The lack of a determined financial penalty at settlement is not unique, even as we have seen Honig’s other co-defendants like billionaire Philip Frost agree to pay $5.52 million when he announced his SEC settlement. Honig’s long time investing partner Mark Groussman agreed to pay $1.38 when he settled with the SEC in February. However, two other co-defendants agreed to similar terms that calculate monetary damages at a latter date.
SEC settlements are filled with confusing legal language that can be unclear to anyone who isn’t a lawyer and the regulator is usually not keen to explain them further. I asked a former SEC enforcement lawyer, who is now experienced in litigating against the SEC as a white-collar defense lawyer, to review the settlement. The lawyer told this reporter, “This is an interesting injunction because the SEC uses conduct-based injunctions or bars. It is also a bifurcated settlement. That just means that the settlement only pertains to the liability and not the monetary side (disgorgement and civil penalties). You typically bifurcate when it is a slam dunk on the liability so it saves money to only fight about the money side of things. I suspect they are asking for an outrageous amount of money.”
The SEC claimed Team Honig executed a $27 million scheme. The most the SEC has ever gotten an individual defendant to pay is $20 million in the Elon Musk case. It’s unclear how much it would take for a SEC fine to make a dent in Honig’s personal finances. He currently lives in an $8.9 million water front home in Boca Raton Florida, sends his children to an expensive private school and travels on private planes. The SEC settlement also bars Honig from promoting penny stocks or trying to control the actions of a director or officer of a public company.
The settlement doesn’t mean Honig cannot try to continue making money from prior investments. One of those investments, PolarityTE, is precluded from the settlement, and is considered by many observers to be a current pump and dump.
Detailed Quote: PTE POLARITYTE INC 4.59Down -0.04 (-0.86 %)AS OF 9:36:08AM ET 09/12/2019
Last Trade 4.59 Trade Time 9:36:08am ET
Change -0.04 % Change -0.86%
Bid 4.61 Bid Size 6
Ask 4.68 Ask Size 4
Open 4.62 Day High 4.66 Day Low 4.51 Previous Close 09/11/2019 4.63 52-Week High 09/20/2018 23.06 52-Week Low 08/27/2019 3.40
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