U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23928 / September 5, 2017
Securities and Exchange Commission v. Richard P. Cedrone, Steven R. Ferris and George R. Thoreson, No. 17-CV-80999 (S.D. Fla. filed Aug. 31, 2017)
Former Registered Reps Settle Market Manipulation Charges in Attempted Nasdaq Listing
Three former registered representatives have agreed to settle SEC charges that they schemed to manipulate the stock of a microcap company in an attempt to get it listed on the Nasdaq stock exchange.
The SEC alleges that Richard P. Cedrone, Steven R. Ferris, and George R. Thoreson coordinated manipulative trading activity including "marking the close" to enable a company called Abakan to meet specific requirements to list on Nasdaq, including the need for its share price to close at or above $2 for 90 consecutive trading days. According to the SEC's complaint, the men initially misunderstood the 90-day requirement to be 90 consecutive calendar days rather than trading days, and despite their manipulation efforts the company was ultimately unsuccessful at obtaining a Nasdaq listing.
According to the SEC's complaint, Cedrone and Ferris were investor relations consultants for Abakan and worked in concert with Thoreson to monitor Abakan's bid-and-ask activity in real time. Thoreson effected the vast majority of the trio's trading in Abakan, ultimately amassing 629,675 shares in his personal accounts at a total cost of more than $1.3 million. Thoreson made real-time admissions during the scheme, primarily via email to Ferris and Cedrone, saying he had just marked the close or engaged in other manipulative trading to keep Abakan's share price above $2. His admissions are corroborated by trading records.
The SEC's complaint further alleges that Ferris engaged in illegal unregistered public offerings of Abakan stock, using the proceeds to fund the company's operations and pay its bills.
Without admitting or denying the SEC's allegations, Cedrone, Ferris, and Thoreson consented to final judgments finding that they violated Section 17(a) of the Securities Act of 1933, Sections 9(a)(2) and 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5, that Ferris also violated Securities Act Section 5, and that Cedrone also violated Exchange Act Section 15(b)(6)(B)(i). The settlements, which are subject to court approval, would prohibit them from placing orders to buy or sell securities during the last 60 minutes of any trading day. Cedrone agreed to pay $5,013 in disgorgement plus $666.19 in interest and a $150,000 penalty. The amount of the penalty assessed against Cedrone takes into account his violation of a prior Commission order. Thoreson agreed to pay a $75,000 penalty and be barred from the securities industry and penny stock offerings. Determination of any penalty against Ferris is deferred until after the terms of his cooperation agreement in the case are completed.
The SEC's continuing investigation is being conducted by John P. Lucas and Kelly V. Silverman and supervised by J. Lee Buck II.