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A former president of Teva Pharmaceutical Industries Ltd. and an investor known to have benefited from the clamor surrounding cryptocurrencies were cited yesterday by regulators for claims that they devised a pump-and-dump scheme.
The Securities and Exchange Commission alleged that Phillip Frost and Barry Honig, along with eight others, conspired to manipulate the prices of three microcap stocks so that they could then sell their shares at inflated prices. According to the SEC, fraud has generated over $ 27 million for the people involved.
The SEC did not disclose the names of microcap stocks in its complaint.
The scheme worked from 2013 to 2018, the SEC said in a lawsuit filed with the federal court in Manhattan, claiming that Mr. Honig was the group leader. Mr. Honig was a large shareholder in
Riot Blockchain
Inc.,
a former biotech company that has changed its name to indicate a particular attention to the technology that supports cryptocurrencies. After the name change, Riot's share price rose more than 200%, up to a maximum of $ 46, over a period of several months. It has since dropped to just under $ 5. The SEC case does not involve Riot Blockchain.
Mr. Honig, a Florida investor, has raised shares in dozens of companies that sometimes drag in hot areas – vaping, solar power, stem cells – and see a pop of stock prices. Some have lost their breath, provoking the wrath of other investors.
Mr. Frost, a billionaire biotech executive who served as president of Teva until 2014, was involved in two of the three manipulation schemes, according to the SEC.
"Honig and his associates engaged in a shameless manipulation of the market that advanced their financial interests while emptying innocent investors and undermining the integrity of our securities markets," said Sanjay Wadhwa, senior associate director of the SEC control division
Actors for Mr. Honig and two other defendants did not respond immediately to a request for comment. The SEC has not listed a lawyer for Mr. Frost and a spokesperson for his company,
Opko Health
Inc.,
refused to comment.
The SEC suit also includes Opko. The company assisted in the fraud and did not reveal its role in a group that controlled one of the companies whose actions were manipulated, according to the complaint.
