SEC charges California man with running a micro-cap stock fraud scheme that targeted retail investors

SEC
  • The SEC charged Charlie Abujudeh with running microcap stock fraud schemes targeting retail investors.
  • According to the SEC, Abujudeh generated over $9 million in illicit proceeds relating to the scheme.
  • The “linchpin” of Abujudeh’s schemes was that he controlled nearly all of the float for each of the companies that he promoted, the SEC said.
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The US Securities and Exchange Commission filed an emergency action charging a California man with running microcap stock fraud schemes targeting retail investors, the regulator said Thursday.

According to the SEC’s complaint, Charlie Abujudeh worked alongside others to fraudulently sell a number of microcap stocks to retail investors in companies including Scepter Holdings, Odyssey Group International, and CannaPharamRX Inc between August 2019 and September 2020.

Abujudeh and his associates sold the microcap stocks to investors by making misleading statements during high pressure sales calls and email promotions, the SEC said.

He generated over $9 million in illicit proceeds by selling shares of those companies to investors during the promotions he funded, the SEC said.

As part of the scheme, Abujudeh paid stock promoters to hype up Odyssey stock over the phone to “unsuspecting retail investors,” and used emailed promotional campaigns to draw attention to the stocks, the SEC said.

According to the complaint, the “linchpin” of Abujudeh’s schemes was that he controlled nearly all of the float, or stock available for public trading, for each of the companies that he promoted.

“This control enabled him to manipulate the market for these securities using a variety of deceptive tactics, most often through deceptive promotional campaigns that he funded and controlled,” the SEC said.

He also allegedly funneled hundreds of thousands of dollars of the illegal Odyssey stock sale proceeds to an Odyssey insider with whom he had been coordinating.

The complaint was filed in the US District Court for the Eastern District of New York. Abujudeh was charged with violating the antifraud and registration provisions of the federal securities laws.

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The 5 biggest insider stock buys of last week

Traders work on the floor of the New York Stock Exchange (NYSE)
  • Here are the five top insider stock buys from last week.
  • Companies include: Sprinklr, Bright Health Group, Pulse Biosciences, Asana, and Doximity.
  • Two firms saw big purchases upon the closing date of their share offerings. Asana insiders continued their buying spree.

Insider is watching which corporate executives are making big bets on their own companies. Here are the five companies that saw the biggest combined stock purchases from insiders during the period from June 24 through July 2, according to data compiled by Insider Monitor.

1. Sprinklr – $84,359,392

On June 25, at $16 per share, 10% owners Dharmesh Thakker, Neeraj Agrawal, and David Tabors each bought 1,073,731 shares of Sprinklr, amounting to $17,179,696 per transaction.

Another 10% owner Divesh Makan bought 606,518 shares at a value of $9,704,288.

H&F Splash Holdings IX, also a 10% owner, bought 1,413,501 shares, amounting to $22,616,016, while CEO Ragy Thomas bought 31,250 shares, totaling $500,000.

Sprinklr, a customer experience software platform, announced the closing of its initial public offering on June 25. The company’s Class A common stock is listed on the New York Stock Exchange.

2. Bright Health Group – $69,999,984

On June 28, 10% owners Edward Walker and Carmen Chang bought 1,944,444 shares at $18 per share, amounting to $34,999,992 apiece.

The share offering of the healthcare company, which began trading on the New York Stock Exchange on June 24, closed on June 28.

Bright Health Group delivers virtual and in-person clinical care through 61 of its affiliated primary care clinics and offers Medicare and Commercial health plan products in 14 states and 99 markets.

3. Pulse Biosciences – $49,999,991

Chairman of the board Robert Duggan bought 3,048,780 shares at $16.40 each, amounting to $49,999,991, on June 30.

The following day, the bioelectric medicine company announced that it has entered into a stock purchase agreement with Duggan.

And as part of the private placement, Duggan, who owns approximately 46% of the company’s outstanding common stock, will invest an additional $8.4 million as new capital.

