SEC Obtains Judgments Against Market Manipulators
Litigation Release No. 24746 / February 21, 2020
Securities and Exchange Commission v. Kit Mun Chan, Lau Kean Chong, Chong Poui Fan, Binji Lu, and Youn Chien Wong, No. 19 Civ. 5718 (GHW) (S.D.N.Y. filed June 19, 2019)
On February 11, 2020, the U.S. District Court for the Southern District of New York entered final judgments against Kit Mun Chan, Lau Kean Chong, Chong Poui Fan, Binji Lu, and Youn Chien Wong. The SEC previously charged the defendants for their alleged scheme to manipulate the market for Medico International, Inc. (MDDT) stock. The judgments order the defendants to pay $1,145,407 in monetary remedies and impose injunctive relief.
The SEC's complaint, filed on June 19, 2019, alleged that the defendants-traders from China, Singapore, and Malaysia-attempted to manipulate the market for MDDT stock by entering matched orders to buy and sell MMDT at substantially the same times, sizes, and prices. The SEC alleged that trades involving these five seemingly unrelated individuals from three different countries accounted for 70% of the volume in MDDT over the period in which they traded. As described in the complaint, IP records show that at least three of the defendants' brokerage accounts were likely accessed by the same user or users while trading MDDT.
Without admitting or denying the allegations of the complaint, Chong consented to the entry of the judgment against him. The judgments against the other defendants were entered on the basis of default. The judgments permanently enjoin the defendants from violating the market manipulation provisions of Section 9(a)(1) of the Securities Exchange Act of 1934 and permanently bar them from participating in an offering of a penny stock. The judgments against Chan, Fan, Lu, and Wong enjoin them from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Chong is ordered to pay disgorgement of $151,957 with prejudgment interest of $1,523.73, and a civil penalty of $17,000. Lu is ordered to pay disgorgement of $144,772.20 with prejudgment interest of $3,049.52 and Wong to pay disgorgement of $67,965.20 with prejudgment interest of $1,431.64. Chan, Fan, Lu, and Wong are ordered to pay civil penalties of $189,427 each.