SEC Charges Self-Described Promoter with Microcap Market Manipulation Scheme

November 29, 2018/US SEC

The Securities and Exchange Commission charged a self-described penny stock promoter and an entity he controlled with orchestrating a scheme to manipulate trading in at least 97 microcap stocks.

According to the SEC’s complaint, Eric Landis falsely claimed to third-party media buyers for microcap companies that he would distribute promotional materials for the stocks via email lists with tens of thousands of subscribers. In reality, his distribution lists were a sham. To generate trading volume and create the false impression that he was drumming up investor interest, the SEC alleges that Landis traded thousands of microcap shares himself using brokerage accounts in his own name, in the name of an entity he controlled, Ridgeview Capital Partners LLC, and in the names of several third parties. Altogether, the SEC alleges that Landis placed thousands of manipulative trades over three years, including approximately 1,300 “matched trades,” which involved simultaneously selling and buying stocks in the microcap companies he was paid to promote.

The SEC’s complaint, filed in the U.S. District Court for the District of Massachusetts, charges Landis and Ridgeview with violating Sections 17(a) of the Securities Act of 1933 and Sections 9(a) and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC seeks a permanent injunction against future violations, disgorgement of ill-gotten gains plus prejudgment interest, monetary penalties, and a penny stock bar.

Landis was previously found liable in a lawsuit brought by the SEC and convicted of related criminal charges based on his role in a prior market manipulation scheme. Before investing, microcap investors should review the investor-education materials available at Investor.gov.

The SEC’s case is being handled by Trevor Donelan, Jonathan Allen, Eric Forni, Kathleen Shields, J. Lauchlan Wash, Rebecca Israel, David Scheffler, and Amy Gwiazda of the SEC’s Boston Regional Office, assisted by Alex Lefferts in the SEC’s Office of Market Intelligence, and in coordination with the Enforcement Division’s Microcap Fraud Task Force. The SEC appreciates the assistance in this matter of the Federal Bureau of Investigation, the U.S. Attorney’s Office for the District of Massachusetts, and the Financial Industry Regulatory Authority (FINRA).

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