4. Asana – $29,824,000

Dustin Moskovitz – president, CEO, and chairman of Asana – continued his buying spree by purchasing 480,000 shares in three tranches.

On June 24, he bought 160,000 shares at $60.30, another 160,000 shares on June 25 at $62.86, and an additional 160,000 on June 30 at $63.24.

For the week of June 17 to June 25, Moskovitz bought a total of $45,328,960.

The productivity startup Asana completed its direct listing in September 2020, giving it a valuation of $4.4 billion at that time. Currently, Asana boasts of an $11 billion market capitalization.

5. Doximity – $20,150,000

On June 28, Emergence GP Partners bought 775,000 shares at $26 each, amounting to $20,150,000.

The share offering of the healthcare startup, which began trading on the New York Stock Exchange on June 24, closed on June 28.

Doximity, considered the “LinkedIn for Doctors,” has a current valuation of $8.4 billion. Its platform includes a newsfeed for healthcare updates and a search tool for job listings.

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An Amazon employee’s husband was sentenced to prison for insider trading- and earning a $1.4 million profit

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Securities and Exchange Commission at the SEC in Washington on Thursday, March 28, 2019.

  • A former Amazon employee’s husband was sentenced after pleading guilty to insider trading.
  • Between 2016 and 2018, Viky Bohra illegally traded Amazon stock for a profit of $1.4 million.
  • Bohra used confidential financial information ahead of eleven straight earnings announcements.
  • See more stories on Insider’s business page.

The husband of a former Amazon employee was sentenced Thursday to 26 months in prison after pleading guilty in November to insider trading, the US Attorney for the Western District of Washington said.

For two and a half years, starting in 2016, Viky Bohra admitted to using confidential financial information he received from his wife, Laksha, to place illegal trades on Amazon stock for a profit of $1.4 million.

According to court records, Bohra accessed information about Amazon revenue and expenses from his wife, who at the time worked as a senior manager in Amazon’s tax department, and used that information in violation of trading blackout periods.

“Bohra’s conduct was not an isolated incident, limited to trading before one Amazon earning’s statement. Rather, Bohra engaged in illegal insider trading in advance of 11 straight earnings announcements,” prosecutors wrote to the court.

The US Securities Exchange Commission brought civil charges last September against Bohra, his wife, and his father, for which they paid more than $2.6 million to repay the illegal gains, along with interest and penalties.

“Vik Bohra deeply regrets this conduct, accepts full responsibility, and intends to promptly repay the funds,” said attorney Peter Offenbecher in a statement at the time, according to The Seattle Times.

As part of his plea agreement, Bohra’s wife will not face criminal charges.

“This case should stand as a warning to those who try to game the markets with insider trading: there is a heavy price to pay with a felony conviction and prison sentence,” US Attorney Tessa M. Gorman said in a statement.

Neither Amazon nor an attorney for Mr. Bohra immediately responded to Insider’s request for comment.

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A couple has paid a combined $325,000 to settle charges by the SEC that they traded shares in a biotech company before clinical trial results were public

FILE PHOTO: The U.S. Securities and Exchange Commission logo adorns an office door at the SEC headquarters in Washington, June 24, 2011.   REUTERS/Jonathan Ernst
FILE PHOTO: SEC

  • A New York couple has agreed to pay more than $325,000 to settle charges of insider trading in the stock of a biotech company, the SEC said.
  • The SEC said that a senior project manager told her partner about failed clinical trial results.
  • The partner sold his stock in the company before the trial results were made public, avoiding losses of $103,875.
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A New York-based couple has agreed to pay more than $325,000 to settle charges of insider trading in the stock of a biotech company where one of them was employed, the US Securities and Exchange commission said on Monday.

Holly Hand was the senior project manager overseeing a clinical drug trial for a company formerly known as Neuralstem. The SEC alleges that in July 2017, Hand learned of failed clinical trial results and tipped off her partner, Chad Calice, who then sold all of his Neuralstem stock ahead of the public announcement of the negative news.

