A London-based microcap pump-and-dump scheme tried to launder proceeds via a Picasso painting, the U.S. government alleged Friday.
In a wide-ranging indictment that targeted London broker Beaufort Securities, which is now in the U.K. equivalent of bankruptcy, the Justice Department said there was a $50 million money laundering and securities fraud scheme.
The charges arise in part from an undercover operation by an Federal Bureau of Investigation agent.
The Securities and Exchange Commission said the stocks of HD View HDVW, +2.21% and West Coast Ventures Group Corp. WCVC, +9.05% were manipulated.
The defendants proposed the undercover agent could purchase a painting by Pablo Picasso entitled “Personnages, Painted 11 April 1965,” and provided paperwork for the painting’s purchase.
One of the defendants told the undercover agent that the art business was “the only market that is unregulated” and that art was a profitable investment because of “money laundering.”
The Picasso never transferred ownership, the Justice Department added.
Several companies listed on the London Stock Exchange’s LSE, -2.66% AIM had to change brokers as a result of the allegations. The British regulator, the Financial Conduct Authority, said it was assisting the investigation but didn’t say there was any pump-and-dump activities with regard to U.K. securities.
The only defendant in custody, Arvinsingh Canaye, was assigned a public defender. PwC, the administrator for Beaufort Securities, didn’t return a message seeking comment on the U.S. charges.
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