U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 25703 / May 1, 2023
Securities and Exchange Commission v. Carlos Eduardo Reyes Alvarez., No. 1:23-cv-03429 (S.D.N.Y. filed Apr. 24, 2023)
SEC Charges Florida Trader with Microcap Stock Manipulation Scheme and Obtains Final Judgment
On April 27, 2023, the U.S. District Court for the Southern District of New York entered a final consent judgment against Carlos Eduardo Reyes Alvarez of Port Saint Lucie, Florida, permanently enjoining him from violating the antifraud and anti-manipulation provisions of the federal securities laws stemming from his manipulation of at least 28 microcap stocks.
The SEC's complaint alleges that from about November 2017 and through at least April 2019, Reyes acquired large positions in thinly-traded over-the-counter stocks and then generated investor interest in these stocks through fraudulent means, most often by causing the issuance of press releases that had not been authorized by the companies. In connection with at least four companies, Reyes also allegedly engaged in wash trading to create the appearance of an active market and raise the company's stock price. The complaint further alleges that Reyes's fraudulent activity increased the prices of the securities he targeted and that he profited from these schemes by selling the securities at the inflated prices. As a result of these schemes, Reyes profited by $368,045.
Without admitting or denying the charges, Reyes consented to the entry of a final judgment that permanently enjoins him from future violations of Section 17(a) 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 thereunder. The final judgment orders Reyes to pay disgorgement of $368,045, prejudgment interest of $76,843, and a civil penalty of $160,000. The final judgment further prohibits Reyes from acting as an officer or director of a public company, and prohibits Reyes from participating in any offering of penny stocks. Finally, the final judgment enjoins Reyes from engaging in, or deriving compensation from, specified activities related to inducing the purchase or sale of securities, unless those securities are listed on a national securities exchange and satisfy specified capitalization requirements.
The SEC's investigation was conducted by Kristine Zaleskas, Ricky Tong, Jason Schall and Michael Paley, and was supervised by Thomas P. Smith, Jr. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.