SEC Charges CEO in Florida With Making False Statements to Inflate Company Stock Price
On February 27th, 2024, the Securities and Exchange Commission (SEC) announced securities fraud charges against Paul A. Pereira—the former Chief Executive Officer (CEO) of Alfi, Inc., Mr. Pereira allegedly knowingly made false statements on social media that were targeted at investors and designed to raise the company’s stock price. The company is no longer in business. In this article, our Miami investment losses attorney discusses the securities fraud case in more detail.
The Allegations: SEC Inflated Stock Price With Material Misrepresentation
Alfi, Inc. is a now-defunct company that was based in Miami Beach, Florida. It was owned and operated by CEO Paul A. Pereira. The company—which traded as a penny stock—touted itself an innovative advertising technology. The SEC brought federal securities fraud charges against Mr. Pereira based on the allegations that he used a pseudonym to make false and materially misleading statements about the company’s future financial outlook on major social media platforms. Specifically, the SEC contends that Mr. Pereira made the following two key misstatements:
- He falsely stated that Alfi, Inc. had a contract with a major restaurant chain to use its technology; and
- He falsely stated that the company had approximately $100 million in advertising inventory revenue when the true figure was only around $5 million.
The SEC contends that Mr. Pereira used the pseudonym to make these misrepresentations in an effort to inflate the company’s stock price. The alleged misconduct at issue in this securities fraud case occurred after the company’s initial public offering (IPO) in the Spring of 2021. Notably, in the Fall of 2022 Alfi, Inc. filed for bankruptcy protection.
The SEC is Seeking Civil Legal Penalties Against the Former Florida CEO
As part of its civil legal complaint, the SEC is seeking a wide range of penalties against Paul A. Pereira. Specifically, federal regulators are seeking findings that Mr. Pereira violated the Securities Act of 1933, violated the Securities Exchange Act of 1934, a permanent injunction, an officer/director bar, and financial sanctions.
Penny Stocks Can Be Especially Risky for Investors
Broadly defined, a penny stock is a stock that typically trades below $5 per share. While the low price point might seem attractive—as it offers the illusion of significant returns with minimal investment—these stocks can be exceptionally risky. Penny stocks are less typically liquid—meaning they can be hard to sell. Beyond that, these lightly-traded stocks often lack transparency. Many penny stocks operate in the shadows of major markets and the companies behind them sometimes have questionable financial health. The Alfi, Inc. fraud case offers an illustrative example of the risk of penny stocks.
Contact Our Miami, FL Securities Fraud Lawyer Today
At Carlson & Associates, P.A., our Miami investment fraud attorney is a strong advocate for investor rights. If you have any questions about your options, we are here as a resource that you can rely on. Do you have any questions about a securities fraud claim? We are here to help. Contact us at our Miami law office today for a confidential case review.
Source:
sec.gov/litigation/litreleases/lr-25944