The SEC and Treasury Department's Financial Crimes Enforcement Network issued parallel orders charging Oppenheimer & Co. with improper sales of penny stocks, including allegations of involvement with illegal activity and pump-and-dump schemes associated with another firm, Gibraltar Global Securities, Inc. Oppenheimer settled the charges by agreeing to pay $20 million and admit guilt over the improper penny stock trades.
The report refers to a case between 2008 and 2010 in which a financial adviser and branch manager willfully sold 2.5 billion shares of unregistered penny stocks on behalf of a customer, generating $12 million in proceeds and $588,400 of commissions for Oppenheimer. The SEC order listed the unregistered distribution of the following securities: Quasar Aerospace, Inc., Encounter Technologies, Inc., My Social Income, Inc., Strategic Rare Earth Metals, Inc., Sebastian River Holdings, Inc., and Shot Spirit Corporation.
Secondly, investigators found evidence of illegal activity in an account Oppenheimer hosted and held by broker-dealer Gibraltar Global Securities, Inc., a firm based and licensed in the Bahamas, but not in the US. In 2013, the SEC charged Gibraltar with violations of the federal Securities Act, including antifraud violations and effecting pump-and-dump schemes concerning penny stocks.
The report states that Oppenheimer processed billions of penny stock transactions on behalf of an alleged pump-and-dump scheme by Gibraltar and failed to identify or act on this red flag that the SEC says should have triggered heightened review as "suspicious activity."
The SEC also charged Oppenheimer with willfully aiding and abetting Gibraltar's violations, failing to withhold and remit taxes to the IRS and maintaining inaccurate books and records.
If you have invested with Oppenheimer & Co., Gibraltar Global Securities, Inc. or with any brokerage or other firm whose improper or illegal sales of penny stocks or participation in a pump-and-dump scheme have proven harmful to your investments or financial interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for investigation and consultation.