Block letters spelling fraud, with magnifying glass

U.S. securities regulators are alleging that a Vancouver, B.C. resident orchestrated a series of stock fraud schemes that took hundreds of millions of dollars from investors.

The U.S. Securities and Exchange Commission (SEC) filed an emergency action in a federal district court in Boston charging nine people, including several residents of Canada, over their alleged participation in long-running stock fraud schemes that “caused significant harm” to retail investors in the U.S. and around the world.

In a complaint that was unsealed Monday, the SEC alleged that Vancouver resident Frederick Sharp “masterminded a complex scheme from 2011 to 2019” that allowed the controlling shareholders of microcap companies to conceal their holdings and then secretly dump their stock into U.S. markets.

“The services Sharp and his associates allegedly provided included furnishing networks of offshore shell companies to conceal stock ownership, arranging stock transfers and money transmittals, and providing encrypted accounting and communications systems,” the SEC alleged.

The SEC’s complaint also alleged that several other Canadian residents “frequently collaborated with Sharp to dump huge stock positions while hiding their control positions and stock promotional activities from the investing public.”

In total, “Sharp and his associates facilitated over a billion dollars in gross sales in hundreds of penny stock companies,” the SEC alleged in its complaint.

The regulator has obtained emergency relief in court, including an order to freeze the defendants’ assets, it said.

Sharp and three others were also charged with one count of conspiracy to commit securities fraud and one count of securities fraud by the U.S. Attorney’s Office for the District of Massachusetts.

None of the allegations have been proven.

In addition to the asset freeze and other temporary relief obtained, the SEC is seeking permanent injunctions, conduct-based injunctions, disgorgement of allegedly ill-gotten gains plus interest, civil penalties and penny stock bans.