SEC Charges Microcap Sales Agent with Fraud
Litigation Release No. 24814 / May 11, 2020
Securities and Exchange Commission v. Tucker, No. 8:20-cv-00875 (C.D. California filed May 11, 2020)
The Securities and Exchange Commission today charged Clinton Maurice Tucker II with engaging in fraud and acting as an unregistered broker in connection with the sale of numerous microcap securities.
According to the SEC's complaint, from at least May 2015 until May 2019, Tucker worked in several boiler-room-like operations to enable shareholders who owned large blocks of illiquid microcap securities to dump their shares without causing the price of the shares to crash. As alleged, Tucker cold-called prospective investors and convinced them to purchase shares of the microcap companies that his selling clients wanted to liquidate. The complaint alleges that Tucker would determine the amount of shares that the prospective investors wanted to purchase and the prices at which they would buy. Tucker allegedly then relayed that information to the selling shareholders, who entered sell orders at the coordinated prices and volumes, making it highly likely that their sell orders and the solicited investors' buy orders would match. Through this alleged matched trading, the selling shareholders were able to offload their shares into a market that Tucker had helped create. In addition to working as a sales agent in the matched-trading scheme, Tucker allegedly pitched fictitious investment opportunities to particularly vulnerable investors whom he identified while working in the boiler rooms. Instead of investing the funds he obtained from these investors as he had represented he would, Tucker allegedly spent the funds on personal expenses.
The SEC's complaint, filed in the U.S. District Court for the Central District of California, charges Tucker with violating the broker-dealer registration provisions of Section 15(a)(1) of the Securities Exchange Act of 1934 and the antifraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Exchange Act, and Exchange Act Rule 10b-5. The SEC seeks injunctions, disgorgement, and civil penalties against Tucker.
The SEC's investigation was conducted by James Thibodeau and Laurie Abbott, was assisted by David Whipple, and was supervised by Daniel Wadley, Regional Director of the Salt Lake Regional Office.
The SEC's Office of Investor Education and Advocacy has issued an Investor Alert to encourage investors to check the background of anyone selling or offering them an investment using the free and simple search tool on Investor.gov.