BROWSE BY TOPIC
Stories of Interest
- Deutsche Bank ‘Beyond Repair’ as Trading Drops - Autonomous Research
- Guggenheim Partners CEO Might Step Down
- Wachovia Customer Sues Wells Fargo Over FundSource Losses - Bill Singer
- Credit Downgrade for Wells Fargo Due to Fake Account Scandal
- CFTC Commissioner Quintenz Named Sponsor of the Technology Advisory Committee
- Harbour and Geneos Customers Win FINRA Arbitration Against Stockbroker - Bill Singer
- Equifax Suffered a Hack Almost Five Months Earlier Than the Date It Disclosed
- The World’s Biggest Wealth Fund Hits $1 Trillion
- At Jefferies, Like Wall Street, Trading Cedes to Banking
- Ex-SAC Trader Who Pleaded Guilty to Insider Trading Just Remembered He’s Innocent
- JPMorgan Turns to Amazon for Retail 'Customer Experience'
- Goldman Sachs Names Ken Hitchner as New Chairman for Asia Pacific
- Judge All but Tosses SEC Case Against ‘Rogue’ Trader And Ex-FBI Informant Guy Gentile
- 'Boys are #1 Among NFL's Most Valuable Teams
- Fake Tax Returns - Your Next Worry After the Equifax Breach
- FINRA DR Recruiting Arbitrators, Mediators at Congressional Black Caucus Conference
- JPMORGAN: Here's who we think will replace Warren Buffett at Berkshire Hathaway
- Mueller to Search Facebook for Russia-Linked Accounts
- Mark Gomes, Market Analyst and Trade Scalper Settles with SEC
- Equifax Waives Credit Lock Fees For Consumers, Amid Criticism
We seek to provide information, insights and direction that may enable the Financial Community to effectively and efficiently operate in a regulatory risk-free environment by curating content from all over the web.
Stay Informed with the latest fanancialish news.
NEWSLETTERS & ALERTS
Former RRs Settle SEC Manipulation Charges in Attempted Nasdaq Listing
Three former registered reps – Richard Cedrone, Steven Ferris, George Thoreson - agreed to settle SEC charges that they schemed to manipulate the stock of a microcap company in an attempt to get it listed on the Nasdaq stock exchange.
The issuer, Abakan, Inc., is a Nevada corporation incorporated in 2006 with its principal place of business in Miami, FL. Since 12/15/09, Abakan’s common stock, which at all relevant times qualified as a penny stock, has been quoted in the OTC market under the symbol “ABKI.”
BACKGROUNDS OF DEFENDANTS.
► RICHARD CEDRONE. Cedrone, 54, a resident of Boynton Beach, FL, provided investor relations consulting services to ABKI from March 2012 through at least 2013. He last worked for an NASD (FINRA) broker-dealer in 1994:
- He was fined and barred from the industry in 1995 by NASD on charges that he guaranteed public customers against losses and then failed to respond to NASD information requests.
- In 1997, Cedrone pleaded guilty in U.S. District Court to charges that he bribed an undercover FBI agent posing as a broker to induce the agent to purchase shares of a penny stock for customer accounts.
- In 1999 he settled SEC charges pertaining to penny stock offerings, at which time he was barred from participating in any penny stock offerings.
► STEVEN FERRIS. Ferris, 65, a resident of Bellevue, WA, provided investor relations consulting services to ABKI from at least May 2011 through at least January 2015. He last worked for an NASD (FINRA) broker-dealer in 1996.
► GEORGE THORESON. Thoreson, 60, a resident of Snohomish, WA, coordinated manipulative trading activity, including "marking the close" to enable ABKI to meet specific requirements to list on Nasdaq, including the need for its share price to close at or above $2 for 90 consecutive trading days. He last worked for an FINRA (NASD) broker-dealer in 2013 – as a registered rep and investment advisor rep for Wells Fargo Advisors – when he was U-5’d primarily for conduct described in this SEC complaint. Thoreson subsequently hooked up as a rep with an RIA and remained with that firm until he retired in March 2017.
SEC FINDINGS. This case involves (i) a fraudulent scheme, spanning at least April 2012 through September 2013, to get Abakan’s (ABKI) stock listed on Nasdaq by causing its share price to close at an artificial price of $2 or better for 90 consecutive trading days through illegal “marking-the-close” and other manipulative trading activity; and, (ii) using unregistered offerings of Abakan’s stock, from at least September 2012 through August 2014, to fund Abakan’s operations.
The Nasdaq-listing scheme …. began in early 2012. By late March 2012, Ferris and Cedrone were both working as investor relations consultants to Abakan and had learned of its Nasdaq-listing goal. As one of his first acts as an Abakan investor-relations consultant – on 3/25/12 - Cedrone e-mailed Thoreson, along with numerous other brokers in Cedrone’s database, to introduce them to Abakan. Thoreson found Cedrone’s description of Abakan attractive.
Eventually, Thoreson, Ferris and Cedrone worked in concert to fraudulently achieve the goal of having Abakan stock close at $2 or better for 90 consecutive trading days. Throughout the scheme, the 3 men monitored Abakan’s bid-and-ask activity in real time and were in constant communication with each other.
- Thoreson effected the vast majority of the trio’s trading in Abakan during the scheme, ultimately amassing 629,675 shares in his personal accounts, at a total cost of $1,374,409. Thoreson made real-time admissions during the scheme, primarily via email to Ferris and Cedrone, that he had just “marked the close” or engaged in other manipulative trading to keep Abakan’s share price above $2, admissions which are corroborated by trading records.
- Ferris likewise engaged in significant Abakan trading, in coordination with, and sometimes on the opposite side of, Thoreson, and consistently working toward the shared goal of meeting the $2 listing requirement.
- For his part, although Cedrone did not personally place trades in Abakan, he brought Thoreson into the scheme and persuaded him to work toward the goal of achieving Nasdaq listing for Abakan. Cedrone also: (i) received and sent email updates in real time of the group’s specific activities in furtherance of manipulating Abakan’s share price; (ii) attempted to recruit other traders to buy or sell Abakan stock when necessary to achieve the goal of the scheme; and, (iii) immediately after Abakan’s share price first closed at $2, Cedrone advocated for and received a bonus of one month’s salary from Abakan based on having recruited Thoreson to the scheme.
It’s interesting to note that the 3 men initially misunderstood the 90-day requirement to be 90 consecutive calendar days rather than trading days, and despite their manipulation efforts the company was ultimately unsuccessful at obtaining a Nasdaq listing.
As far the use of unregistered offerings of Abakan stock to fund Abakan’s operations ...., Ferris was a principal operative in these unregistered public offers and sales of Abakan shares – which involved shares obtained from undisclosed affiliates.
AGREED UPON SANCTIONS. Cedrone agreed to pay a $150,000 fine plus $5,700 in disgorgement and interest. The amount of the penalty assessed against Cedrone takes into account his violation of a prior Commission order that barred him from participation in penny stock offerings.
Thoreson agreed to pay a $75,000 penalty and be barred from the securities industry and penny stock offerings.
Ferris will learn of his penalties after terms of his cooperation agreement in the case are completed.
[For further details, click on SEC Complaint.]