Hedge Fund Focus

SEC Charges Paul M. Gozzo and PMG Capital, LLC With Fraud in the Market Manipulation of Microcap Stocks

Gozzo and PMG Capital Agree to Settle Charges

The Securities and Exchange Commission today filed a settled complaint against Paul M. Gozzo and PMG Capital, LLC of Jupiter, Florida, alleging that they violated the federal securities laws by manipulating the markets of numerous microcap stocks in 2006 and 2007. The Commission alleges that the manipulation led to artificially high prices, which allowed Gozzo and others to sell their holdings for substantial gains.

Without admitting or denying the allegations in the complaint, Gozzo and PMG Capital consented to the entry of Final Judgments prohibiting them from participating in offerings of penny stock and permanently enjoining them from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. Gozzo also agreed to pay $437,788 in disgorgement of unlawful profits and prejudgment interest. The settlement is subject to approval by the United States District Court for the Southern District of Florida.

As a result of the same conduct, Gozzo, in a separate criminal matter, was charged with one count of conspiracy to commit securities fraud and one count of securities fraud in the United States District Court for the Southern District of Florida. Gozzo’s obligation to pay disgorgement in the Commission’s action will be reduced by any amount of restitution ordered in this criminal proceeding.

The Commission’s investigation is ongoing. The Commission appreciates the cooperation of the Fraud Section of the Department of Justice’s Criminal Division and the Federal Bureau of Investigation, which conducted a separate parallel investigation. [SEC v. Paul M. Gozzo and PMG Capital, LLC, Civil Action No. 09-cv-80432-WJZ (S.D. Fla.)] (LR-20957)