Frederick L. Sharp – Unlawfully Selling Stocks
The Securities and Exchange Commission announced today that it obtained a final judgment against Canadian resident Frederick L. Sharp. In August 2021, the SEC charged Sharp with leading a fraudulent scheme that generated hundreds of millions of dollars from unlawful stock sales and caused significant harm to retail investors in the United States and around the world. Among other relief, the judgment orders Sharp to pay over $50 million in monetary relief.
Frederick L. Sharp was charged by SEC for fraudulently generating hundreds of millions from illegal stock sales.
According to the SEC’s complaint, Sharp masterminded a complex scheme from 2011 to 2019 in which he and his associates enabled control persons of penny stock companies, whose stock was publicly traded in the U.S. securities markets, to conceal their control and ownership of huge amounts of penny stock and then surreptitiously dump the stock into the U.S. markets, in violation of federal securities laws. The services Sharp and his associates allegedly provided included furnishing networks of offshore shell companies to conceal stock ownership, arranging stock transfers and money transmittals, and providing encrypted accounting and communications systems. According to the complaint, Sharp and his associates facilitated over a billion dollars in gross sales in hundreds of penny stock companies.
On May 12, 2022, the U.S. District Court for the District of Massachusetts entered the final judgment by default against Sharp. The judgment enjoins him from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 (“Securities Act”) and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, and the registration provisions of Section 5 of the Securities Act. The judgment also orders Sharp to pay disgorgement and prejudgment interest of $28,934,433 and a civil penalty of $23,990,781. It further imposes a penny stock bar and a conduct-based injunction restricting Sharp’s future trading in stocks.
The ongoing litigation against the remaining defendants is being handled by Kathleen Shields, David London, Trevor Donelan, and Amy Gwiazda of the Boston Regional Office; Katherine Bromberg of the Enforcement Division’s Retail Strategy Task Force; and Edward Gerard, Shipra Wells, and Lee Buck of the Washington, DC Office.
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