The Securities and Exchange Commission charged Canadian citizen George Stubos for engaging in a deceptive scheme involving at least two microcap companies that generated more than $10 million in unlawful stock sale proceeds at the expense of unsuspecting retail investors. The SEC has obtained emergency relief in court to freeze Stubos' assets including a multi-million dollar property in Palm Springs, California.

The SEC's complaint alleges that Stubos secretly gained control of several thinly traded microcap companies whose stock was publicly traded in the U.S. securities markets, hired stock promoters to create demand for his stock, and generated substantial illicit profits by selling the stock to unsuspecting investors. Stubos allegedly hid the fact that he controlled the majority of the stock of publicly traded companies. He allegedly misled investors, brokers, and transfer agents (companies that maintain records of stock ownership) in order to convince these parties that his stock shares were eligible for trading in the public markets, when in fact he did not register his sales of those stock with the Commission and did not disclose accurate information about his control over the companies. Stubos also engaged in manipulative trading to create the appearance of active market trading and thus increased investor demand for the stock. According to the complaint, in 2007, Stubos was barred by the British Columbia Securities Commission from participating in the securities industry for two years for similar conduct.

The SEC's complaint, filed in the United States District Court for the Southern District of New York, charges Stubos with violating Sections 17(a)(1) and 17(a)(3) of the Securities Act of 1933 and Sections 9(a)(2) and 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5(a) and (c) thereunder. The SEC seeks permanent obey-the-law and conduct-based injunctions, disgorgement of allegedly ill-gotten gains plus prejudgment interest, and a penny stock bar against Stubos. The complaint additionally seeks relief from Dori-Ann Stubos, George Stubos' wife, who allegedly received illicit proceeds from Stubos' fraudulent scheme.

The SEC's case was investigated by Trevor T. Donelan, Jennifer Cardello, Amy Gwiazda, and Kathleen Shields in the Boston Regional Office, with the assistance of Nita Klunder of the SEC's Boston Regional Office and Marlee Miller, Bonnie Kartzman, and Owen Granke of the SEC's Office of International Affairs. The SEC appreciates the assistance of the Financial Industry Regulatory Authority, the British Columbia Securities Commission, the Panama Superintendencia del Mercado de Valores, the Royal Canadian Mounted Police, the CuraĤao Korps Landelijke Politiediensten, the Cayman Islands Monetary Authority, the Cyprus Securities and Exchange Commission, the Dominican Republic Superintendencia del Mercado de Valores, the Liechtenstein Financial Market Authority, and the Swiss Financial Market Supervisory Authority.