Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses as a result of a securities fraud related to scalping. Scalping occurs when a broker or financial advisor recommends a security and immediately sells the security to turn a profit. According to securities arbitration lawyers, when many investors purchase the security, the price rises, allowing the fraudster to gain financially.
In one recent scalping scheme, securities fraud charges were filed by the Securities and Exchange Commission (“SEC”) against John Babikian, the promoter behind AwesomePennyStocks.com and PennyStocksUniverse.com. Both websites are affiliated microcap stock promotion websites and are known collectively as “ABS.” The SEC charges allege that Babikian engaged in scalping through the websites.
According to the SEC, on February 23, 2012, the websites sent emails to around 700,000 people, recommending investing in a particular penny stock, America West Resources Inc. (AWSRQ). However, the fact that Babikian held over 1.4 million shares of America West was not disclosed in the email, nor was the fact that he had positioned the shares for immediate sale via a Swiss bank.
Reportedly, the emails caused a significant increase in America West’s share price and trading value. Babikian then made more than $1.9 million when he unloaded the stock during the last hour and a half of the trading day. Before February 23, America West was low-priced and thinly traded, but on that day more than 7.8 million shares of the stock were traded and the share price was greatly increased. According to investment fraud lawyers and the SEC, if it hadn’t been for the emails, the stock would have been sold at a much lower price, and Babikian wouldn’t have been able to sell more than a few thousand shares in one day.
If you believe that you’ve been the victim of scalping, you may be able to recover your losses through a securities arbitration claim. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.