, 2018)
On July 27, 2018, the Securities and Exchange Commission charged Howard M. Appel with manipulating the stocks of three microcap companies while on supervised release following his criminal conviction for a prior securities fraud.
According to the SEC's complaint, Appel orchestrated multiple schemes to manipulate the market for trading in shares of Virtual Piggy Inc., (VPIG), Red Mountain Resources Inc. (RDMP), and Rio Bravo Oil Inc. (RIOB), and concealed his activity by using overseas associates and nominee brokerage accounts. The SEC's complaint alleges that Appel secretly acquired ownership or control over sufficient shares of the companies so that he and his associates could manipulate their stocks through coordinated trading activity. As alleged in the complaint, Appel kept tight control over the trading and engaged in matched trading with his associates. In one instance, Appel allegedly sought to coordinate artificial bidding activity to prevent the price of RDMP from dropping, emailing instructions to his associates: "Have ur guy for 12500 at .87 and another 7500 at .85 in case we get hit by selling today. (My guy above that bidding .87)." In another example in the complaint, Appel sold 200,000 shares of RIOB to accounts controlled by one of his associates overseas in a series of matched trades that accounted for 80 percent of the reported volume on RIOB's second day of trading.
The SEC's complaint, which was filed in federal court in Pennsylvania, charges Appel with violations of Sections 17(a)(1) and 17(a)(3) of the Securities Act of 1933 and Sections 9(a)(1), 9(a)(2), and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(a) and (c) thereunder. Appel has agreed to settle the SEC's charges. Appel will be barred from serving as an officer or director of a public company. The court will determine monetary sanctions and other relief at a later date.
On the same day, the U.S. Attorney's Office for the Eastern District of Pennsylvania also announced a parallel criminal action against Appel.
The SEC's investigation was conducted in the New York office by Rhonda Jung, Melissa Coppola and Adam Grace under the supervision of Lara Shalov Mehraban. The litigation will be led by Preethi Krishnamurthy and Ms. Jung. The SEC appreciates the assistance of the U.S. Attorney's Office for the Eastern District of Pennsylvania and the Federal Bureau of Investigation.