Monday June 24, 11:28 am Eastern Time
Trader Settles With SEC Over Alleged Stock Shenanigans
By: Judith Burns, Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- A Virginia day trader agreed to settle Securities and Exchange Commission allegations he manipulated a half-dozen stocks in online, after-hours trading.
Kin Lee, a self-employed day trader, didn't admit or deny the SEC's allegations, but agreed to pay a $60,000 fine and return more than $100,000 of allegedly ill-gotten gains. The settlement also bars Lee from future day- trading activity.
Lee used a computer in his McLean, Va., home to buy and sell stocks through numerous online brokerage accounts he controlled under various aliases, according to the SEC's case filed Monday in federal court in Virginia .
The day trader waited until U.S. markets closed, then bought stocks through one of his accounts and sold the shares to another to create the illusion of activity, a practice known as "wash" trading. To further the illusion, the SEC said Lee placed numerous limit orders to buy or sell stocks at preset prices, setting the price at unrealistically high or low levels. These "phantom" orders had little chance of being executed, but the SEC said posting them made the market appear to be more active than it actually was.
"What used to be done with boiler rooms and bucket shops can now be done online," said John Reed Stark, director of the SEC's Internet enforcement unit, in Washington . He said Lee ran "a classic manipulation," to artificially inflate stock prices. The only difference, said Stark, is that Lee relied on " 21st century technology" to conduct the alleged fraud, which the SEC said started in January 2000 and continued until April 2001 .
Lee allegedly manipulated prices in Consulier Engineering Inc. , Biospecifics Technologies Corp. , Hawk Industries Inc. (HAWK), FTD.com Inc. (EFTD), Pharmaprint, Inc. (PPRT) and Eprise Inc. (EPRS), according to the SEC. |
