U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 25971 / April 9, 2024
Securities and Exchange Commission v. Mark Borden, Civ. Action No. 1:24-cv-02621 (E.D.N.Y. filed Apr. 8, 2024)
SEC Charges Canadian Attorney for Selling Billions of Shares of Stock on Behalf of Others in Violation of Broker Registration Requirements
On April 8, 2024, the Securities and Exchange Commission charged Canadian attorney Mark Borden with selling billions of penny stock shares on behalf of others without registering with the Commission as a broker, thereby violating the securities laws. Borden has agreed to settle the case by, among other things, paying over $335,000 in disgorgement of ill-gotten gains, prejudgment interest, and a civil penalty.
According to the SEC's complaint, between 2017 and April 2021, Borden sold penny stocks on behalf of his customers without registering with the Commission as a broker or being associated with a registered broker. Borden allegedly did so by taking possession of the stock, drafting documents that appeared to transfer ownership of the shares to himself, depositing that stock in accounts he controlled at various brokerage firms, selling those shares to retail investors often in coordination with stock promotion campaigns funded by his customers, and keeping a commission of the stock sale proceeds before disbursing the remainder to his customer. The SEC alleges that Borden and his customers understood that the customer retained beneficial ownership of the stock at all times and would receive the vast majority of the stock sale proceeds. For example, one of Borden's customers allegedly received over $15 million in stock sale proceeds from Borden in less than three years.
The SEC's complaint, filed in federal district court in the Eastern District of New York, charges Borden with violating the securities registration provisions of Section 15(a)(1) of the Securities Exchange Act of 1934. Without admitting or denying the allegations, Borden consented to the entry of a final judgment permanently enjoining him from future violations of the charged provisions. In addition, Borden consented to a penny stock bar. Borden agreed to pay a $70,000 civil penalty, $231,363 in disgorgement, and $33,907 in prejudgment interest. The settlement is subject to court approval.
The SEC's case is being handled by Nita Klunder, David D'Addio, and Paul Block of the Boston Regional Office.