SEC v. Beaufort Securities, et al.

Violations Charged

Section 10(b), Rule 10b-5

Case Overview

An undercover FBI agent spent fifteen months presenting himself to Beaufort Securities, a London brokerage, as a man in the business of arranging pump-and-dumps in U.S. microcap stocks. Investment manager Panayiotis Kyriacou opened six brokerage accounts for him in the names of nominee companies, advised keeping each below the 5% ownership reporting trigger, and moved their communications to WhatsApp and off the firm's recorded lines.

When the agent said he wanted to create the appearance of active trading in HD View 360, an OTC-quoted stock, Kyriacou suggested 'match' trading, something he said he did with a lot of clients. In early 2018, Beaufort entered four purchase orders against sell orders the agent had pre-arranged, and one matched trade nearly doubled HD View's price. The SEC charged the firm and Kyriacou with fraud.

Joe's Role

The SEC's press release announcing the charges names Joe among the staff who conducted the investigation.

Outcome

Both defendants consented to judgments enjoining them from antifraud violations and barring them from penny-stock offerings. A parallel criminal case was brought by the U.S. Attorney's Office for the Eastern District of New York.