Securities: US DOJ prosecutes broker-dealers for market abuse
Two securities broker-dealers have been charged in an indictment unsealed today for their alleged roles in a securities fraud scheme involving several publicly traded companies,
A federal grand jury returned an indictment under seal on 26 May, 2010, charging Blake Williams, 27, of Dallas, and Derek Lopez, 43, of Torrance, Calif., with one count of conspiracy to commit securities fraud and seven counts of securities fraud.
The charges, filed in U.S. District Court for the Northern District of Texas - Dallas Division, were unsealed today. Williams and Lopez were arrested today in Dallas and Torrance, respectively, and are making initial court appearances.
According to the indictment, Williams was a securities broker-dealer and employee of TBeck Capital Inc., a purported investment banking and securities trading firm in Grapevine, Texas. Lopez was a securities broker-dealer who provided services to TBeck Capital. According to the indictment, from June 2006 until the end of December 2008, Williams, Lopez and their conspirators engaged in a scheme to manipulate the price and volume of stocks traded in the over-the-counter market.
The indictment alleges that companies owned and controlled by a conspirator obtained control of large positions of free-trading stock in various publicly-traded companies. Williams, Lopez and others allegedly would then coordinate trades with each other and with their conspirators to create the false appearance that there was greater investor interest in the stock. Williams and Lopez allegedly traded stock in their own names as well as through TBeck Capital and other companies to keep the stock price artificially inflated. These alleged actions allowed the defendants and their conspirators to then sell that stock at an artificially high price.
According to the indictment, Lopez allegedly traded in his own name, as well as in the name "Da Big Kahuna," to disguise his trades. Williams allegedly traded in his own name and in the name of several companies to make it appear that there were multiple unrelated entities buying and selling the stock. According to the indictment, Williams allegedly received cash payments and Lopez received free-trading stock and cash payments in return for their assistance in manipulating the stock prices of companies in which TBeck Capital owned and controlled large positions of free-trading stock.
If convicted on the conspiracy charge, the defendants face a maximum penalty of five years in prison and a USD250,000 fine, or twice the gross gain or loss, whichever is greater. Each of the securities fraud charges carries a maximum penalty of 20 years in prison and a USD5 million fine.
An indictment is merely a charge and defendants are presumed innocent until proven guilty, says the DOJ
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