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Regulatory Sanctions

Stupid Is as Stupid Does with Penny Stock

September 25, 2017

by Howard Haykin


The SEC today charged a Certified Public Accountant with insider trading ahead of an acquisition offer for an advertising technology company.


SEC FINDINGS.    According to the SEC, on 1/28/16, while serving as an accounting consultant for Adaptive Medias, Inc., the CPA received an internal email from the company's controller about a soon-to-be-issued press release announcing that the company had received an acquisition offer of $1.50 per share. At the time, company stock was trading at only $0.16 per share. Six minutes after receiving the email, the accountant logged onto his personal online brokerage account and purchased 18,500 shares of Adaptive Medias stock - at a cost of $2,880.


Four days later, on February 1, when the acquisition offer was announced, the price of Adaptive Medias shares jumped 428% over the prior day, and closed at $0.74 per share. By selling all of his shares, the accountant allegedly generated over $8K in illicit profits.


FINANCIALISH TAKE AWAY.    In  this day and age of technology, Penny Stocks no longer operate under the radar - and regulators barely "break a sweat" in their efforts to detect large or unusual trading activity following major corporate announcements. While we can't vouch for the validity of the regulator's findings, we do know that anyone who's unable to resist the temptation of making an 'easy buck' should have second thoughts. Their actions are likely to be under regulatory surveillance.