SEC Charges Unregistered Penny Stock Dealer
Litigation Release No. 24886 / September 3, 2020
Securities and Exchange Commission v. John M. Fife, Chicago Venture Partners, L.P., Iliad Research and Trading, L.P., St. George Investments LLC, Tonaquint, Inc., and Typenex Co-Investment, LLC, No. 1:20-cv-05227 (N.D. Ill. filed September 3, 2020)
The Securities and Exchange Commission today filed charges against John M. Fife of Chicago and companies he controls for acquiring and selling more than 21 billion shares of penny stock without registering as a securities dealer with the SEC.
The SEC's complaint, alleges that between 2015 and 2020, Fife, and his companies, Chicago Venture Partners, L.P., Iliad Research and Trading, L.P., St. George Investments LLC, Tonaquint, Inc., and Typenex Co-Investment, LLC, regularly engaged in the business of purchasing convertible notes from penny stock issuers, converting those notes into shares of stock at a large discount from the market price, and selling the newly issued shares into the market at a significant profit. The SEC alleges that Fife and his companies engaged in more than 250 convertible transactions with approximately 135 issuers, sold more than 21 billion newly-issued penny stock shares into the market, and obtained more than $61 million in profits. The complaint also alleges that, at the time of the conduct, the Defendants were not registered with the SEC as dealers, in violation of the mandatory registration provisions of the federal securities laws. It further alleges that by failing to register, the Defendants avoided certain regulatory obligations for dealers that govern their conduct in the marketplace, including regulatory inspections and oversight, financial reporting requirements, and maintaining books and records.
The SEC's complaint, filed in federal court in Illinois, charges the defendants with violating the dealer registration provisions of Section 15(a)(1) of the Securities Exchange Act of 1934. The SEC seeks permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, civil penalties, and penny stock bars.
The SEC's investigation was conducted by Jaclyn Janssen and Scott Hlavacek, and supervised by Amy S. Cotter in the Chicago Regional Office. Eric Phillips will handle the litigation.