1 awareness 2 awareness 3 awareness
here's another recent penny stock manipulation case. evil and yet so obvious/blatant how they do it. makes you wanna puke.
FACTS
A. Agreements to Manipulate the Markets for Microcap Issuers’ Stock
8. Beginning in at least January 2006, Gozzo agreed with another individual who
was involved with and owned large positions ofstock in a number ofmicrocap issuers. Gozzo,
through PMG Capital, agreed with this individual to provide “market capitalization support” to
increase stock liquidity and market awareness for certain issuers’ stock in exchange for cash and
shares ofthe issuers’ stock.
9. Subsequently, Gozzo and others acted in concert to manipulate the markets for the
stocks ofa number ofissuers. In coordination with others, Gozzo engaged in a number of
practices aimed at misleading the market to increase and maintain artificially high prices so that
Gozzo and others could sell offtheir holdings for substantial gains.
B. “Bid Support”
10. Gozzo engaged in “bid support,” by placing orders for issuers’ stock for relatively small amounts of shares at prices immediately below the “inside,” or highest, bid price posted by
market makers.
11. The intended effect ofthese orders was to absorb sell orders to prevent market
sales from causing stock prices to fall significantly. By placing orders at slightly lower prices
than the prevailing bid price, Gozzo created an artificial floor for the price ofa particular stock
and “supported” the prevailing bid.
12. Gozzo placed his orders through different brokerage firms so that market
participants would see a substantial number ofbids posted, all close to the inside bid,·and
conclude that there was greater demand for the stocks than truly existed.
13. In one stock, hereinafter “Issuer A,” Gozzo sent an email asking another trader to
“please put bids in this in this morning on the following names, but not top bids, away bids.” By
asking the other trader not to place a “top bid,” Gozzo was asking the other trader not to place an
order at a greater price than the best current bid. The effect ofthe “away bid” was to have a
market maker show an additional bid, but not to change the current best bid on the issuer’s stock
posted by a market maker.
14. In another stock, hereinafter “Issuer B,” Gozzo told another trader that “we are
going to take that stock and move it up, plus stack some bids lower… just in case… I hope to
move this up well today.” Soon after, Issuer B’s stock price materially increased.
C. Trading in Multiple Accounts
15. Gozzo traded through several different brokerage firms to give the false
impression ofmarket depth to those looking at the market using a “Level II” or “Level III”
trading service, which identify the market makers that are originating bids.
16. Gozzo placed trades in accounts in the name ofhimselfand accounts in the name
ofPMG Capital.
17. For instance, between March and August 2006, Gozzo bought and sold 85,000
shares ofstock in a company, hereinafter “Issuer C,” using five different accounts with three
brokerage firms and producing a net loss.
18. By trading in multiple accounts Gozzo gave the false impression to investors of
more participants and liquidity in the market for the stock ofIssuer C.
19. Gozzo also engaged in coordinated trading in which he and others purchased and
quickly sold stocks, resulting in artificially increased trading volume designed to attract interest
to the stocks and increase the prices.
20. For instance, Gozzo coordinated with a number of individuals in manipulating the
market for a stock, hereinafter “Issuer D.” He told them in an email, “although I am not
quarterbacking this one, I will be there too, you can count on bid support to show depth, as well
as market buying, especially the first two weeks. If you all want to reconnect Thursday to talk
about the first day days … so we can assess what has been going on and what we need to do
next.”
21. At times Gozzo arranged “matched” trades in which he and others purchased and
sold stocks in concert. “Matched” orders are orders for the purchase/sale of a ·security that are
entered with the knowledge that orders ofsubstantially the same size, at substantially the same
time and price, have been or will be entered by the same or different persons for the
sale/purchase of such security. This trading was done for the manipulative purposes
of: (1) artificially increasing market activity in the traded stock; (2) misleading the market that
genuine investors were buying for legitimate investment purposes; and (3) artificially propping
up the stock price ofthe traded security.
