Recently, Phillip Frost— a biotech billionaire alongside other individuals were accused by the SEC of operating a fraudulent penny stock. Frost has responded saying that he played a minor role in the plot which involved the buying up of penny stocks and increasing their market value only to dispose of them at huge profits. Before they got caught, they made an overall profit of about $27 million.
Frost Settled with the SEC
A total of three companies were pumped and dumped, of which Frost was only involved in two of them. But due to his arrangement with the SEC, which is currently functioning with a small number of employees due to a partial government shutdown, he is not under any obligation to either admit or deny any of the allegations raised against him by the SEC. Alternatively, he would be paying a fine of $5.5 million and he is to never get involved with most types of penny stocks.
Based on a recent report from the SEC, Honing purchased about 9 percent of Bioptic, a biotech exchange before changing its name to Riot Blockchain. He obtained his large shares at a reduced rate of $9. When the exchange converted into a blockchain-and-crypto investment firm, the value increased to almost $50. Defending his actions, Honig said that: “When a stock goes up, you take a profit. Every good investor does it.”
O’Rourke was the Chief Executive Officer of Bioptic and then Riot Blockchain. At the moment, his case is pending.
Frost’s Involvement in the Scam is Minimal
Frost got involved when he assisted in paying for the unlawful promotion of the two shares he took part in and he also invested in ways that helped increase the price of the stock. Since pump-and-dump schemes are mostly not legal, Mr. Frost and his legal team reached a settlement of $5.5 million.