$3.2 million stock lending fraud
22 June 2012 New Jersey
Image: Shutterstock
The Securities and Exchange Commission accused Manuel Bello of running an illegal stock lending scheme that netted him $3.2 million.
The New Jersey businessman had two firms, Ayuda Equity Funding and AmeriFund Capital Holdings, which made loans to affiliates of public companies that put up shares of stock as collateral.
The size of the loans were based on a percentage of the value of the stock put up as collateral, generally in the range of 40 percent to 75 percent, SEC officials wrote in a complaint. In exchange, borrowers transferred ownership of their stock and made quarterly interest payments over the term of the loan, which typically were three to five years.
Bello and his firms allegedly claimed they would not sell the stock except in the event of default, and would return the collateral once the loan was repaid.
However, Bello and his firms almost immediately sold the stock once the transfer was made, the SEC said. In at least 35 instances, he and his firms sold restricted shares without proper registrations, the agency said.
Bello and the firms settled the case without admitting or denying wrongdoing by agreeing to repay the $3.2 million in illicit gains plus interest. Bello also agreed to a $500,000 penalty and a bar from the securities industry.
The New Jersey businessman had two firms, Ayuda Equity Funding and AmeriFund Capital Holdings, which made loans to affiliates of public companies that put up shares of stock as collateral.
The size of the loans were based on a percentage of the value of the stock put up as collateral, generally in the range of 40 percent to 75 percent, SEC officials wrote in a complaint. In exchange, borrowers transferred ownership of their stock and made quarterly interest payments over the term of the loan, which typically were three to five years.
Bello and his firms allegedly claimed they would not sell the stock except in the event of default, and would return the collateral once the loan was repaid.
However, Bello and his firms almost immediately sold the stock once the transfer was made, the SEC said. In at least 35 instances, he and his firms sold restricted shares without proper registrations, the agency said.
Bello and the firms settled the case without admitting or denying wrongdoing by agreeing to repay the $3.2 million in illicit gains plus interest. Bello also agreed to a $500,000 penalty and a bar from the securities industry.
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