Michael P. Tremoglie Jul. 25, 2012, 5:10am
NEW HAVEN, Conn. (Legal Newsline) - The Securities and Exchange Commission on Friday filed a civil fraud action against stock promoter Jerry Williams and two companies that he controlled -- Monk's Den and First In Awareness.
He is alleged to have operated a scalping scheme from which he made over $2.4 million.
Stock scalping involves the owner of shares of a security recommending that security for investment and then immediately selling it at a profit following the recommendation.
The SEC alleges that from about the beginning of 2009 through to at least the end of 2010, Williams recommended two stocks, Cascadia Investments and Green Oasis Environmental, to a large group of potential investors. They followed his trading recommendations and strategies, the SEC says.
According to the complaint, from March 2009 through at least 2010, Williams, through FIA and Monk's Den, "knowingly or recklessly schemed to defraud buyers and holders of Cascadia and Green Oasis stock by recommending it to his followers while simultaneously selling his own shares."
Williams, who was known to his followers as "Monk," used his Internet-based message board (called "Monk's Den"), in-person seminars (called "Monkinars"), and other means to encourage people to buy, hold and accumulate Cascadia and Green Oasis stock, the SEC says.
He allegedly told potential investors that by buying up the outstanding shares, or float, of these companies, a "short squeeze" would be triggered that allowed them to sell their stock to "market makers" that had shorted the stock.
Williams had contracted with Cascadia and Green Oasis to promote their stock in exchange for millions of free and discounted shares, the SEC says. After receiving his shares, Williams created demand for the stocks by promoting them to his Monk's Den followers as "Plays" or buys and by selecting them as targets for Float Lock Downs, the SEC says.
While encouraging Monk's Den followers to buy and hold stocks in pursuit of the Play or Float Lock Downs, Williams made materially false and misleading statements through the Monk's Den message board, his Monkinars, newsletters, email Alerts and other means, the SEC says.
The SEC charged Williams, First In Awareness and Monk's Den with violating of the Securities Exchange Act of 1934. The SEC also charged Williams with violating the Securities Act of 1933 and the Investment Advisers Act of 1940. It is seeking permanent injunctions, disgorgement, prejudgment interest and civil penalties against each defendant.