SEC Charges Penny Stock Dealer in Florida With Failure to Properly Register, Settlement Reached
On June 16th, 2023, the Securities and Exchange Commission (SEC) announced the settlement of securities violation charges against Bryan Pantofel and a company that he owned and managed called BHP Capital NY, Inc. The SEC contends that the firm improperly acted as an unregistered penny stock dealer in Florida. Here, our Miami securities losses attorney discusses the enforcement action from the SEC in detail.
SEC Settlement: $2.5 Million for Unregistered Convertible Note Dealer
In the United States District Court for the Southern District of Florida, the SEC took enforcement action against BHP Capital NY, Inc., a convertible note dealer, as well as its managing member. The contends that BHP Capital NY, Inc. operated without proper registration as securities dealers. The settlement reached by the SEC and the defendants mandates that the company will pay $2.5 million in monetary penalties. The alleged securities law violations took place between late 2017 and mid 2022. In total, the SEC contends that nearly four dozen microcap issuers were affected.
What is a Penny Stock (Microcap Stock)?
A penny stock—also frequently known as a microcap stock—is a security that typically trades for less than $5 per share. These stocks are generally issued by small companies with market capitalizations below $300 million. Due to their low trading prices and often limited financial history, penny stocks are considered highly speculative and volatile. They often do not trade on major stock exchanges like the NYSE or NASDAQ, but rather on over-the-counter (OTC) markets.
Penny Stocks Can Be Especially Risky for Investors
All investors should be aware of the fact that penny stocks can carry heightened risks. Here are some of the most notable reasons why microcap securities can be especially risky investments:
- Volatility: Due to their low prices, penny stocks often experience extreme price fluctuations, even within a single trading day. This volatility can result in large losses if an investor cannot sell at the desired price.
- Lack of Liquidity: These stocks typically have low trading volumes, making it difficult for investors to buy or sell shares without affecting the stock price. This illiquidity can result in investors being unable to sell their holdings when needed.
- Limited Information: Penny stocks often belong to companies that are not required to file with the Securities and Exchange Commission (SEC). Consequently, reliable financial information might be scarce, making it difficult for investors to make informed decisions.
- Securities Fraud and Other Scams: The penny stock market is notorious for fraudulent schemes, such as pump-and-dump scams, where manipulators artificially inflate the stock price before selling off their shares, causing the price to plummet.
Get Legal Guidance From a Top Miami Penny Stock Fraud Attorney
At Carlson & Associates, P.A., our Miami penny stock fraud lawyer is an experienced advocate for investors. If you or a loved one is an investor who sustained significant financial losses due to penny stock fraud, we can help. Give us a phone call now or connect with us online to set up your fully private case review. Our firm is ready to protect your legal rights and financial interests.
Source:
sec.gov/litigation/litreleases/2023/lr25749.htm