Canadians charged in US$35M pump and dump penny stock scheme
|CTVnews 06 Feb 2020 at 09:20|
TORONTO -- Three Canadian businessmen have been accused of artificially inflating the price of stocks they held in a pump and dump scam that allegedly generated more than US$35 million.
The U.S. Securities and Exchange Commission (SEC) charged the Canadians and three other individuals and their companies with participating in an international scheme to profit from the illegal sales of stock in at least 45 microcap companies, or publicly traded companies with small market capitalizations of between about $50 million and $300 million, from July 2015 to June 2019.
A pump and dump scam is the illegal act of artificially inflating the market price of an owned stock through false promotion and selling it once the price has risen as a result of the surge in interest. The schemes usually target penny stocks, or the shares of small public companies that initially trade at low prices, such as less than $5 per share. They are considered highly volatile and at risk of manipulation by stock promoters because they are often traded over-the-counter, or without the supervision of an organized exchange.
The SECs New York and Boston offices led the investigation into the groups alleged penny stock scheme with assistance from multiple international regulators in Canada, Cyprus, Hong Kong, Malta, Mauritius, New Zealand, Panama, and Singapore.
The Canadians charged in the SECs complaint are Steve M. Bajic, 49, a dual citizen of Canada and Croatia who lives in Canada; Rajesh Taneja, 43, a Canadian citizen and resident of Vietnam; and Christopher Lee McKnight, 45, a Canadian citizen who resides in Canada.
Kenneth Ciapala, 38, a dual citizen of Switzerland and the U.K.; Anthony Killarney, 34, a U.K. citizen; and Aaron Dale Wise, 34, a U.S. citizen, have also been charged.
Bajic, Taneja, Killarney, Ciapala, and their companies have been charged with violating the antifraud and registration provisions of the U.S. federal security laws and with acting as unregistered broker-dealers.
McKnight and Wise were charged with aiding and abetting the fraudulent stock sales. McKnight was also charged with violating an antifraud provision of the U.S. federal securities laws.
The SEC alleges that Bajic and Taneja helped shareholders secretly dump large quantities of microcap stock. The agency said the pair co-ordinated the illegal stock sales with Ciapala and Killarney.
McKnight and Wise have been accused of fraudulently transferring and hiding the sources of funds that were used to promote the microcap stocks.
None of the allegations have been tested in court.
The SEC complaint said the accused used various companies registered overseas, including in Switzerland, Thailand, Seychelles, Hong Kong, and Anguilla, in order to carry out the alleged scheme.
As we allege in the complaints, the defendants evaded the securities registration requirements and engaged in other manipulative conduct, including by disguising the true sellers of securities, to defraud investors and generate illicit profits for themselves, Marc Berger, the director of the SECs New York regional office, said in .