NY company pays $9 million settlement after being charged by SEC with failure to register

On Behalf of | Aug 11, 2022 | Financial News

A convertible note dealer and its two owners have reached a settlement of over $9 million involving charges by the Securities and Exchange Commission, the SEC announced.

The company, Manhattan-based Crown Bridge Partners, LLC, and its managing members Soheil and Sepas Ahdoot of Great Neck, Long Island, were charged with failing to register with the SEC as securities dealers.

The SEC filed its complaint against the defendants in federal district court in Manhattan. The commission said that between January 2016 and December 2020, Crown Bridge bought about 250 convertible notes from 150 microcap issuers. The notes were then converted into 35 billion new shares of the stocks at a discount from the market price. According to the complaint, the shares were then sold into the market for a substantial profit, despite the fact that neither Crown Bridge nor the Ahdoots were registered as dealers with the SEC.

“When Crown Bridge and the Ahdoots allegedly failed to register with the SEC, they skirted important regulatory safeguards that support the integrity of our markets by, among other things, subjecting securities dealers to inspections and oversight,” said Mark Cave, Associate Director in the Division of Enforcement. “Today’s action secures comprehensive relief against the defendants – including the surrender or cancellation of securities of dozens of different issuers – and reflects our ongoing commitment to enforcing the registration provisions of the federal securities laws.”

Under the settlement, Crown Bridge and the Ahdoots did not admit or deny the allegations but did agree to be permanently enjoined from further violations of the registration provisions of the Securities Exchange Act of 1934.

They agreed to pay disgorgement and prejudgment interest of $8,390,601 and a civil penalty of $810,307, and consented to a five-year penny stock bar. Crown Bridge also agreed to surrender or cancel securities of 82 different issuers they allegedly obtained from their unregistered dealer activity.

Financial professionals who work for broker-dealers, RIAs or other financial services companies operate in a highly regulated industry that is overseen by the SEC, state regulators and other self-regulatory organizations such as FINRA and various exchanges. The attorneys at Lewitas Hyman understand this because we were formally senior attorneys in the SEC’s Division of Enforcement. We have the experience to guide and advise you through any type of regulatory investigation. If you are the subject of a regulatory proceeding, contact Lewitas Hyman at (844) 651 2641or through our online contact form for a free consultation.

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