Former Registered Reps Settle Market Manipulation Charges Of Attempting To Push OTC Stock To Nasdaq

On September 5, 2017, three former registered representatives settled charges brought by the Securities and Exchange Commission. The SEC claimed that the three individuals had put together a scheme to manipulate the stock of a microcap company in hopes of pushing it up to the Nasdaq. The SEC alleged that Steven R. Ferris, Richard P. Cedrone and George R. Thoreson coordinated manipulative trading activity to ensure Abakan was able to meet the requirements to be listed on the Nasdaq.

The trio was accused of “marking the close” to ensure Abakan stock would close at or above $2 per share for 90 consecutive trading days. The SEC complaint alleges that the men misunderstood the requirement to be 90 calendar days instead of 90 trading days. Therefore, their manipulation efforts were not fruitful.

The SEC complaint suggests that Ferris and Cedrone worked as investor relations consultants for Abakan and cooperated with Thoreson to observe Abakan’s bid-and-ask activity in real-time. Thoreson was apparently responsible for the trio’s trading in Abakan stock. He eventually amassed 696,675 shares in his personal accounts. The costs totaled more than $1.3 million.

The SEC has accused of Thoreson of making real-time admissions via email to Ferris and Cedrone. They alleged that he admitted to marking the close and engaging in other manipulative tactics to keep the share price above $2. The SEC also alleged that Ferris engaged in illegal unregistered public offerings and ultimately used the proceeds to fund the company’s operations and pay its bills.

The men have consented to final judgments without admitting or denying the allegations. The settlement would require the men to avoid placing securities orders during the last 60 minutes of any trading day. Cedrone has also agreed to pay $5,013 in disgorgement and $666.19 in interest. He will also pay a $150,000 penalty.

Thoreson has agreed to pay a $75,000 penalty and will be barred from the securities industry and penny stock offerings.