The SEC and the Department of Justice have instituted civil and criminal proceedings against a UK-based broker-dealer/investment manager alleged to have engaged in stock manipulation with an undercover FBI agent. After suspecting stock manipulation, the FBI sent an undercover agent to suggest a matched trade scheme to manipulate the stock price of a microcap stock. The SEC alleges that the defendants, which include the BD/IA and executives of the traded company, helped the FBI agent pursue his scheme because they would receive kickbacks. The FBI also relied on recorded telephone conversations with the executives.
OUR TAKE: A message for potential wrongdoers: The person with whom you plan to conspire may be an undercover FBI agent whose colleagues are recording your phone calls. If you engage in stock manipulation, you may go to jail.