The alleged mastermind of a series of pump-and-dump schemes has been sentenced to prison by a U.S. district court judge.
Last November, Ronald Bauer, a dual Canadian-U.K. citizen, who was based in London, U.K., pleaded guilty to U.S. charges in connection with a scheme to orchestrate market manipulations in seven stocks.
Now, Bauer has been sentenced to 20 months in prison, three years of supervised release, and ordered to forfeit US$4.3 million.
According to U.S. authorities, Bauer operated a “sophisticated scheme” that involved secretly taking control of the stock of several companies, and concealing that control by distributing shares in the companies among various nominees through a Swiss corporation, Blacklight, S.A.
Those nominees then engaged in match trading in the companies’ stocks, and funded promotional campaigns, which aimed to artificially boost the stocks — before selling their shares at inflated values.
“From overseas, Bauer manipulated stock prices to enrich himself at the expense of unsuspecting investors,” said Jay Clayton, U.S. attorney for the Southern District of New York, in a release.
“Today’s sentencing sends a clear message: those who seek to manipulate U.S. markets from outside the United States will face justice,” he added.
Bauer was previously sanctioned by the U.S. Securities and Exchange Commission (SEC) for engaging in another pump-and-dump scheme. In 2005, he settled allegations from the SEC, without admitting or denying the charges. That settlement included a five-year ban on dealing in penny stocks, and he was ordered to disgorge US$840,000 plus interest.
In connection with this latest case, the SEC also filed separate civil charges against Bauer, along with seven alleged co-conspirators (including several other Canadians), alleging that they manipulated the stocks of 17 microcap companies that generated US$145 million in illicit trading profits.