The Securities and Exchange Commission announced today that it obtained a final judgment against Canadian resident Frederick L. Sharp. In August 2021, the SEC charged Sharp with leading a fraudulent scheme that generated hundreds of millions of dollars from unlawful stock sales and caused significant harm to retail investors in the United States and around the world. Among other relief, the judgment orders Sharp to pay over $50 million in monetary relief.
The stock market is one of the most important things that drive the world economy. It gives businesses access to money and gives investors chances to grow. But there is also theft in this market, as was the case with Frederick L. Sharp, who was charged with selling stocks without permission.
Who is Frederick L. Sharp?
Frederick L. Sharp used to be a stockbroker and worked at different trading firms in the US. In 2019, the Securities and Exchange Commission (SEC) said Frederick L. Sharp sold stocks in a way that was against the law.
What’s being said
The SEC said that Sharp sold shares in a company that wasn’t listed with the SEC, which was against the law. The company, NVC Fund LLC, was supposed to be a venture capital fund that invested in early-stage technology companies.
Frederick L. Sharp is accused of selling buyers’ shares in NVC Fund LLC without telling them that the company was not registered with the SEC. The SEC also said that Sharp lied to investors about the nature of the investment by saying that it was safe and that their money would be used to help potential tech startups.
What is a Red Flag?
A red flag serves as a signal or sign that there may be an underlying issue or danger associated with a company’s stock, financial statements, or news reports. These indicators can come in many forms and are often identified by analysts or investors as any notable undesirable trait.
What happened
Sharp has had to deal with a lot because of the accusations against him. The SEC has taken legal action against him, and if he is found guilty, he could get fines, pay back what he stole, and even go to jail.
The case has also shown that investors need to learn more about the risks of investing in securities that are not listed with the government. Investors need to be careful when looking at investment possibilities and should do a lot of research before investing.
Frederick L. Sharp was charged by SEC for fraudulently generating hundreds of millions from illegal stock sales.
According to the SEC’s complaint, Sharp masterminded a complex scheme from 2011 to 2019 in which he and his associates enabled control persons of penny stock companies, whose stock was publicly traded in the U.S. securities markets, to conceal their control and ownership of huge amounts of penny stock and then surreptitiously dump the stock into the U.S. markets, in violation of federal securities laws. The services Sharp and his associates allegedly provided included furnishing networks of offshore shell companies to conceal stock ownership, arranging stock transfers and money transmittals, and providing encrypted accounting and communications systems. According to the complaint, Sharp and his associates facilitated over a billion dollars in gross sales in hundreds of penny stock companies.
On May 12, 2022, the U.S. District Court for the District of Massachusetts entered the final judgment by default against Sharp. The judgment enjoins him from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 (“Securities Act”) and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, and the registration provisions of Section 5 of the Securities Act. The judgment also orders Sharp to pay disgorgement and prejudgment interest of $28,934,433 and a civil penalty of $23,990,781. It further imposes a penny stock bar and a conduct-based injunction restricting Sharp’s future trading in stocks.
The ongoing litigation against the remaining defendants is being handled by Kathleen Shields, David London, Trevor Donelan, and Amy Gwiazda of the Boston Regional Office; Katherine Bromberg of the Enforcement Division’s Retail Strategy Task Force; and Edward Gerard, Shipra Wells, and Lee Buck of the Washington, DC Office.
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