SEC Bans Penny Stock Company President for Attempted Pump and Dump Scheme

The former president of a penny stock company consented to a permanent ban from serving as a public company officer or director and to pay a $50,000 penalty. The SEC alleged that he made multiple misrepresentations in an attempt to pump up the value of his company's stock.

The SEC determined that Robert J. Ritch made material misstatements using social media. Specifically, the SEC accused Mr. Ritch of making false claims concerning (i) his criminal history, (ii) his educational background, (iii) his experience as an investor, and (iv) the present and future operations of his company, Manzo Pharmaceuticals ("MNZO"). Mr. Ritch allegedly claimed, without merit, that the company would "acquire in whole or in part operating companies" in the "energy, technology, real estate and financial services" sectors.

As a result of the alleged misconduct, the SEC charged Mr. Ritch with violating Exchange Act Section 10(b) and Rule 10b-5. The SEC also suspended trading in MNZO.

Commentary

This case is noteworthy. The SEC detected the CEO's fraudulent statements very quickly and in advance of investors' trading on them. As a result, the SEC was able to prevent investor harm.​​

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