He made billions in biotech. He has his name on a museum in Miami. But in the post-Madoff era, we might know better than to think that these bona fides mean that an investor is doing everything by the book. In fact, nowadays such outlandish wealth seems more indicative of some lurking corruption rather than the classic American success story. Unfortunately - a sign of the times - it can be difficult any more to believe that extraordinary wealth does not come at the expense of moral and ethical violations.
But skepticism can be a very healthy outlook when it comes to billionaire investors. The latest in the line of super wealthy moneymakers charged with some form of securities fraud is Philip Frost, who has been charged by the SEC with a long-running fraudulent investment scheme which generated more than $27 million in unlawful revenue from the sale of stock to retail investors.
SEC Takes Down Pump & Dump Scheme That Hurt Retail Investors
The SEC announced that the South Florida-based group which involved Frost allegedly manipulated the share price of the stock of three companies from 2013 to 2018. While not a criminal offense, the SEC will deal with the charges against Frost and his group in civil court.
Microcap Pump & Dump Scheme
According to the SEC’s complaint, the group, led by Barry Honig and involving Frost, manipulated the share price of the stock of three companies in classic pump-and-dump schemes. Honig allegedly orchestrated the acquisition of large quantities of the issuer’s stock at steep discounts, and after securing a substantial ownership interest in the companies, Honig and his associates engaged in illegal promotional activity and manipulative trading to artificially boost each issuer’s stock price and to give the stock the appearance of active trading volume. Honig and his associates then allegedly dumped their shares into the inflated market, reaping millions of dollars at the expense of unsuspecting investors.
