In a litigation release, the SEC announced consent final judgments in Florida federal court against a penny stock company and its owner, as well as a relief defendant, in a fraudulent stock offering case. The SEC alleged that the company’s CEO used deceptive tactics and a boiler room to raise more than $6.5 million from investors while misleading them as to the success of the business. The final judgment permanently enjoins further violations, imposes industry bars, and orders disgorgement of nearly $4.5 million from the CEO and the relief defendant (a separate firm owned by the CEO) and $6.6 million from the penny stock company (SEC v. Oxford City Football Club, Inc., February 8, 2017).
Fraud and "boiler room" tactics. The SEC charged Oxford City Football Club, Inc. and its CEO with marketing the company as "the largest publicly traded diversified portfolio of professional sports teams in the world" and the owner of a "diversified portfolio of academic institutions" when, in reality, there was no truth to those claims. According to the Commission’s complaint, Oxford’s CEO operated a "boiler room" from which millions of shares of unregistered offerings were sold through fraudulent practices designed to deceive investors as to Oxford’s stock value and the potential for future profits and into believing that Oxford was a thriving conglomerate, the Commission alleged. One of the CEO’s tactics involved false claims to potential investors that telephone conversations were being recorded using a "verbal verification system" and threatening to sue them based on the "recordings" if they refused to pay.
Sanctions. The court enjoined Oxford’s CEO from violating the antifraud provisions of the Securities Act and the Exchange Act and barred him from the issuance, purchase, offer, or sale of securities, participating in any penny stock offering, and serving as an officer or director of a public company. The court also ordered disgorgement of $2,240,173, plus prejudgment interest, from both the CEO and the relief defendant. These disgorgement amounts are deemed satisfied by a $6.6 million restitution order entered against the CEO in a parallel criminal case.
The court also enjoined Oxford from further violations and ordered disgorgement of $6.6 million, plus prejudgment interest.
The release is No. LR-23745.
MainStory: TopStory AlternativeInvestmentFunds DirectorsOfficers Enforcement FraudManipulation FloridaNews
Interested in submitting an article?
Submit your information to us today!Learn More
Securities Regulation Law Daily: Breaking legal news at your fingertips
Sign up today for your free trial to this daily reporting service created by attorneys, for attorneys. Stay up to date on securities regulation legal matters with same-day coverage of breaking news, court decisions, legislation, and regulatory activity with easy access through email or mobile app.