On September 29, 2017 the SEC filed suit against Michael A. Skerry of British Columbia for “an alleged scheme to manipulate the shares of a penny stock.” The penny stock in question was Success Holding Group International Inc. (SHGT).
This appears to be a standard scalping case: Skerry allegedly bought shares from Success Holding Group International and then allegedly sold those shares at the same time he was was promoting the stock (without disclosing his ownership or share sales). This kind of case has been rare for over a decade — many stock promoters switched to being paid in cash to reduce the risk of getting sued for this. Of course the most famous case of scalping was Tokyo Joe back in 2001.
From the SEC press release:
The SEC’s complaint alleges that Micheal A. Skerry, of New Westminster, British Columbia, Canada, illegally profited by manipulating the price and demand of Success Holding Group International, Inc., a penny stock whose securities were quoted on OTC Link, through a practice known as “scalping.” The SEC alleges that he entered into agreements with Success Holdings to provide investor relations services and to purchase shares of Success Holdings stock at a discount. Skerry allegedly paid $36,000 to Success Holding in exchange for 360,000 shares of Success Holding stock and immediately began taking steps to generate interest in the company through a fraudulent campaign to drive up public demand for Success Holding stock. Among other things, the SEC’s complaint alleges that Skerry posted misleading messages on public websites and sent blast emails to potential investors urging them to buy Success Holding stock without telling them that he owned the stock and intended to sell it at the earliest opportunity. The SEC alleges that Skerry sold all his shares of Success Holding stock to the public for a profit of over $950,000. Skerry’s sales allegedly made up more than 60% of the trading volume during the period, including 100% of the trading volume on certain days.
The SEC’s complaint charges Skerry with violating Sections 5 and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The SEC seeks a permanent injunction, a penny stock bar, disgorgement, pre- and post-judgment interest, and a civil penalty.
See also SEC Complaint.
Related to this complaint, Success Holding Group International Inc agreed to settle with the SEC for a total of $139,737, without admitting or denying the allegations that it “sold shares of its stock in an unregistered transaction to Skerry while knowing that he planned to immediately resell the shares to the public, and with failing to file Forms 10-Q or Forms 10-K for any periods since the period ended June 30, 2015”