(HedgeCo.Net) 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.