Source: Securities and Exchange Commission
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 25926 / January 16, 2024
Securities and Exchange Commission v. Jonathan Farber, Aarif Jamani, and Brian Keasberry, Civ. Action No. 1:24-cv-00273 (S.D.N.Y. filed Jan. 12, 2024)
SEC Charges Three Individuals in Microcap Fraud Scheme Targeting Retail Investors
The Securities and Exchange Commission today charged Jonathan Farber of New York, Aarif Jamani of British Columbia, Canada, and Brian Keasberry of Nevada, with running a microcap fraud scheme targeting retail investors. The defendants were each involved in different parts of an alleged fraudulent scheme involving a publicly-traded company that generated approximately $5 million in illicit stock sale proceeds.
According to the SEC’s complaint, County Line Energy Inc. was a small California-based company whose stock was publicly traded. In the first half of 2018, before Defendants allegedly launched their scheme there was little (and sometimes no) trading in that stock. As alleged by the SEC, from September 2017 to at least October 2021, Defendants Farber, Jamani, and Keasberry carried out a fraudulent scheme to profit from their accumulation, manipulation, and sale of County Line stock. First, Farber and Jamani allegedly gained control of County Line and also gained control of most of the company’s publicly available stock. According to the complaint, in order to attract retail investors who would buy Defendants’ County Line stock, Farber and Jamani bought and sold County Line stock in accounts they controlled to fraudulently create the appearance of active trading in the stock. Next, the SEC alleges that Defendants attempted to generate more investor interest in County Line stock by paying for an online promotional campaign, touting the stock’s great potential and pointing to County Line press releases that Farber and Jamani caused the company to release. Throughout their scheme, Defendants allegedly concealed from investors their control and involvement in County Line’s management that should have limited the amount of stock they could sell, under the federal securities laws. According to the complaint, after accumulating a large amount of County Line stock and fraudulently manipulating both the trading volume and price of the stock, Defendants sold a large amount of the stock they accumulated to retail investors who were unaware of Defendants’ scheme. The complaint alleges that Defendants shared the $5 million in profits from the stock sales that completed their scheme.
The SEC’s complaint charges Farber, Jamani, and Keasberry with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 (“Securities Act”) and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder. Farber and Jamani are also charged with violating Section 9(a)(2) of the Exchange Act. Farber, Jamani, and Keasberry are also charged with violating the registration provisions of Sections 5(a) and 5(c) of the Securities Act. The SEC is seeking permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, civil penalties, and penny stock bars and officer-and-director bars as to all defendants.
Investors can find additional information about pump-and-dump scams, including the warning signs of fraud, on Investor.gov. The Office of Investor Education and Advocacy and Enforcement’s Retail Strategy Task Force have also issued Investor Alerts about these types of fraud, including Frauds Targeting Main Street Investors — Investor Alert, Investor Alert: Fraudulent Stock Promotions, Investor Alert: Don’t Invite Investment Scams to Find You, and Investor Alert: Beware of Stock Recommendations on Investment Research Websites.
The SEC’s case is being handled by Nita Klunder, Marc Jones, Mark Albers, and Amy Gwiazda of the Boston Regional Office with the assistance of Alex Lefferts of the Enforcement Division’s Office of Investigative & Market Analytics. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.