SEC Obtains Judgment Against Penny Stock Promoter

Litigation Release No. 24389 / February 1, 2019

Securities and Exchange Commission v. Anthony J. Thompson, Jr., et al., No. 14-cv-09126 (ALC) (S.D.N.Y. filed Nov. 21, 2014)

On November 28, 2018, the Securities and Exchange Commission obtained a judgment against a penny stock promoter in connection with multiple pump-and-dump schemes.

On November 17, 2014, the SEC charged Jay Fung and two others with orchestrating schemes to manipulate five penny stocks between November 2009 and September 2010. The complaint alleged that, as part of the manipulative scheme, Fung and the other defendants, through entities they controlled, acquired a significant amount of the publicly traded shares of the companies, distributed misleading newsletters to prospective investors touting the companies, and created demand for the stocks. The complaint further alleged that the newsletters controlled by Fung, among other things, stated that they "may" or "might" sell the shares owned in the companies that were being touted when, in fact, they intended to sell, and in some cases were selling, the shares owned.

Fung consented to the entry of a judgment enjoining him from violating the antifraud provision of Section 17(b) of the Securities Act of 1933. The judgment provides that the amount of any disgorgement and civil monetary penalties to be imposed will be determined by the court at a later date.

Fung previously settled charges in March 2016 relating to trading on inside information in advance of a pharmaceutical company merger. Fung also settled charges in February 2014 relating to his role in a scheme in which he promoted a penny stock without adequately disclosing he was selling his shares in the same stock and receiving compensation for his promotional efforts.

The SEC's investigation was conducted by Peter Pizzani, Timothy Nealon and Thomas P. Smith, Jr. of the New York Regional Office, and was supervised by Sanjay Wadhwa.  The SEC's litigation has been led by Howard Fischer and Mr. Pizzani.