Three penny-stock promoters, including a former Montreal resident, have been charged by U.S. regulators with conducting several coordinated pump-and-dump schemes.

The U.S. Securities and Exchange Commission (SEC) says that the three promoters worked together to gain control of a large portion of shares in the stock of microcap companies and then hyped those stocks in newsletters distributed to prospective investors. It alleges they then dumped their shares at elevated prices, leaving investors with significant losses after their promotional efforts ceased and the prices dropped. The allegations have not been proven.

According to the SEC’s complaint filed in federal court in Manhattan, Anthony Thompson, Jay Fung, and Eric Van Nguyen conducted five separate schemes that resulted in more than US$10 million in ill-gotten gains. It notes that Van Nguyen was based in Montreal and distributed electronic penny stock promotion newsletters on such websites as UnrealStocks.com and InsanePicks.com. The regulator alleges that their newsletters failed to fully disclose the compensation they were receiving for promoting the stocks, and misled readers about their selling activity.

The SEC’s complaint also names two relief defendants in an effort to recover money that the SEC says resulted from the schemes. It alleges that Thompson’s wife received US$200,000 in proceeds from one of the stock manipulation schemes; and that another former Montreal-based promoter, John Babikian, received US$1 million as a result of one of the schemes. Earlier this year, a court ordered US$3.73 million in sanctions against Babikian in a separate case.

The SEC’s complaint charges Thompson, Fung, and Van Nguyen with violating the anti-fraud and anti-touting provisions of the federal securities laws and related rules. It is seeking disgorgement of ill-gotten gains from the schemes plus prejudgment interest and penalties as well as permanent injunctions against further violations of the securities laws.

“Thompson, Fung, and Van Nguyen repeatedly staged coordinated promotional campaigns to manipulate stock prices and score their own paydays while defrauding investors,” said Sanjay Wadhwa, senior associate director for enforcement in the SEC’s New York office.