22. To ensure that the market prices ofthe issuers stock remained artificially inflated,
Gozzo and others coordinated their trading so as not sell too much stock into the market. They
also provided buy-side support for a stock when there were too many other retail investors
selling it. Another trader erriailed Gozzo the group’s strategy in Issuer C, “I suggest that we have
a plan to gradually tick up [Issuer C] each day. I will keep the press releases going… You
23. With regard to another stock, hereinafter “Issuer E,” Gozzo told another trader, “I
think the goal should be to sell 10,000 shares a minimum, every day, however, some days with
higher volume, we can sell 5 times that, so I will be in constant contact.”
24. Through this coordinated trading and other manipulative practices, Gozzo and
others manipulated the prices ofissuer securities to artificially high levels, deriving illegal
trading profits by selling their stock while the stock was artificially inflated.
E. Coordinating with Others who Controlled the Float
25. As the scheme progressed, Gozzo received enough ofone issuer’s stock to take
part in group efforts to control the “float”-the total shares ofa particular stock publicly owned
and available for trading.
26. Another trader orchestrated a reverse merger whereby Issuer E would become a
public company by merging into a public traded shell company. Gozzo and the other trader
agreed to split almost the entire float ofIssuer E’s stock. The other trader explained, “the
structure is 20 million shares outstanding, 5 million in the float and 15 million restricted. We
own all but 32,000 in the float.”
27. Gozzo and others were able to exercise dominion and control over the market of
Issuer E’s shares, permitting Gozzo and others to limit the supply ofIssuer E’s stock and through
coordinated trading to maintain artificially high prices and volume in Issuer E’s stock.
F. The Manipulation Continues
28. Gozzo continued to manipulate the market for several issuers’ stock, even though
other traders had ended their involvement with the issuers after liquidating substantial amounts
of stock. In those instances, Gozzo received stock and/or cash from the companies for investor.
relations services but continued to manipulate the market for those stocks while purportedly
providing legitimate services.
29. For instance, Gozzo arranged a trade between two other individuals in which
900,000 shares of a particular company’s stock, hereinafter “Issuer F,” changed hands below the
market price without the trade being reported to the market. Had the trade been reported, the
size ofthe trade and the discounted price would have caused the market price to fall. In an email
message, Gozzo expressed his happiness about the trade and that it was not reported to the
market: “t did not hit the tape which is even better. I am fired up!!!!”
here's another recent penny stock manipulation case. evil and yet so obvious/blatant how they do it. makes you wanna puke.
FACTS
A. Agreements to Manipulate the Markets for Microcap Issuers’ Stock
8. Beginning in at least January 2006, Gozzo agreed with another individual who
was involved with and owned large positions ofstock in a number ofmicrocap issuers. Gozzo,
through PMG Capital, agreed with this individual to provide “market capitalization support” to
increase stock liquidity and market awareness for certain issuers’ stock in exchange for cash and
shares ofthe issuers’ stock.
9. Subsequently, Gozzo and others acted in concert to manipulate the markets for the
stocks ofa number ofissuers. In coordination with others, Gozzo engaged in a number of
practices aimed at misleading the market to increase and maintain artificially high prices so that
Gozzo and others could sell offtheir holdings for substantial gains.
B. “Bid Support”
10. Gozzo engaged in “bid support,” by placing orders for issuers’ stock for relatively small amounts of shares at prices immediately below the “inside,” or highest, bid price posted by
market makers.
11. The intended effect ofthese orders was to absorb sell orders to prevent market
sales from causing stock prices to fall significantly. By placing orders at slightly lower prices
than the prevailing bid price, Gozzo created an artificial floor for the price ofa particular stock
and “supported” the prevailing bid.
12. Gozzo placed his orders through different brokerage firms so that market
participants would see a substantial number ofbids posted, all close to the inside bid,·and
conclude that there was greater demand for the stocks than truly existed.
13. In one stock, hereinafter “Issuer A,” Gozzo sent an email asking another trader to
“please put bids in this in this morning on the following names, but not top bids, away bids.” By
asking the other trader not to place a “top bid,” Gozzo was asking the other trader not to place an
order at a greater price than the best current bid. The effect ofthe “away bid” was to have a
market maker show an additional bid, but not to change the current best bid on the issuer’s stock
posted by a market maker.
14. In another stock, hereinafter “Issuer B,” Gozzo told another trader that “we are
going to take that stock and move it up, plus stack some bids lower… just in case… I hope to
move this up well today.” Soon after, Issuer B’s stock price materially increased.
