The Securities and Exchange Commission announced charges against 5 individuals who were involved in a scheme to deceive and mislead investors about Cool Holdings, Inc., an publicly traded company.
According to SEC, Andrew DeFrancesco is the chairman Cool Holdings Board, Marlio Mauicio Diaz, the CEO of Cool Holdings, Carlos Felipe Rezk as the Chief Marketing Officer, and Nikola Faukovic who works for DeFrancesco were the ones behind the scheme. The SEC claims that DeFrancesco and Diaz omitted important details and provided false information in Cool Holdings filings to the Commission. This included information about an important business relationship. The purpose of this was to conceal the company’s fragile financial situation and future prospects.
DeFrancesco, Diaz and Rezk are also alleged to have arranged the publication of deceptive promotional articles about Cool Holdings that were secretly funded DeFrancesco. DeFrancesco also secretly sold, with Faukovic’s help, hundreds of thousands Cool Holdings share held by nominee entities. DeFrancesco has sold more than 8 million shares totaling over 1.6 millions. DeFrancesco is accused of hiding his ownership by Cool Holdings’ shares, with the help of Faukovic and Catherine DeFrancesco.
Andrew DeFrancesco is accused in the SEC complaint of violating numerous provisions, including antifraud provision of Securities Act of 1933. Diaz and Rezk have been charged with aiding and abet DeFrancesco in his violations. Faukovic has been charged with aiding DeFrancesco in his violations. Catherine DeFrancesco, on the other hand, is accused of violating the beneficial ownership disclosure requirements. The complaint is seeking injunctive measures, civil penalties and disgorgement as well prejudgment interest for all defendants. It also seeks to bar DeFrancesco Diaz and Rezk from holding any officer or director positions.
Katherine Bromberg and Danielle Srour conducted the SEC investigation, while Michael D. Paley and Thomas P. Smith Jr. supervised it. Ms. Bromberg will handle the litigation, along with Ms. Srour and Pascale Guierrier.
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Securities and Exchange Commission, or SEC for short, is the regulatory agency of the United States. It oversees and enforces securities laws. Its main mission is to protect and promote investors, ensure fair and efficient markets and facilitate capital formation. These objectives are achieved by the SEC through regulation of securities markets and ensuring that companies provide accurate and transparent data to investors. It also takes legal action against those who engage in illegal or fraudulent activities. The SEC plays an important role in ensuring compliance with securities laws, such as the Securities Act of 1935 and Securities Exchange Act of 1944. SEC mandate: to create a fair financial system that fosters investor confidence, and promotes economic growth.
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