Discala et al.

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 25725 / May 12, 2023

Securities and Exchange Commission v. DiScala et al., Civil Action No. 1:14-cv-4346 (E.D.N.Y. filed July 17, 2014; amended January 19, 2016).

SEC Obtains Final Judgment Against Former Broker for Role in Alleged Offering Fraud

On May 5, 2023, the U.S. District Court for the Eastern District of New York entered a final judgment against Matthew Bell, enjoining him from violating certain provisions of the federal securities laws.

According to the SEC's complaint, starting in 2013, Bell was involved in a scheme to manipulate the price of the securities of CodeSmart Holdings, Inc. ("CodeSmart"). The SEC alleged that Bell and another individual invested their brokerage customers in CodeSmart, including a number of elderly customers. The SEC alleged that the plan was for the defendants, including Bell, to profit at the expense of Bell's customers. Bell allegedly personally sold his CodeSmart shares at the same time as purchasing shares in his customers' accounts.

The SEC's complaint charged Bell with violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Sections 9(a) and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. On December 22, 2022, the Court entered a partial judgment against Bell by consent in which he agreed to be permanently enjoined from violations of the charged provisions and agreed to a penny stock bar. On May 5, 2023, the Court entered a final judgment against Bell by consent in which he agreed to be permanently enjoined from violations of the charged provisions. He agreed to disgorge $552,725 in ill-gotten gains and prejudgment interest thereon, the payment of which was deemed satisfied by the restitution order in the parallel criminal proceeding, United States v. DiScala, et al., 14 Cr. 399 (E.D.N.Y.).

The SEC's litigation is being handled by Todd Brody and Lindsay Moilanen of the New York Regional Office and is being supervised by Sheldon L. Pollock and Joseph Sansone. The SEC appreciates the assistance of the U.S. Attorney's Office for the Eastern District of New York and the Federal Bureau of Investigation.