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Daryl Anderson, One of the brokers for Nevwest

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fung_derf Member Level  Friday, 02/22/19 11:28:34 AM
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Daryl Anderson, One of the brokers for Nevwest who helped dump stock.....


9/14/09 Stockwatch: SEC Daryl Anderson Scalping Suit


SEC files scalping suit against NevWest ex Anderson

2009-09-14 14:44 ET - Street Wire

Also Street Wire (U-*SEC) U.S. Securities and Exchange Commission

by Mike Caswell

The U.S. Securities and Exchange Commission has filed a scalping lawsuit against Daryl Anderson, 41, a former broker from Nevada. The SEC claims that Mr. Anderson recommended that customers buy a pink sheets company, Cloudtech Sensors Inc., at the same time as he was selling it. He allegedly made $930,000 in illicit profits from the scheme. (All figures are in U.S. dollars.)

Mr. Anderson is better known to Stockwatch readers as one of 14 defendants in the SEC's case against CMKM Diamonds Inc., a pink sheets promotion that allegedly defrauded investors of $64.2-million. That suit, filed on April 7, 2008, in the District of Nevada, claimed that Saskatchewan resident Urban Casavant and others dumped hundreds of billions of CMKM shares. They allegedly received the shares after Nevada lawyer Brian Dvorak authored fraudulent opinion letters.

One of the brokerages that served the CMKM defendants was Mr. Anderson's former employer, NevWest Securities Corp. The SEC said that Mr. Anderson, while employed at NevWest, helped CMKM shareholder John Edwards dump 259.9 billion shares. The activity generated $2.3-million in commissions for Mr. Anderson, according to the complaint.

On June 23, 2009, the SEC won penalties totalling $4.7-million against Mr. Anderson for his role in the CMKM scheme. The fine was one of the smaller ones in the case -- the regulator won judgments totalling $65.6-million against Mr. Casavant and $54.9-million against Mr. Edwards on Sept. 2, 2009.

SEC's Cloudtech complaint

The SEC filed its current complaint against Mr. Anderson on Sept. 10, 2009, in the District of Nevada. In it, the regulator alleges that he ran a scalping scheme between June, 2007, and January, 2008 (about two years after the CMKM scheme, which ended in May, 2005). The SEC says the victims were his former brokerage clients, who had been his loyal customers during his 14 years as an investment adviser.

When his brokerage career ended in March, 2007, Mr. Anderson started working independently, recommending stocks to investors and trading their accounts for them, the complaint states. His customers viewed him as an adviser and a friend, and they trusted and followed his advice, the SEC says. He provided the investors will full service, even opening their trading accounts for them at a brokerage of his choosing. The complaint alleges that he entered their personal information on-line and held their account numbers and passwords.

Mr. Anderson started pitching Cloudtech to these investors in June, 2007, when the stock traded at 95 cents per share, the complaint states. He told them it was an up-and-coming company, and investors could double or triple their money quickly.

On the first day of the scheme, Mr. Anderson allegedly had his clients purchase 70,000 shares at prices that escalated from 95 cents to $1.75 per share. In some cases, he instructed his customers to place orders, and in others he used his control over their accounts to directly place the orders. This buying accounted for 44 per cent of the volume that day. At the same time, Mr. Anderson secretly placed sell orders in his personal account, the SEC says. His sell orders were significantly above the market, at prices between $1.50 and $2. As the stock moved up, he sold 20,000 shares, the complaint states.

The SEC says the scheme continued in similar fashion through to Jan. 4, 2008. During this time, Mr. Anderson's clients paid a total of $3,064,751 for 1,046,715 Cloudtech shares, representing 33 per cent of the trading volume during that period. The stock rose to a high of $4.35 per share.

The scheme came to an end on Jan. 4, 2008, when the SEC halted the company, because it had not filed any financials since Dec. 31, 2000. The stock deregistered in March, 2008, allegedly leaving Mr. Anderson's clients holding worthless shares.

The SEC is asking for appropriate civil penalties and an order requiring Mr. Anderson to disgorge the amount of money he obtained as a result of the scheme, plus interest. The complaint also seeks an order barring future violations of the U.S. Securities Act.

Mr. Anderson, without admitting any wrongdoing, has settled the case without a hearing. He has agreed to disgorge his ill-gotten gains of $930,000, and to pay a civil penalty to be determined by the court. He has also agreed to an injunction barring future violations.

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