SEC seeks $6.2M from two men accused of penny stock scheme

Los Angeles, The US Securities and Exchange Commission (SEC) has asked a federal judge in Boston to approve a proposed judgement against William Kaitz and Graham Taylor for their alleged roles in a $140m penny stock pump-and-dump scheme. The SEC claims that the two defendants, who were named in an August 2021 suit, took part in a “sophisticated, multiyear, multinational” scheme that involved purchasing large amounts of microcap stocks from 2014 to 2018. They then split the shares among various shell companies to avoid regulatory scrutiny, inflated the stock prices by paying telemarketers and advertising firms to solicit and fool investors, and sold off shares for a profit. The scheme included a medical data company, a fabric maker, a food retailer, and a cannabis startup.

Taylor arranged the merger of a public company with another defendant’s private company, which resulted in the distribution and fraudulent sale of shares associated with the resulting public company. The SEC determined that Taylor should pay nearly $5m, which includes $3.43m in disgorgement, almost $1.3m in prejudgment interest, and a civil penalty of more than $207,000. Kaitz, whose media company was used to promote the stocks as “urgent and bullish investment opportunities”, was asked to pay more than $1.3m, which includes nearly $813,000 in disgorgement, almost $280,000 in prejudgment interest, and a $215,000 civil penalty. Kaitz lied to regulators about being paid by those involved in the scheme and omitted the fact that he had a burner phone that he used to cover his tracks. Both Kaitz and Taylor would be permanently barred from participating in an offering of penny stock.

(This information is primarily sourced from Reportlinker.  Highly Capitalized has neither approved nor disapproved the contents of this news release. Read our Disclaimer here).