An Old Westbury investor accused of breaching federal regulations through penny stocks his firms bought and sold has reached a settlement with the Securities and Exchange Commission.
Michael Manis and three co-defendants have each agreed to pay a $25,000 civil penalty in exchange for the SEC dropping securities fraud charges against them. The four were charged with purchasing unregistered penny stocks through the firms Coastal Group Holdings, Inc., and Spartan Group Holdings, LLC, and reselling them using exemptions the SEC said the companies should not have received.
The SEC alleged in its initial criminal complaint in 2012 that from 2007-10, Manis, Danny Garber, Kenneth Yellin and Jordan Feinstein acquired more than $1 billion in penny stock shares at up to 60 percent off the market price and misrepresented their intention to hold the shares for investment purposes by immediately reselling them without registering them with the agency.
More than 12 entities were also charged in connection with the scheme, according to court filings.
“These penny stock purchasers had enough securities industry experience to know that their penny stock trading was not exempt from the securities laws as they claimed,” Andrew M. Calamari, director of the SEC’s New York Regional office, said in 2012.
But according to a news release issued last Tuesday by Manis’ attorneys Hughes Hubbard & Reed LLP, Manis argued that the transactions were protected by the companies issuing the stock, stock transfer agents, brokerage firms and several attorneys and compliance personnel.
In a statement, Hubbard & Reed LLP officials said that because Manis was “the initial purchaser of the unregistered securities, he was the party the registration requirements were designed to protect.”
