Tuesday, 3 March 2015
Last updated 9 hours ago
Dec 2 2011 | 9:45am ET
It isn't only Occupy Wall Street protestors thinking there's a corrupt hedge fund around every corner. Corporate executives looking to trade kickbacks for investments do, too.
And now 13 of them have been charged, ensnared in a Federal Bureau of Investigation sting operation. The FBI set up an office in a Boston suburb, where an agent pretended to represent a "major hedge fund." There, he allegedly offered microcap companies a $5 million investment in exchange for a 50% kickback, which he said the hedge fund knew nothing about.
Eleven people with ties to seven companies were charged, in addition to two "finders," identified in an FBI affidavit as Kelly Black-White and James Prange. Black-White's lawyer told Reuters that she "is looking forward to defending against the charges." Eight of those charged were arrested, four are to surrender and one remains at large.
"Executives who engage in this kind of fraud are just selling out their own investors," David Bergers, head of the Securities and Exchange Commission's Boston office, said. "Microcap stocks are a sector of the market particularly prone to fraud and abuse."
The SEC suspended trading in the seven companies involved, Augrid Global Holdings, Comcan International, First Global Financial Corp., MicroHoldings US, Outfront Companies, Symbollon Pharmaceuticals and ZipGlobal Holdings.
Jan 23 2015 | 1:00pm ET
In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…