The U.S. Securities and Exchange Commission on Thursday accused a Bulgarian man and several other defendants of submitting bogus takeover bids for Avon Products Inc. and two other companies to fraudulently drive up their share prices.
The complaint against Nedko Nedev, a firm calling itself PTG Capital Partners and others was filed in Manhattan federal court three weeks after Avon shares shot up 20 percent in intraday trading on May 14, when PTG claimed to have offered to buy the cosmetics company for $18.75 per share, a 181 percent premium.
According to the SEC, Nedev and others tried to manipulate the prices of Avon, Rocky Mountain Chocolate Factory Inc. and Tower Group International Ltd. by filing false tender offers on its public Edgar database, and issuing fraudulent press releases.
The regulator said Nedev, who is 37 and lives in Sofia, Bulgaria, had along with others taken positions in the stocks before the alleged manipulation, hoping to sell their positions at artificially inflated prices, and that the manipulation made Nedev tens of thousands of dollars.
The Rocky Mountain case stemmed from an alleged bogus tender offer on Dec. 18, 2012 from defendant PST Capital Group Ltd. to buy the confectionery retailer for a 27 percent premium, causing its shares to rise 4.6 percent.
Meanwhile, the SEC said the share price of Tower Group rose 32 percent on May 13, 2014 after a fraudulent press release was issued in the name of Euroins Insurance Corp., also from Sofia, to buy that insurance holding company. Tower was later bought by Bermuda-based ACP Re Ltd.
The SEC lawsuit seeks civil penalties and to recoup illegal profits from Nedko and the other defendants, including alleged brokerage entities in Nevada and the British Virgin Islands whose accounts were accessed from Sofia to make the suspect trades.
Defense counsel could not immediately be determined.
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