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SEC Charges Defendant For Market Manipulation

The Securities and Exchange Commission (SEC) filed suit against Adam S. Gottbetter, a current Boca Raton, FL resident. The SEC alleged that Mr. Gottbetter used his New York office for the planning and implementing of a market manipulation scheme. Two Canadian stock promoters were also charged for assisting Mr. Gottbetter.

The SEC alleged that this case involves three market manipulations schemes to increase the stock price of three different publicly traded securities. It further alleged that Mr. Gottbetter played the role of architect and facilitator, using his law office as headquarters to plan the schemes. The SEC alleged that Mr. Gottbetter and the Defendants planned to pump the company’s stock prices and then sell the shares they controlled, reaping huge profits.

The SEC alleged that the first scheme was through a manipulation of the stock price of Kentucky USA Energy, Inc. (“KYUS”). Mr. Gottbetter allegedly recruited a stock promoter and trader to design and implement a promotional campaign and engage in a series of matched trades, all to increase the stock price of KYUS. The scheme reportedly generated the participants approximately $12 million. In the second scheme Mr. Gottbetter allegedly recruited a trader to inflate the stock price of Dynastar Holdings, Inc. In the third scheme, which the SEC alleged to be the most ambitious of the three schemes, two Veteran stock promoters approached Mr. Gottbetter to put this scheme into action with a series of telephone calls and meetings. According to the SEC, the three Defendants hatched their plan to drive up the price of the common stock of HBP Energy Corp.

According to the SEC, Mr. Gottbetter knew that the schemes were unlawful, and the three Defendants even warned each other of the dangers. The SEC alleged that they even rehearsed the stories they would tell if questioned by law enforcement.

The SEC charged Mr. Gottbetter with violations of the securities registration and the anti-fraud provisions of the Securities Act, along with violating or aiding and abetting violations of the anti-fraud provisions of the Securities Exchange Act of 1934. The SEC is seeking permanent injunctions, bars from any future participation in penny stock offerings, disgorgement of ill-gotten gains and civil penalties.

Attorney Pearce began his career at the SEC as an enforcement attorney more than 35 years ago. His SEC defense law practice clients have included public companies and their officers and directors, broker-dealers, investment advisors, and individuals being investigated in connection with their personal securities transactions. He has broad, extensive experience in matters arising from alleged 10b-5 fraud violations including, “insider trading,” Section 16(b) “short swing profit,” and Section 14 “proxy rule” violations as well as Section 9 “market manipulation” cases.

Have you have been contacted by the SEC or believe that you may be subject of an investigation? If so, call Mr. Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce defends various entities and individuals who may be the subject of an SEC investigation or enforcement action regarding their alleged involvement in securities laws violations.

This Investors’ Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 35 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to representing investors and financial industry professionals throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.