SEC Partially Settles Pump-and-Dump Manipulation Case

Pump- and-dump schemes keyed to microcap stocks seem to be the flavor of the week. On Friday the mastermind of an international market manipulation scheme was sentenced to serve 18 years in prison. U.S. v. Gallison, 1:15-cr-00178 (E.D. Va.). The SEC has a parallel action tied to the scheme which is pending. See SEC v. Gallison, Civil Action No. 1:15-cv-05456 (S.D.N.Y.).

Now the SEC has announced the resolution of another market manipulation scheme. SEC v. Strebinger, Civil Action No. 14-cv-3533(N.D. Ga.) is an action against Bruce Streibinger, Howard Chapman and Muskateer Investments Inc. . The complaint alleges a pump and dump scheme involving the shares of Americas Energy Company. The scheme began in May 2009 with a reverse merger done with Americas and another start-up firm. It continued with the accumulation of large positions by Messrs. Strebinger and Chatman which were concealed from the market by failing to file a Schedule 13D disclosing their positions and intent. That step was followed by the typical massive promotional campaign keyed to false publicity. As the stock price rose Messrs. Strebinger and Chapman sold shares through a web of foreign brokerage firms, reaping $17 million. The complaint alleged violations of each subsection of Securities Act Section 17(a) and Exchange Act Sections 10(b), 13(d) and 20(b).

Mr. Strebinger settled with the SEC. In a final judgment entered by the Court he was enjoined from future violations of Securities Act Section 17(a) and Exchange Act Sections 10(b), 13(d) and 20(b). The final judgment imposes a penny stock bar and directs the payment of $1,515,640 in disgorgement. The litigation continues as to the other defendants. See Lit. Rel. No. 23493 (March 21, 2016).