SEC Charges Two Lawyers and a Paralegal in MicroCap Stock Manipulation Scheme
Late last week, the SEC filed fraud charges against a New York City-based securities lawyer for orchestrating taking control of two publicly traded shell companies and rigging them and their securities for use in market manipulation schemes for his personal profit. Another lawyer and a paralegal are also charged for their roles in furthering the schemes.
According to the SEC, Mustafa David Sayid used his position as a securities lawyer to gain control of two microcap companies, Nouveau Holdings, Ltd. and Striper Energy, Inc.
From 2012 to 2015, Sayid caused the two companies to issue convertible debt to him that could be redeemed for company stock for purported legal fees owed to him. The complaint charges that Sayid profited by selling the convertible debt to a pair of stock manipulators, setting them up to dump large blocks of the company’s stock on the OTC.
Sayid allegedly made multiple false statements to investors and other third parties, while he coordinated with the pump-and-dump operators who were responsible for pumping each company’s share price and then dumping the stock.
According to the SEC’s complaint, Sayid hired Norman Reynolds, a securities lawyer practicing in Houston, Texas, to issue false opinion letters to persuade Nouveau’s transfer agent to remove restrictive legends from millions of shares of Nouveau, which were then sold in a dump of Nouveau’s stock. The SEC alleges that Reynolds based his legal opinion on fabricated documentation from Sayid while negotiating for payment from the proceeds of the Nouveau pump and dump.
The SEC alleges that Sayid hid his control of Nouveau and Striper by installing officers and directors at the companies who would follow his direction, including his paralegal, Kevin Jasper of New York City. Jasper aided Sayid’s market manipulation schemes by signing false documents at Sayid’s direction.
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