|SEC Charges Unregistered Broker-Dealers and Penny Stock Company With Registration Violations For Illegal Stock Sales |
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23947 / September 28, 2017
Securities and Exchange Commission v. David Howard Welch, et al, No. 17-cv-01968 (C.D. Cal. filed Sept. 27, 2017)
SEC Charges Unregistered Broker-Dealers and Penny Stock Company With Registration Violations For Illegal Stock Sales
The Securities and Exchange Commission has charged six unregistered broker-dealers located in California and Colorado with illegally selling securities in penny stock companies.
The SEC's complaint alleges that brothers David H. Welch and Marc J. Bryant, both located in southern California, and John C. Knight, located in Colorado, sold securities in New Global Energy Inc., its predecessor company, Global Energy Technology Group, Inc., and other companies in unregistered transactions using sales agents located in boiler rooms, both nationally and internationally, raising over $10 million from investors over four years. Welch, Bryant and Knight used various entities, including Defendants Bio-Global Resources, Inc., Diversified Equities Inc. (DEI), and Diversified Equities Development Inc. (DED), to make these illegal sales. In addition, according to the complaint, all of the defendants, including New Global and its CEO, Florida attorney Perry D. West, sold securities without filing a registration statement with the SEC.
The SEC alleges that Welch, Bryant, Knight, Bio-Global, DEI and DED weren't registered with the SEC to sell investments. The SEC encourages investors to check the backgrounds of people selling investments by using the SEC's investor.gov website to quickly identify whether they are registered professionals and confirm their identity.
The complaint alleges that Welch, Bryant, Knight, Bio-Global, DEI and DED violated Section 15(a)(1) of the Securities Exchange Act of 1934, and all the defendants violated Sections 5(a) and (c) of the Securities Act of 1933. The complaint seeks injunctions, disgorgement of the defendants' ill-gotten gains, prejudgment interest, penalties, and penny stock bars.
Knight and DEI, without admitting or denying the allegations in the SEC's complaint, agreed to entry of a judgment that enjoins them from violating the charged provisions of the federal securities laws and imposes a penny stock bar against Knight. There will be further proceedings before the court to determine the amounts of disgorgement, interest, and civil penalties. Knight also consented, without admitting or denying the findings, to an SEC Order barring him from the securities industry.
The SEC's investigation was conducted by Jacqueline M. Moessner and supervised by Mary S. Brady. The SEC's litigation is being led by Leslie J. Hughes.