U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23157 / December 15, 2014
Securities and Exchange Commission v. Douglas Furth, Civil Action No. 14 Civ.7254 (LDW) (E.D.N.Y.)
SEC Charges Stock Promoter with Market Manipulation
The Securities and Exchange Commission ("Commission") filed a civil injunctive action on December 12, 2014, in the United States District Court for the Eastern District of New York, charging Douglas Furth, a stock promoter who resides in Solon, Ohio, with manipulating the common stock of SearchPath HCS, Inc. ("SearchPath").
The Commission's complaint alleges that from at least September to December 2010, Furth engaged in a fraudulent broker bribery scheme designed to manipulate the market for SearchPath stock through matched trades. The complaint also alleges that Furth entered into a kickback arrangement with an individual ("Individual A") who claimed to represent a group of registered representatives with trading discretion over the accounts of wealthy customers. Furth promised to pay a 30% kickback to Individual A and the registered representatives he represented in exchange for the purchase of up to $10-30 million of SearchPath stock.
The Commission's complaint further alleges that on October 13-15 and December 6-10, in accordance with the illicit arrangement, Furth instructed Individual A to purchase approximately 52 million shares of SearchPath stock for a total of approximately $80,000. Furth gave Individual A detailed instructions concerning the size, price and timing of the orders. Thereafter, Furth paid Individual A bribes of approximately $24,000 for those purchases.
The complaint charges Furth with violating Section 17(a)(1) of the Securities Act of 1933 and Sections 9(a)(1) and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(a) and (c) thereunder. The Commission seeks permanent injunctive relief from Furth, disgorgement of ill-gotten gains, if any, plus pre-judgment interest, civil penalties, and a penny stock bar.
The Commission acknowledges assistance provided by the U.S. Attorney's Office for the Eastern District of New York and the Federal Bureau of Investigation in this matter.