The Securities and Exchange Commission announced on May 22, 2023 that Thomas Carter Ronk, an investment adviser, had been found guilty of participating in a microcap trading scheme. What does it mean? Why is this important?
Final Judgment against Ronk
On April 14, 2023, the U.S. District Court for the Central District of California rendered a final judgment of consent against Ronk. This judgment included an injunctive order, a 5-year bar for officers and directors, a 5-year bar for penny stock, and a fine. What exactly did Ronk commit to justify such a judgment, and why?
Ronk’s fraudulent schemes
According to the amended complaint of the SEC, Ronk participated in three different fraudulent schemes. Imagine a magician pulling bunnies out of a cap, but Ronk pulled out tricks that were deceptive to manipulate the stock exchange.
- In the first instance, he is accused of using fraudulent promotional tactics to sell or aid in the sale two microcaps. He spread false information in newsletters.
- Ronk was also accused of lying to potential investors about a private stock offer. Imagine a fisherman baiting a hook with a juicy plastic worm only to have the fish discover it when they bite.
- Ronk, thirdly, manipulated prices for common stocks at the same two issuers that he fraudulently promoted. Imagine a master puppeteer pulling strings and controlling the marionettes.
Charges and Consequences
The amended complaint of the SEC charged Ronk of violating various sections of Securities Act of 1933, Securities Exchange Act of 1935 and the Securities Act’s anti-touting provision. Ronk’s actions were punishable in the same way as a cheater would be if caught.
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Ronk accepted a final verdict without admitting to or denying SEC allegations. He consented to being permanently prohibited from violating the charged provisions, and to a 5-year bar for penny stocks and officers and directors. He agreed to pay $75,000 in civil penalties, which is equivalent to a large fine for speeding tickets, but at a much higher level.
Who’s handling the case?
Christopher Dunnigan of the New York Regional Office and Preethi K. Krishnamurthy, who are under Sheldon L. Pollock’s supervision, handle the SEC litigation. They are like a team of experienced detectives who work diligently to make sure justice is served.
As a conclusion, Thomas Carter Ronk’s case serves as a stark warning of the dangers of fraudulent stock market activities. This case is a warning that underscores the importance and value of integrity and transparency within the world of finance.