Friday, March 9,
2018 04.24AM / US SEC
The Securities and Exchange Commission
today barred the president of a penny stock company from ever again serving as
a public company officer or director after he was caught making false and
misleading statements about the company to investors in an effort to increase
demand for the stock.
The SEC confronted him quickly and the misstatements were removed from the
Internet and social media before any dramatic spike in stock price typically
seen in pump-and-dump
schemes could occur. Following such spikes, fraudsters dump
their shares and stop hyping the stock, the price typically falls, and
investors lose their money.
According to the SEC’s order, Robert
Ritch of Spring Hill, Tennessee, began spreading false information on social
media about his investment successes and the company’s prospects shortly after
taking control of Manzo Pharmaceuticals (MNZO) in July 2017.
The order finds that despite Ritch’s
statements that MNZO was a holding company that purported to invest in and
acquire other companies, in reality it had a limited operating history and
incurred continuing losses. Contrary to his representations, Ritch had
not founded, built, or exited any successful multi-million dollar business and
did not complete more than $1 billion in transactions during his career.
In fact, according to the SEC’s order, he had not completed even $1 million in
transactions during his career.
In addition, Ritch lied to investors
by concealing his criminal history, which includes three felony convictions for
crimes of dishonesty.
“Ritch used social media to tout
widespread falsehoods about his company and track record designed to deceive
the market and put investor money into his own pocket. As here, we will continue
to act quickly to stop manipulative conduct and minimize investor harm,” said
Marc Berger, Director of the SEC’s New York Regional Office.
The SEC’s order finds that Ritch
violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(b).
Without admitting or denying the SEC’s findings, Ritch consented to a
cease-and-desist order, officer-and-director bar, penny stock bar, and $50,000
penalty. The SEC also has suspended
trading in MNZO.
The SEC’s investigation was conducted
by Bennett Ellenbogen, Thomas Feretic, and Sandeep Satwalekar of the New York
office, and Ricky Tong of the Microcap Fraud Task Force. The case was
supervised by Lara Shalov Mehraban.
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