FOLLOW US :
212-300-5196

White Glove Service. Excellent Results. Strong Reputation.

Read Our Reviews

NYC Microcap (Penny Stock) Fraud Lawyers

November 15, 2016

Since the over-the-counter market or microcap market encompasses of companies with low stock prices, it is relatively inexpensive and easy to acquire large volumes of these stocks. Many microcap fraud schemes involve purchasing these penny stocks, aggressively marketing them to significantly increase the price and then selling at the high price. Once the scammer dumps the stock, he or she ceases to market the stock, leaving the remaining investors with shares that fell in price.

If you are charged with microcap fraud, you could face serious criminal penalties as it is a type of market manipulation. It is important to work with an attorney who understands federal and state laws as they pertain to securities trading. It is not enough to simply fight the charges; your legal team must understand the financial markets inside and out. To speak with a New York criminal defense lawyer with a track record of representing clients in a number of securities fraud cases, contact the legal team at Spodek Law Group, PC today.

What are Pink Sheet Scams?

Microcap fraud is also known as pink sheet fraud. If a company is not listed on a major market such as the New York Stock Exchange or NASDAQ, it must make its prices public so that investors can execute trades. Therefore, pink sheets that are published daily provide bid-ask stock quotes for these companies not listed on the national exchanges. It is important to understand that pink sheets are not a stock exchange; they are merely a quotation service.

Since the NASD only regulates brokers and not the stocks that brokers trade and because pink sheets are typically below the threshold for the Securities and Exchange Commission rules and regulations, pink sheets are not very well regulated. As a result, pink sheet scams are common and may include examples such as:

– Reverse mergers. Companies listed on pink sheets can change their names. When a company is taken over, there is far less regulation than when it wants to issue new stocks. Ultimately, these pink sheet companies may end up with no assets and are often referred to as “shell companies.”
– Bogus research reports. Stock brokers create “reports” on stocks in order to make them appear as if they are from legitimate brokers. They then distribute the reports in an attempt to encourage investors to buy shares of a specific stock.

Manipulation of penny or low-value stocks on the microcap market is typically part of a “pump and dump” scheme. In other words, an individual purchases a stock for a few cents, uses aggressive marketing such as bogus reports to artificially inflate the price and then sell the stock at the higher price.

Microcap or Penny Stock Fraud Penalties

In December 2014, the Securities and Exchange Commission charged a penny stock promoter of developing a pump and dump scheme, charging the defendant with violating:

– Rule 10b-5 of the Securities Exchange Act of 1934
– Section 17(A) of the Securities Act of 1933

Both laws make it a criminal offense for to engage in transactions that deceive buyers, to employ schemes to defraud or to obtain property or money by omitting material facts or by making false statements of material facts.

Defendants may also face additional charges under other state and federal statutes, including charges of mail or wire fraud if they sent any communications via mail or wire. For this reason, it is critical that you seek legal counsel as soon as you have been charged with participating in a penny stock or microcap fraud scam.

Seek Legal Representation if You Are Accused of Microcap Fraud

Contact Spodek Law Group, PC today if you have been charged with orchestrating or participating in a microcap or penny stock fraud scheme. Criminal penalties may include large fines and jail time, and a civil case may force you to pay restitution. It is critical that you understand your rights and options before developing a defense strategy against the charges. A professional NYC criminal defense lawyer at Spodek Law Group, PC can inform you of the best way to proceed with your case in order to obtain the best possible outcome for your situation, so please contact us today for more information.

FREE CONSULTATION

Testimonials

Spodek Law Group have offered me excellent support and advice thru a very difficult time. I feel I've dealt with someone who truly cares and wants the best outcome for you and yours. I'm extremely grateful for all the help Spodek Law Group has offered me. I can't recommend them enough.

~ David Bruce

Spodek Law Group was incredibly professional and has given me the best advice I could wish for. They had been helpful and empathetic to my stressful situation. Would highly recommend Spodek Law Group to anyone I meet.

~ Rowlin Garcia

Best service I ever had. Todd is absolutely class personified. You are in the safest hands with spodek. They have their clients interest in mind.

~ Francis Anim

Spodek Law Group

White Glove Service

We provide superior service, excellent results, at a level superior to other criminal defense law firms. Regardless of where your case is, nationwide, we can help you.

Get In Touch

Schedule Your Consultation

Los Angeles

555 W 5th St 35th floor, Los Angeles, CA 90013

212-300-5196



get directions

Queens

35-37 36th St, 2nd Floor Astoria, NY 11106

212-300-5196



get directions

NYC

85 Broad St 30th Floor, New York, NY 10004

212-300-5196



get directions

Brooklyn

195 Montague St., 14th Floor, Brooklyn, NY 11201

212-300-5196



get directions

Call Us