A Bulgarian national identified as Nedko Nedev has been accused by the Securities and Exchange Commission (SEC), the US stock market regulator, of fraudulent manipulation to profit from increased share prices.
SEC said that it has imposed an emergency asset freeze of two brokerage accounts in the US and filed a complaint in a federal court in Manhattan, after tracking “a false Avon tender offer to a foreign entity using an IP address located in Sofia, Bulgaria.”
Nedev controlled at least one of the two now-frozen brokerage accounts, which held a “substantial position” in Avon stock derivatives that have been losing value in recent months. The false tender for Avon shares, made at a large premium of their trading price at the time, drove the stock’s value up 20% on May 14 and Nedev made about $5000 in excess profits by selling half of the derivatives held by the now-frozen account, the SEC said.
The two frozen accounts held $2 million in assets, according to the SEC statement.
“Only three weeks after the manipulation of Avon stock occurred, this emergency court order keeps not only the alleged illicit profits from being transferred offshore, but preserves the SEC’s ability to recover substantial penalties,” SEC enforcement division directors Andrew Ceresney said.
This was the third attempted fraudulent manipulation of stock by the defendants, who used the same scheme last year involving Tower Group International, making a profit of $20 000 from that operation, and in 2012 involving the stock of Rocky Mountain Chocolate Factory.
In addition to Nedev, the SEC complaint charges the two companies that own the frozen accounts and the two entities that lodged the fake take-over bids for Avon and Tower Group International.
(Photo: Alexander Korabelnikov/sxc.hu)