Texas Securities Fraud Charges Filed Against Wadell & Reed and Brookstreet Securities Broker-Dealers Over Microcap Stock Scheme

Assistant Attorney General Lanny A. Breuer of the Criminal Division says that broker-dealers Blake Williams and Derek Lopez are charged with Texas securities fraud involving a number of publicly traded companies. A federal grand jury indictment charged both men with seven counts of securities fraud and one count of conspiracy to commit securities fraud. The two men were arrested on May 27. Also that day, the US Securities and Exchange Commission filed its securities fraud complaint against the two broker-dealers.

Per the criminal indictment, Williams, who worked for TBeck Capital Inc. and was registered with Wadell & Reed, and Lopez, who provided services to TBeck Capital Inc. was registered with Brookstreet Securities, worked with others to manipulate the volume and prices of stocks that were traded in the over-the-counter market. While companies run and owned by a co-conspirator would take charge of large positions of free-trading stock in a number of publicly-traded companies, Lopez, Williams, and their other-co-conspirators would allegedly coordinate trades with each other to make it seem as if there were a lot of investors interested in the stock.

Lopez and Williams allegedly traded the stock through TBeck Capital, other companies, and also in their own names, so that the price would stay artificially inflated. They, along with the other participants in the Texas securities scheme, could then sell their stock at these prices.

If convicted of conspiracy, the broker-dealers could be sentenced to a 5-year maximum prison sentence and whichever is greater between a $250,000 fine and two times the gross gain or loss. Each securities fraud count comes with a 20-year maximum and a $5 million fine.

Meantime, the SEC is seeking penny stock bars, injunctions, penalties, and disgorgement against the two men, as well as a director and officer bar against Williams, who also was an officer for a number of microcap issuers.

Related Web Resources:
Two Securities Broker-Dealers Indicted for Securities Fraud Scheme in Texas, Justice.gov, May 27, 2010
Read the SEC Complaint (PDF)

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