George Stubos
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 25824 / September 12, 2023
Securities and Exchange Commission v. Stubos, et al.;, ivil Action No. 1:22-cv-04674 (S.D.N.Y filed June 6, 2022)
SEC Obtains Final Judgment Against Canadian Individual in Fraudulent Microcap Scheme
On September 8, 2023, the U.S. District Court for the Southern District of New York entered a final judgment against Canadian resident George Stubos. In June 2022, the SEC charged Stubos for engaging in a deceptive scheme involving several microcap companies. Among other relief, the judgment orders Stubos to pay more than $6 million.
The SEC's action 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 the 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. The court entered the final judgment against Stubos by consent. Stubos, without admitting or denying the allegations in the SEC's complaint, consented to a final judgment that permanently enjoins him from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, and the market manipulation provisions of Section 9(a) of the Exchange Act. Stubos' judgment orders him to pay disgorgement of $5,367,926 and prejudgment interest of $806,108 and it imposes a penny stock bar and a conduct-based injunction that prohibits Stubos from participating in the issuance, purchase, offer, or sale of any security other than for his own personal accounts. The complaint also seeks relief from Dori-Ann Stubos, George Stubos' wife, who allegedly received illicit proceeds from Stubos' fraudulent scheme, and that action remains ongoing.
The SEC's case is being handled by Kathleen Shields, Alfred Day, and Ryan Murphy of the Boston Regional Office.