Bulgarian Man Charged in Securities Hoax
March 10 2016 - 8:30PM
Dow Jones News
Manhattan federal prosecutors unsealed charges Thursday against
a Bulgarian man, accusing him of orchestrating bogus takeovers of
publicly traded companies, including one involving Avon Products
Inc. last year that caused the New York Stock Exchange to halt
trading in Avon three times.
U.S. Attorney Preet Bharara said Nedko Nedev manipulated the
stock of Avon and Rocky Mountain Chocolate Factory Inc. through
sham tender offers. Mr. Bharara charged Mr. Nedev with eight
criminal counts, including market manipulation and insider
trading.
Mr. Nedev was arrested by authorities in Sofia, Bulgaria,
Thursday and prosecutors said they would seek his extradition.
Last June, the Securities and Exchange Commission charged Mr.
Nedev, alleging he directed a yearslong series of stock-market
manipulations that used a network of offshore firms and Internet
addresses fraudulently to pump up share prices in companies,
culminating in the Avon bid.
The scheme sent Avon's shares soaring to a more than 20%
increase, after an entity calling itself PTG Capital Partners Ltd.
said in a securities filing that it had lodged a bid of $18.75 a
share to buy the company. PTG was a front company created and
controlled by Mr. Nedev, prosecutors and regulators alleged.
Despite the wild swings in Avon stock, Mr. Nedev netted just
$5,000 on the maneuver, regulators alleged.
Prosecutors said that several years earlier, between January
2012 through at least December 2012, Mr. Nedev manipulated Rocky
Mountain stock, through a sham tender offer. That company's stock
rose 23% in 2012 after a bogus news release was issued.
In between the Rocky Mountain scheme and the Avon scheme,
prosecutors said Mr. Nedev traded on inside information about an
offer by Euroins Insurance Group AD to acquire U.S. based insurer
Tower Group international Ltd. in 2014. Mr. Nedev had learned the
news from Euroins chairman, who had hired Mr. Nedev as an external
consultant, prosecutors alleged.
Mr. Nedev had been something of a mystery. Last year, a
law-enforcement official in Bulgaria told The Wall Street Journal
Mr. Nedev might not be a real person.
Mr. Nedev couldn't be reached for comment.
Write to Christopher M. Matthews at
christopher.matthews@wsj.com
(END) Dow Jones Newswires
March 10, 2016 20:15 ET (01:15 GMT)
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