SEC Sues alleged boiler room operators involved in New Generation Energy (NGEY) pump & dump

On September 27th, 2017 the SEC sued individuals and companies that it alleges illegally sold shares in multiple penny stock companies through boiler rooms. From the SEC press release:

The Securities and Exchange Commission has charged six unregistered broker-dealers located in California and Colorado with illegally selling securities in penny stock companies.

The SEC’s complaint alleges that brothers David H. Welch and Marc J. Bryant, both located in southern California, and John C. Knight, located in Colorado, sold securities in New Global Energy Inc., its predecessor company, Global Energy Technology Group, Inc., and other companies in unregistered transactions using sales agents located in boiler rooms, both nationally and internationally, raising over $10 million from investors over four years. Welch, Bryant and Knight used various entities, including Defendants Bio-Global Resources, Inc., Diversified Equities Inc. (DEI), and Diversified Equities Development Inc. (DED), to make these illegal sales. In addition, according to the complaint, all of the defendants, including New Global and its CEO, Florida attorney Perry D. West, sold securities without filing a registration statement with the SEC.

See the SEC’s legal complaint (pdf). Excerpt from the complaint:

This case involves numerous individuals and entities acting as brokerdealers
– including operating a boiler room “cold-calling” operation – despite failing
to register with the SEC in violation of Section 15(a) of the Exchange Act. In
addition, all of the Defendants, operating through a web of controlled entities, sold
stock in two successive companies to the public in unregistered transactions in
violation of Sections 5(a) and 5(c) of the Securities Act, thereby depriving investors
of important and legally required information. Through their illegal plan the
Defendants effected millions of dollars of securities transactions in the stock of two
entities: Global Energy Technology Group, Inc. (“Global Energy”) and Defendant
New Global Energy, Inc. (“New Global”).

From their sales of the securities of Global Energy and New Global, the
Welch, Bryant, Knight, Bio-Global, DEI and DED raised over ten million dollars
from more than 500 investors. As a result of conduct alleged in this Complaint, these
Defendants violated the broker-dealer registration provisions of Section 15(a)(1) of
the Exchange Act, 15 U.S.C. § 78o(a)(1)

New Global Energy (NGEY) was the stock that is mentioned in the complaint. Below is the weekly candlestick chart.

The case is Securities and Exchange Commission v. David Howard Welch, et al, No. 17-cv-01968. It was filed in the Central District of California.

 

Disclaimer. No position in any stocks mentioned and I have no relationship with anyone mentioned in this post. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

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