WASHINGTON (Legal Newsline) —
The Securities and Exchange Commission (SEC) announced Dec. 16 that it has barred
several market participants from the penny stock industry for their roles in
alleged sham initial public offerings (IPOs) of microcap stocks that defrauded
One defendant, securities lawyer Michael J. Muellerleile of Newport Beach, California, purportedly used false
and misleading registration information for IPOs to funnel unrestricted shares
of penny stocks to offshore market participants.
Another defendant, Nevada-based Empire Stock Transfer and its supervisor of operations
Matthew J. Blevins, allegedly transferred large blocks of penny stocks to
offshore nominees despite a number of red flags indicating the shares could be part
of an illegal scheme.
“These enforcement actions
bar any further penny stock activity by these market participants, including
attorneys and a transfer agent supervisor who betrayed the trust that investors
place in gatekeepers to protect them in this highly risky market,” said
Stephanie Avakian, deputy director of the SEC’s Enforcement Division.
“The SEC is committed to combating microcap fraud through the investigative
work of its Microcap Fraud Task Force, the initiatives of its microcap fraud working group, and repeated warnings to investors about the red flags of penny
Muellerleile agreed to pay
$154,267 in penalties, while Empire Stock Transfer agreed to more than
$154,000. Blevins himself will pay $20,000.