SEC Charges Seven Individuals with Unregistered Brokerage Activity Related to the Sale of Numerous Microcap Securities
Litigation Release No. 24952 / October 27, 2020
Securities and Exchange Commission v. Alex Forester, Michael Hicks, Yarden Krampf, Christopher Lee, Sean O'Neal, Michael Raynor, and Lee Sobel, No. 2:20-civ-09813 (C.D. Cal. filed Oct. 26, 2020)
The Securities and Exchange Commission charged Alex Forester, Michael Hicks, Yarden Krampf, Christopher Lee, Sean O'Neal, Michael Raynor, and Lee Sobel for acting as unregistered brokers in connection with widespread boiler room activity.
According to the SEC's complaint, between October 2015 and November 2019, the defendants worked as investor solicitors in several boiler-room operations engaged in a matched-trading scheme. The complaint alleges that the defendants were provided scripts and lead lists, which they used to cold call prospective investors and pitch investments in microcap securities that the boiler room was promoting. The defendants allegedly convinced investors to purchase shares of the microcap companies at prices and volumes that matched amounts sold by shareholders who were paying the boiler rooms to promote the stock. The complaint alleges that the defendants received over $2.8 million in commissions through their sales. According to the complaint, none of the defendants were registered as a broker-dealer or associated with a registered broker-dealer at the time.
The SEC's complaint, filed in the federal district court for the Central District of California, charges all of the defendants with violating the broker-dealer registration provision of Section 15(a)(1) of the Securities Exchange Act of 1934. Forester, Hicks, and Krampf have consented, on a neither-admit-nor-deny basis, to the entry of judgments that impose permanent injunctions, conduct-based injunctions from soliciting purchases or sales of securities, and that reserve the issue of a civil penalty for determination by the court. The settlements are subject to court approval.
The SEC's investigation was conducted by James Thibodeau and Laurie Abbott, was assisted by David Whipple, and was supervised by Amy Oliver, Assistant Director, and 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.