C. Trading in Multiple Accounts
15. Gozzo traded through several different brokerage firms to give the false
impression ofmarket depth to those looking at the market using a “Level II” or “Level III”
trading service, which identify the market makers that are originating bids.
16. Gozzo placed trades in accounts in the name ofhimselfand accounts in the name
ofPMG Capital.
17. For instance, between March and August 2006, Gozzo bought and sold 85,000
shares ofstock in a company, hereinafter “Issuer C,” using five different accounts with three
brokerage firms and producing a net loss.
18. By trading in multiple accounts Gozzo gave the false impression to investors of
more participants and liquidity in the market for the stock ofIssuer C.
19. Gozzo also engaged in coordinated trading in which he and others purchased and
quickly sold stocks, resulting in artificially increased trading volume designed to attract interest
to the stocks and increase the prices.
20. For instance, Gozzo coordinated with a number of individuals in manipulating the
market for a stock, hereinafter “Issuer D.” He told them in an email, “although I am not
quarterbacking this one, I will be there too, you can count on bid support to show depth, as well
as market buying, especially the first two weeks. If you all want to reconnect Thursday to talk
about the first day days … so we can assess what has been going on and what we need to do
next.”
21. At times Gozzo arranged “matched” trades in which he and others purchased and
sold stocks in concert. “Matched” orders are orders for the purchase/sale of a ·security that are
entered with the knowledge that orders ofsubstantially the same size, at substantially the same
time and price, have been or will be entered by the same or different persons for the
sale/purchase of such security. This trading was done for the manipulative purposes
of: (1) artificially increasing market activity in the traded stock; (2) misleading the market that
genuine investors were buying for legitimate investment purposes; and (3) artificially propping
up the stock price ofthe traded security.
22. To ensure that the market prices ofthe issuers stock remained artificially inflated,
Gozzo and others coordinated their trading so as not sell too much stock into the market. They
also provided buy-side support for a stock when there were too many other retail investors
selling it. Another trader erriailed Gozzo the group’s strategy in Issuer C, “I suggest that we have
a plan to gradually tick up [Issuer C] each day. I will keep the press releases going… You
23. With regard to another stock, hereinafter “Issuer E,” Gozzo told another trader, “I
think the goal should be to sell 10,000 shares a minimum, every day, however, some days with
higher volume, we can sell 5 times that, so I will be in constant contact.”
24. Through this coordinated trading and other manipulative practices, Gozzo and
others manipulated the prices ofissuer securities to artificially high levels, deriving illegal
trading profits by selling their stock while the stock was artificially inflated.
E. Coordinating with Others who Controlled the Float
25. As the scheme progressed, Gozzo received enough ofone issuer’s stock to take
part in group efforts to control the “float”-the total shares ofa particular stock publicly owned
and available for trading.
26. Another trader orchestrated a reverse merger whereby Issuer E would become a
public company by merging into a public traded shell company. Gozzo and the other trader
agreed to split almost the entire float ofIssuer E’s stock. The other trader explained, “the
structure is 20 million shares outstanding, 5 million in the float and 15 million restricted. We
own all but 32,000 in the float.”
27. Gozzo and others were able to exercise dominion and control over the market of
Issuer E’s shares, permitting Gozzo and others to limit the supply ofIssuer E’s stock and through
coordinated trading to maintain artificially high prices and volume in Issuer E’s stock.
F. The Manipulation Continues
28. Gozzo continued to manipulate the market for several issuers’ stock, even though
other traders had ended their involvement with the issuers after liquidating substantial amounts
of stock. In those instances, Gozzo received stock and/or cash from the companies for investor.
relations services but continued to manipulate the market for those stocks while purportedly
providing legitimate services.
29. For instance, Gozzo arranged a trade between two other individuals in which
900,000 shares of a particular company’s stock, hereinafter “Issuer F,” changed hands below the
market price without the trade being reported to the market. Had the trade been reported, the
size ofthe trade and the discounted price would have caused the market price to fall. In an email
message, Gozzo expressed his happiness about the trade and that it was not reported to the
market: “t did not hit the tape which is even better. I am fired up!!!!”
