WASHINGTON (Legal Newsline) - The Securities and Exchange Commission on Wednesday charged a New York-based firm and its owner with conducting a penny stock scheme.
The SEC's complaint charges Edward Bronson and E-Lionheart Associates with violations of federal securities laws. It is asking for disgorgement of more than $10 million in allegedly ill-gotten gains, penalties and penny stock bars against E-Lionheart and Bronson.
The complaint also names another entity owned and controlled by Bronson - Fairhills Capital Inc. - as a relief defendant for the purpose of recovering the allegedly illegal proceeds it received.
Acting at Bronson's direction, E-Lionheart personnel systematically "cold called" penny stock companies quoted on the OTC Link to ask if they were interested in obtaining capital, the SEC said. If the company was interested, E-Lionheart personnel would offer to buy stock in the company at a rate that was deeply discounted from the trading price of the company's stock at that time, the SEC said. Typically, Bronson and E-Lionheart immediately began reselling the shares to the investing public through a broker within days of receiving the shares from the company, the SEC said.
According to the SEC, more than $10 million in unlawful profits were made from selling shares bought atdeep discounts from approximately 100 penny stock companies.
The SEC's complaint was filed in U.S. District Court for the Southern District of New York. Bronson lives in Ossining, N.Y., while E-Lionheart is located in White Plains.