SEC v. Kueber

Violations Charged

Section 17(a), Section 10(b), Rule 10b-5

Case Overview

Cynk Technology, a purported social network with no revenue and no operations, rose from under 10 cents to more than $21 per share in the summer of 2014. The SEC charged Phillip Kueber with concealing his control of the company through straw shareholders, mainly family members and associates, sham CEOs, and offshore dummy corporations in Belize and Nevis.

The straw shareholders never received the shares they had supposedly purchased. According to the complaint, Kueber moved the stock into brokerage accounts and offshore shells he controlled and misled broker-dealers about his ownership, creating the appearance of a genuine public float. The Commission suspended trading on July 11, 2014. When trading resumed, the price closed at 60 cents.

Joe's Role

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

Outcome

The trading suspension preceded any sales by Kueber into the price spike. He consented to permanent injunctions, an officer-and-director bar, and a penny-stock bar. A parallel criminal case was brought by the U.S. Attorney's Office for the Eastern District of New York.