New York - US securities regulators sued a Bulgarian investor Thursday for allegedly orchestrating bogus acquisition bids for Avon and two other companies in a stock-rigging scheme.
Nedko Nedev, 37, of Sofia, Bulgaria, is charged with engineering a fake bid for Avon on May 14, 2015 via a company calling itself PTG Capital, the US Securities and Exchange Commission said in a US lawsuit filed in New York.
"There is no indication that PTG Capital is a legitimate company organized for any other reason than the stock manipulation scheme described here," the suit said.
The SEC said a federal court in New York had frozen two brokerage accounts containing $2 million, at least one of which is which is controlled by Nedev.
"Only three weeks after the manipulation of Avon stock occurred, this emergency court order keeps not only the alleged illicit profits from being transferred offshore, but preserves the SEC's ability to recover substantial penalties," said Andrew Ceresney, the SEC's director of enforcement.
The PTG bid lifted Avon shares by 20 percent in intraday trading and led volume in Avon shares to jump 448 percent, the complaint said.
Nedev, trading from Bulgaria, gained $4,879 due to the jump in Avon shares.
In the other two cases, Nedev also scored stock gains on a fraudulent press release and a fraudulent securities submission each declaring bogus bids for companies, according to the suit.
A May 2014 fake bid for the insurer the Tower Group came from an outfit calling itself Euroins Insurance and yielded $23,368, the SEC said.
A December 2012 fake bid for the Rocky Mountain Chocolate Company came from an entity calling itself PST Capital. The bid though did not drive the share price high enough for Nedev to take a profit, the SEC suggested.
The suit did not tie Nedev directly to the takeover announcements, but said it was "highly unlikely that Nedev's trading was mere coincidence."
It pointed to the parallel trading and takeover actions, the common Bulgaria links of many of the entities involved, and other similarities.
"These facts demonstrate that Nedev or others working with him are coordinating this market manipulation from Bulgaria," it said.
Besides Nedev, other parties named as defendants include PTG, Strategic Capital Partners Muster Ltd. and Strategic Wealth Investments Inc. The frozen brokerage accounts belong to Strategic Capital and Strategic Wealth.
Strategic Capital identifies itself as incorporated in the British Virgin Islands and located in Sofia, while Strategic Wealth is incorporated in the US state of Nevada.
Strategic Wealth was opened by a Bulgarian citizen and often trades in parallel with Nedev's Strategic Capital account, the complaint said.
AFP
