Orange County

OC Man Sued by SEC for Alleged Role in Securities Fraud Scheme

Microcaps are usually small public companies with securities quoted on the over-the-counter markets -- via a broker-dealer network rather than a centralized exchange.

In this March 29, 2020, file photo, the New York Stock Exchange building is seen in the Financial District of New York City.
Tayfun Coskun/Anadolu Agency via Getty Images

An Orange County man was sued Monday by the U.S. Securities and Exchange Commission for allegedly engaging in fraud and acting as an unregistered broker in connection with the sale of microcap securities.

Clinton Maurice Tucker II, who was last known to be living in Trabuco Canyon, could not be reached for immediate comment and it was unclear if he's being represented by an attorney.

From at least May 2015 until May 2019, Tucker allegedly worked in several boiler-room-like operations that were set up to enable shareholders who owned large blocks of illiquid microcap securities to dump their shares without causing the price of the shares to crash, according to the SEC.

Microcaps are usually small public companies with securities quoted on the over-the-counter markets -- via a broker-dealer network rather than a centralized exchange.

According to the SEC's complaint, filed in Los Angeles federal court, Tucker cold-called prospective investors and convinced them to purchase shares of the microcap companies that his selling clients wanted to liquidate.

The complaint alleges that Tucker, 50, would determine the amount of shares that the prospective investors wanted to purchase and the prices at which they would buy. He allegedly then relayed that information to the selling shareholders, who entered sell orders at the coordinated prices and volumes, making it highly likely that their sell orders and the solicited investors' buy orders would match.

Through the alleged matched trading, the selling shareholders were able to offload their shares into a market that Tucker had helped create, the SEC alleges.

In addition to working as a sales agent in the matched-trading scheme, Tucker allegedly pitched fictitious investment opportunities to particularly vulnerable investors whom he identified while working in the boiler rooms, according to the SEC.

Instead of investing the funds he obtained from those investors as he had represented he would, Tucker allegedly spent the funds on personal expenses.

The SEC alleges Tucker violated the broker-dealer registration provisions of the Securities Exchange Act of 1934 and the anti-fraud provisions of the Securities Act of 1933 and is seeking injunctions, repayment of funds and civil penalties against him.

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