GPL Defendants allegedly engaged in penny stocks “scalping” activities
Additionally, the SEC alleged that the GPL Defendants engaged in an unlawful conduct called “scalping” by secretly funding the stock promotional activities of microcap issuers such as HempAmericana. The GPL defendants’ conduct enable them to sell their HempAmericana shares at a profit.
From 2017 to at least 2019, the GPL defendants allegedly engaged in buying and selling large blocks of HempAmericana stocks, one of their most most profitable scalping schemes. They allegedly generated profits of approminately $11 million.
Seaside Advisors and its CEO Adams assisted HempAmericana in promoting its stocks to investors. The GPL defendants allegedly required HempAmericana to split the offering proceeds with Seaside.
Furthermore, the SEC alleged that the GPL Defendants lied to broker-dealers about their involvement in the penny stocks scalping scheme. The Commission also accused HempAmericana of failing to disclose the financing it received from the GPL Defendanrs and their intention to sell its shares into the promotion. Therefore, they committed securities fraud.
