SEC v. Douglas W. Colt
United States Securities and Exchange Commission
SEC Litigation Release No. 16461, 71 SEC Docket 1951 (2000)
- Written by Kelly Simon, JD
Facts
The Securities and Exchange Commission (SEC) (plaintiff) charged Douglas Colt (defendant) and his associates with manipulating the price of four stocks during February and March of 1999. In its complaint, the SEC alleged that Colt had created fast-trades.com, a website through which he provided stock recommendations and, allegedly, manipulated the market to his own financial gain. Colt, as well as some of his family members and friends, would purchase specific low-priced stock and set a sell limit order for the stock. Colt would then disseminate a recommendation to buy the stock through his website. Immediately following Colt’s release of a stock recommendation about one of the pre-purchased securities, the price of the recommended stocks would soar. The increase in stock price would trigger the sell limit orders, resulting in lucrative stock sales for Colt and his affiliates. The price of the targeted stock would then fall after the short-term trading spree Colt’s tip instigated. The SEC initially sought an injunction on Colt’s conduct and disgorgement of the illicit profits of the scheme. Without admitting or denying the charges, Colt accepted a settlement with the SEC that involved enjoinment of his actions but did not require the payment of a civil fine or the disgorgement of illicit profits due to inability to pay.
Rule of Law
Issue
Holding and Reasoning ()
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