SEC v. 8000, Inc., Jonathan E. Bryant, Thomas J. Kelly, and Carl N. Duncan, Esq., Case No. 12-CV-7261 (S.D.N.Y.). On September 27, 2012, the SEC announced charges against 8000, Inc., Jonathan E. Bryant, Thomas J. Kelly, and Carl N. Duncan, Esq. for their roles in a scheme to manipulate 8000, Inc.’s (“EIGH”) stock price. Bryant got control of EIGH and named Kelly its CEO. He retained Duncan as the company’s securities lawyer. The three engineered a plan in which they increased the company’s stock price while selling restricted shares. Bryan and Kelly publicized financial reports and issued press releases falsely claiming that EIGH had millions of dollars in capital and revenues. At the same time, Duncan provided the OTC Markets Group, Inc. and EIGH’s transfer agent with false opinion letters representing that EIGH’s common stock was quoted in a market widely available to investors. As a result of the false opinion letters, Bryant was able to acquire stock certificates without restrictive legends for EIGH’s restricted stock, which allowed him to sell tens of millions of shares that he could not have otherwise sold. The trading volume in EIGH stock soared and the share price increased dramatically as a result of the manipulation. Bryant and Kelly earned significant profits from their stock sales.
The SEC charged EIGH with violating Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The SEC charged Kelly and Bryant with the same violations and with aiding and abetting EIGH’s violations. The SEC also charged Bryant with control person liability and with violating Sections 5(a) and 5(c) of the Securities Act. The SEC seeks injunctive relief, disgorgement plus prejudgment interest, and civil monetary penalties against all defendants, and penny stock bars against Bryant and Kelly.
The SEC settled with Duncan, who without admitting or denying the charges, agreed to a permanent injunction against of violations of Sections 5(a), 5(c), and 17(a)(2) of the Securities Act and from preparing or issuing any opinion letter in connection with the offer or sale of securities pursuant to, or claiming an exemption under, Section 4(1) of the Securities Act and Rules 144 and 802 under the Securities Act, including without limitation, signing an opinion letter or preparing an opinion letter to be signed by another person, related to such offering. Duncan will receive a penny stock bar, he will disgorge $15,570 in legal fees that he received plus $524.98 in prejudgment interest, and he will pay a $25,000 civil monetary penalty. In a related 102(e) administrative proceeding, Duncan agreed to be permanently suspended from appearing or practicing before the SEC as an attorney.
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