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AwesomePennyStocks Promoter Has Tentative Accord With SEC

The U.S. Securities and Exchange Commission has a tentative settlement that will resolve a case against John Babikian, originally from Montreal, who ran AwesomePennyStocks, by having him pay $3.73 million and refrain from further promotion of penny stocks.

Babikian, who regulators said operated a “pump-and-dump” scheme using penny-stock websites, will also be restrained from recommending the purchase of any U.S. publicly traded stock without simultaneously disclosing any plans to sell such stock within 14 days of the recommendation, according to the agreement, filed by the SEC in a Manhattan court July 2. The agreement, yet to be signed by a judge, would have Babikian pay disgorged profits plus $1.7 million in civil penalties.

Babikian and any employees or people working for him are “permanently barred from participating in an offering of penny stock, including engaging in activities with a broker, dealer, or issuer,” according to the pact.

The proposed settlement doesn’t call for Babikian to admit or deny the SEC’s allegations against him.

Babikian put out an e-mail list called AwesomePennyStocks to tout a coal company’s stock while dumping his own shares, the SEC said in a March lawsuit. AwesomePennyStocks’ messages about that firm and 38 others, sent over five years, helped boost the combined value of the stocks by as much as $3 billion, according to data compiled by Bloomberg.

Stanley Morris, a lawyer for Babikian, declined to comment on the settlement.

The SEC said March 13 it was freezing Babikian’s assets, including two homes and proceeds from the sale of a partial interest in a plane. Babikian also owned a Bugatti Veyron as well as a Bentley and Lamborghini, according to documents from Revenue Quebec, the province’s tax authority

The case is Securities and Exchange Commission v. Babikian, 14-cv-01740, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Tiffany Kary in New York at tkary@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Fred Strasser, Joe Schneider

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