HD View 360 Inc (OTC:HDVW), another company that issued a press-release mentioning Blockchain only to see trading in their shares suspended, has been hit with an enforcement action by the Securities and Exchange Commission along with a related criminal prosecution.
The SEC first issued an order of suspension for trading for shares in HD View 360 on March 1st. At that time, the Order indicated;
“… questions concerning the accuracy and adequacy of publicly available information about the company, including, among other things, certain statements made in a February 5, 2018 press release regarding enhancing a subsidiary of HD View 360 Inc. with blockchain technology. Questions have also arisen regarding potential manipulative activity in HD View 360 Inc.’s stock, since January 31, 2018.”
The release in question included a statement from HD View 360 CEO Dennis Mancino stating;
“These new features, combined with a cost-efficient, upgraded software and fully-encrypted system, and the addition of Blockchain Technology will allow us to capture a significant portion of the market, while providing exceptional service to our customers and increased profit margins to our loyal shareholders.”
Today, the SEC has charged Mancino, a UK-based broker-dealer and its investment manager, along with several other individuals in connection with manipulative trading in the securities of HD View 360. The initial suspension order, which was initially only in place until March 15th, has been extended.
As part of the legal action, the FBI had an undercover agent act like a pump and dump operator.
In a complaint filed in the U.S. District Court for the Eastern District of New York, the SEC alleges that Beaufort Securities Ltd. and Peter Kyriacou, an investment manager at Beaufort, manipulated the market for HD View’s common stock. The FBI agent and Kyriacou discussed depositing large blocks of micro-cap stock in Beaufort accounts, driving up the price of the stock through promotions, manipulating the stock’s price and volume through matched trades, and then selling the shares for a large profit.
The undercover operation by the FBI also resulted in related criminal prosecutions against the defendants by the Office of the United States Attorney for the Eastern District of New York.
The SEC’s complaint against Beaufort and Kyriacou alleges that they:
- Opened brokerage accounts for the undercover agent in the names of nominees in order to conceal his identity and his connection to the anticipated trading activity in the accounts
- Suggested that the undercover agent could create the false appearance that HD View’s stock was liquid in advance of a pump-and-dump by “gaming the market” through matched trades
- Executed multiple purchase orders of HD View shares with the understanding that Beaufort’s client had arranged for an associate to simultaneously offer an equivalent number of shares at the same price
A second complaint filed by the SEC, alleges that in a series of recorded telephone conversations with the undercover agent, HD View CEO Dennis Mancino and William T. Hirschy agreed to manipulate HD View’s common stock by using the agent’s network of brokers to generate fraudulent retail demand for the stock in exchange for a kickback from the trading proceeds.
According to the complaint, the three men agreed that Mancino and Hirschy would manipulate HD View stock to a higher price before using the agent’s brokers to liquidate their positions at an artificially inflated price.
The SEC’s complaint also alleges that Mancino and Hirschy executed a “test trade” on Jan. 31, 2018, coordinated by the FBI agent, consisting of a sell order placed by the defendants filled by an opposing purchase order placed by a broker into an account at Beaufort.
Additionally, the SEC’s complaint also alleges that prior to their contact with the undercover FBI agent, Mancino and Hirschy manipulated the market for HD View and for West Coast by using brokerage accounts that they owned, controlled, or were associated with.
The SEC is seeking injunctions, disgorgement, prejudgment interest, penalties, and penny stock bars from Beaufort and Kyriacou.
With respect to Hirschy, Mancino, and their corporate entities, the SEC is seeking injunctions, disgorgement, prejudgment interest, penalties, penny stock bars, and an officer-and-director bar against Mancino.
The investigation in this matter is continuing.