Ex-Teva chairman charged in ‘pump and dump’ stock fraud

By PharmaCompass

2018-09-13

Impressions: 177 Article

Last week, the US Securities and Exchange Commission (SEC) said it charged 10 individuals and 10 associated entities for manipulating the stocks of three companies. An SEC statement said these individuals and the associated entities ran “fraudulent schemes that generated over US$ 27 million from unlawful stock sales and caused significant harm to retail investors who were left holding virtually worthless stock”.

According to the SEC, between 2013 and 2018, these “prolific South Florida-based investors” manipulated the share price of stocks in three unidentified companies. The SEC named investor Barry Honig and pharmaceutical billionaire Phillip Frost among the individuals. Frost allegedly participated in two of these three schemes.

Honig allegedly helped acquire large quantities of company stock and engaged in manipulative activity after taking ownership interests in the companies. OPKO Health Inc was also named among the charged entities. Frost is chairman and CEO of OPKO, a dual listed company traded in Tel Aviv and Wall Street.

Eighty-one year old Frost served as the chairman of the Israeli generic drug giant Teva Pharmaceuticals until 2014. OPKO has been traded on the Tel Aviv Stock Exchange since April 2013, after OPKO Health bought Israeli biomedical company, Prolor Biotech. This deal was of interest since Frost held both OPKO and Teva.

SEC investigators allege that Honig was the ringleader of the “pump and dump” scheme. In each of the three cases, the SEC says Honig orchestrated the purchase of shares at steep discounts. The participants would buy shares in coordination with each other, driving up the prices. The group would control the actions of the management without disclosing that they were in control. Then they would arrange for the publication of promotional articles to further raise the stock price.

According to the SEC complaint, Honig and his associates then dumped their shares into the inflated market, reaping millions of dollars at the expense of unsuspecting investors.

“As alleged, Honig and his associates engaged in brazen market manipulation that advanced their financial interests while fleecing innocent investors and undermining the integrity of our securities markets,” Sanjay Wadhwa, Senior Associate Director in the SEC’s Division of Enforcement, said.

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“ The article is based on the information available in public and which the author believes to be true. The author is not disseminating any information, which the author believes or knows, is confidential or in conflict with the privacy of any person. The views expressed or information supplied through this article is mere opinion and observation of the author. The author does not intend to defame, insult or, cause loss or damage to anyone, in any manner, through this article.”

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