According to the SEC’s complaint, Neuralstem stock dropped roughly 50% the morning the news was announced. Calice avoided losses of $103,875. He also tipped off his uncle, who avoided losses of $14,434 by selling before the news, the SEC said.

Calice and Hand were in frequent communication about Neuralstem’s stock price throughout the day that he sold his stock, the SEC said. Calice reinvested in the company the day after the announcement, buying 4,000 shares at $2.82 apiece, below the range of $5.45 and $6 at which he sold the stock.

The SEC’s complaint, which was filed in federal district court in Manhattan, charges Calice and Hand with violating the antifraud provisions of the federal securities laws. Calice and Hand didn’t admit or deny the allegations. They consented to the entry of a final judgment that enjoins them from violating the charged provisions and requires each of them to pay a civil penalty, the SEC said.

Neuralstem changed its name to Seneca Biopharma Inc. in 2019 and merged with Leading BioSciences Inc. in April to become Palisade Bio Inc.

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Rep. Ayanna Pressley dubs Georgia GOP Sens. Loeffler and Perdue ‘the Bonnie and Clyde of corruption’

ayanna pressley
Rep. Ayanna Pressley speaks at a program voicing support for those protesting against police brutality against Black Americans in Boston on June 2, 2020.

  • Rep. Ayanna Pressley on Friday called Georgia Sens. Kelly Loeffler and David Perdue “the Bonnie and Clyde of corruption.”
  • The Massachusetts Democrat made the comments during an interview with MSNBC’s Joy Reid about turning out voters for the January 2021 runoff elections in the Peach State.
  • “Georgia, do your thing,” she said. “I know we’re asking a lot of Georgia … Do what you do. All eyes are on Georgia.”
  • Visit Business Insider’s homepage for more stories.

Rep. Ayanna Pressley on Friday slammed Georgia Sens. Kelly Loeffler and David Perdue, calling them “the Bonnie and Clyde of corruption.”

During an appearance on MSNBC’s “The ReidOut” with host Joy Reid, the Massachusetts Democrat spoke about turning out voters for the January 2021 runoff elections in the state, which will determine control of the US Senate.

“Georgia, do your thing,” she said. “I know we’re asking a lot of Georgia. But do your thing, Georgia. Do what you do. All eyes are on Georgia. [Senate Majority Leader] Mitch McConnell [of Kentucky]…Loeffler, Perdue – they are the Bonnie and Clyde of corruption.”

She added: “They are all the same. We need to regain control of the Senate. Georgia, do what you do.”

An analysis by The New York Times showed that Perdue sometimes made more than 20 stock transactions in one day, and he made nearly 2,600 trades during his first term in office. His financial transactions came under scrutiny this past year, with the Times reporting that “the Justice Department had investigated the senator for possible insider trading in his sale of more than $1 million worth of stock in a financial-analysis firm, Cardlytics.”

Though prosecutors ultimately did not file charges, questions lingered about stock trading among all senators and potential conflicts of interest.

Earlier this year, the Justice Department began an investigation into Loeffler after she sold millions of dollars’ worth of stock in January after a briefing about the coronavirus. No charges were filed in her case, and she has denied any wrongdoing, calling attacks against her “a political witch hunt by the fake news media.”

On December 15, President-elect Joe Biden visited Georgia to stump for the challengers to Loeffler and Perdue, Democrats Raphael Warnock and Jon Ossoff, respectively.

Loeffler, who is running in a special election to fill the remaining term of GOP Sen. Johnny Isakson, and Perdue, who is running for reelection to a second term, both fell below the 50% threshold to win their races outright, which necessitated runoff elections.

The 2020 elections produced a 50-48 advantage for the Republicans, with the outstanding Georgia Senate races making the difference in McConnell keeping control of the chamber or Senate Minority Leader Chuck Schumer of New York becoming the new majority leader. If Democrats can win both seats, Vice President-elect Kamala Harris would be able to break tie votes, giving the party control of the Senate for the first time since 2015.

As of Friday morning, over 1.1 million voters had already cast ballots for the runoff elections, according to Reuters.

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