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SEC Charges Pair Touting Penny Stocks With Scalping

The U.S. Securities and Exchange Commission said today that it charged a Canadian couple with fraud for making a profit by touting penny stocks they were also selling selling, a practice known as scalping.

The U.S. Securities and Exchange Commission said today that it charged a Canadian couple with fraud for making a profit by touting penny stocks they were also selling, a practice known as scalping.

The regulator alleges that Carol McKeown and Daniel Ryan illegally profited by selling penny stocks around the same time they were pumping them up on www.pennystockchaser.com, a scheme the SEC said netted them a profit of at least $2.4 million.

According to the SEC complaint, the Montreal couple received millions of shares of touted companies through their corporations Downshire Capital Inc. and Meadow Vista Financial Corp. as compensation. The pair then sold shares on the open market as Penny Stock Chaser predicted massive price increases, the SEC said.

The complaint adds that McKeown, Ryan, and their corporations did not disclose the full amount of compensation they received for touting the stocks.

“McKeown and Ryan used all the modern methods to communicate with investors including the Penny Stock Chaser website, email, text messages, Facebook and Twitter, yet failed to adequately communicate that their rosy predictions for touted stocks were accompanied by their sales of those very same stocks,” Eric Bustillo, the director of the SEC’s Miami office said in a statement.

The SEC and Quebec’s Autorite des marches financiers (AMF), which worked together during the investigation, have frozen the couple’s assets in the U.S. and Canada and obtained a cease trade order against them and their corporations.

As the Senior Editor of Advanced Trading, Justin Grant plays a key role in steering the magazine's coverage of the latest issues affecting the buy-side trading community. Since joining Advanced Trading in 2010, Grant's news analysis has touched on everything from the latest ... View Full Bio

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