SEC v. THOMAS RUBIN, CHRISTOPHER SCOTT, BGLR ENTERPRISES, LLC and E-INFO SOLUTIONS, LLC, Civil Action No. SACV 11-1466 (C.D. Cal.)
SEC v. JEFF GREENEY and BIG BALLER MEDIA GROUP, LLC, Civil Action No. SACV 11-1467 (C.D. Cal.)
SEC CHARGES THREE PRINCIPALS OF FORMERLY REGISTERED BROKER-DEALER AND THEIR RELATED ENTITIES FOR INVOLVEMENT IN MICROCAP STOCK FRAUD SCHEME AND STOCK SALES IN UNREGISTERED OFFERINGS
The Securities and Exchange Commission today filed two separate complaints against the three former principals of Westcap Securities, Inc., a now-defunct broker-dealer – namely Thomas Rubin (“Rubin”), Westcap’s then Chief Executive Officer, Christopher Scott (“Scott”), Westcap’s then Chief Compliance Officer, and Jeff Greeney, Westcap’s then Chief Financial Officer, and their related entities. The Commission alleges that Rubin and Scott committed securities fraud by, among other things, engaging in market manipulation in a broader manipulative scheme, and also, through their respective related entities, BGLR Enterprises, LLC and E-Info Solutions, LLC, violated the registration provisions of Section 5(a) and (c) of the Securities Act of 1933 (“Securities Act”) by selling stock in unlawful unregistered offerings. The Commission separately alleged that Greeney, through his related entity, Big Baller Media Group, LLC, violated the registration provisions by selling stock in unlawful unregistered offerings.
The Commission alleges that Rubin and Scott, in violation of Section 17(a) of the Securities Act Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(a) and (c) thereunder, participated in a broader market manipulation ring that involved bringing companies public through reverse mergers; using Westcap to raise funds for the newly-created companies through purported private placements; and manipulating the public markets for those newly-created public companies, which allowed Rubin and Scott, through their related entities, to sell their holdings of these companies at artificially inflated prices for total proceeds exceeding $1.5 million.
In particular, the Commission alleges that Rubin engaged in various manipulative activities including coordinated and matched trading activity, and that Scott similarly engaged in a number of manipulative activities including assuming trading authority and control over multiple accounts to conduct coordinated trading activity. In one email, Rubin complained to another scheme participant that he, not Rubin, should conduct the manipulative trading by writing, “my job is to bring in all the money and yours [is] to cover the bid,” which referred to entering buy orders to keep the stock price at an artificially inflated level. Scott, in an email to Rubin and another scheme participant, explained that he engaged in manipulation to keep an issuer’s stock price at a certain range - a range that he believed was needed to facilitate Westcap’s concurrent private placement involving that issuer.
The Commission seeks injunctions, penny stock bars, disgorgement, and penalties from Rubin and Scott (and their related entities, BGLR Enterprises and E-Info Solutions), in addition to an officer and director bar against Scott because he was an officer of one of the microcap issuers.
With respect to Greeney, the Commission alleges that he, through his related entity, sold shares in unregistered offerings of two of the microcap issuers for unlawful profits of approximately $330,000, in violation of the registration provisions of the Securities Act. Greeney and his related entity, Big Baller Media Group, have offered to settle the Commission’s allegations by consenting, without admitting or denying the allegations, to an injunction against future violations of Securities Act Sections 5(a) and 5(c), to be barred from participating in an offering of penny stock for a period of three years, and to pay disgorgement and penalties in amounts to be determined by the Court. The offer of settlement by Greeney and Big Baller Media Group are subject to the Court’s approval. Greeney has also offered to settle a yet-to-be instituted administrative proceeding against him, in which Greeney would consent, if the Court enters an injunction against him, to an order barring him from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization with the right to reapply for admission after three years.
See Also: SEC Complaint and Litigation Releases Nos. LR-20977 and LR-21539.
SEC Complaint vs. Greeney and Big Baller Media Group SEC Complaint vs. Rubin, Scott, BGLR Enterprises and E-Info Solutions
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