(HedgeCo.Net) The Securities and Exchange Commission has settled charges against a convertible note dealer, Crown Bridge Partners, LLC, and its managing members, Soheil and Sepas Ahdoot of Great Neck, N.Y., for failing to register with the SEC as securities dealers. As part of the settlement, the Ahdoots and Crown Bridge agreed to pay more than $9 million in monetary relief and to surrender or cancel securities of 82 different issuers they allegedly obtained from their unregistered dealer activity.
The SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, alleges that, between January 2016 and December 2020, Crown Bridge purchased about 250 convertible notes from 150 microcap issuers, and converted the notes into 35 billion newly issued shares of stock at a large discount from the market price. It then allegedly sold the newly issued shares into the market at a significant profit. As alleged, neither Crown Bridge nor the Ahdoots were registered as dealers with the SEC or associated with a registered dealer, as their activities required them to do.
Without admitting or denying the allegations, Crown Bridge and the Ahdoots agreed to be permanently enjoined from further violations of Section 15(a)(1) of the Securities Exchange Act of 1934, to pay disgorgement and prejudgment interest of $8,390,601.27 and a civil penalty of $810,307, and to a five-year penny stock bar. Crown Bridge also agreed to surrender all conversion rights in its currently held convertible notes, surrender all unexercised warrants that it acquired in connection with convertible notes, and cancel any shares it holds that were acquired by converting notes or exercising related warrants. The settlement is subject to court approval. Finally, Crown Bridge and the Ahdoots consented to the entry of a Commission order imposing a five-year collateral bar to be obtained in a follow-on administrative proceeding.