Securities and Exchange Commission v. Dynkowski, et al., Civil Action No. 1:09-361 (D. Del.)
Defendant Adam S. Rosengard Settles SEC Charges in Penny Stock Manipulation Case
The Securities and Exchange Commission recently announced that Chief Judge Gregory M. Sleet of the United States District Court for the District of Delaware entered a final judgment against Defendant Adam S. Rosengard on February 25, 2013 in SEC v. Dynkowski, et al., Civil Action No. 1:09-361, a stock manipulation case the SEC filed on May 20, 2009. The SEC’s complaint alleges that Defendant Pawel P. Dynkowski and others engaged in market manipulation schemes involving at least four separate stocks. The complaint alleges that Rosengard violated Section 5 of the Securities Act of 1933 by acting as a nominee account holder in one of the schemes.
As alleged in the complaint, the schemes generally followed the same pattern: Dynkowski and his accomplices agreed to sell large blocks of shares for penny stock companies in exchange for a portion of the proceeds. The shares were put in nominee accounts that Dynkowski and his accomplices controlled. The defendants artificially inflated the market price of the stocks through wash sales, matched orders and other manipulative trading, often timed to coincide with false or misleading press releases, and then sold shares obtained from the issuers and divided the illicit proceeds.
As alleged in the complaint, Dynkowski orchestrated the manipulation scheme involving Xtreme Motorsports of California, Inc. stock in 2007. The complaint alleges that in this scheme Dynkowski and an accomplice engaged in wash sales, matched orders and other manipulative trading. As alleged in the complaint, Rosengard acted as a nominee account holder in the scheme. Specifically, he gave Dynkowski access to a brokerage account for the purpose of selling shares of Xtreme Motorsports stock. The complaint alleges that this scheme generated approximately $257,646 in illicit profits.
To settle the SEC’s charges, Rosengard consented to a final judgment that permanently enjoins him from violating Section 5 of the Securities Act; orders disgorgement of $165,646 with prejudgment interest of $21,297; and bars Rosengard from participating in any offering of a penny stock. No civil penalty was imposed, and part of the disgorgement obligation was waived, in light of Rosengard’s financial condition.
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