SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17579 / June 24, 2002
SECURITIES AND EXCHANGE COMMISSION v. KIN H. LEE (Civil Action No. 02-895-A) (ED. Va. 2002).
SEC Sues Day Trader For Manipulating After-hours Securities Markets
The United States Securities and Exchange Commission today filed a complaint in the United States District Court for the Eastern District of Virginia charging self-employed day trader, Kin H. Lee, with manipulating the thinly-traded after-hours securities markets of six publicly-traded companies. Without admitting or denying the allegations made by the Commission, Lee consented to the entry of an order enjoining him from violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The order requires Lee to pay $100,892 in disgorgement and pre-judgment interest, pay a civil penalty of $60,000, and prohibits Lee from engaging in pattern day trading.
The complaint alleges that between January 2000 and April 2001, Lee, a day-trader, using his home computer and multiple online brokerage accounts, attempted to manipulate the after-hours markets of six publicly-traded companies. Lee's manipulative trading activity primarily involved the execution of large-volume "wash sales" - transactions resulting in no change in beneficial ownership - at gradually increasing prices, to create the appearance of an active and rising market in a given security. In six instances, Lee's manipulative trading activity constituted a considerable percentage of the stocks' trading volume, caused the stocks' share price to increase, and resulted in a financial gain to Lee. Lee realized profits totaling $86,490.62 by selling previously acquired shares into the artificial markets he created.
The Commission acknowledges the assistance of NASD Regulation's Market Regulation Department in the investigation of this matter.
To report suspicious activity involving possible Internet fraud, visit sec.gov.
SEC Complaint in this matter.
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