Massachusetts district court ruled he is guilty of fraud and market manipulation
The BC Securities Commission (BCSC) has permanently banned West Vancouver lawyer Frederick Langford Sharp from BC's investment market after a US court found him guilty of fraud and market manipulation.
In 2021, the US Securities and Exchange Commission (SEC) filed a complaint in the Massachusetts district court against Sharp, charging him with "a sophisticated, multiyear, multi-national attack on the United States financial markets and retail United States investors."
The SEC alleged that Sharp and his employees were facilitating illegal stock sales beginning in or before 2010 and continuing to 2020. Sharp allegedly enabled his clients to defraud investors by secretly controlling the stock of numerous penny stock companies and then selling those securities in conjunction with misleading promotions.
The SEC claimed that Sharp facilitated the fraudulent scheme by creating and using encrypted communications hardware and networks and offshore trading platforms to obfuscate who controlled the public companies. Sharp had also allegedly created an accounting system to keep track of his clients' stock positions, proceeds, commissions, and fees. The SEC said Sharp's fraudulent misconduct generated over $1 billion in gross proceeds.
The US court ordered Sharp to pay $21.8 million, representing the net profits gained from the misconduct, plus pre-judgment interest of $7.2 million and a civil penalty of $24 million. The court also permanently barred him from the issuance, purchase, offer or sale of any security, except for his personal account, and from participating in the offering of a penny stock.
Following the US court's final judgment, the BCSC barred Sharp from:
- generally trading in or purchasing any securities or derivatives
- becoming or acting as a director or officer of any issuer or registrant
- becoming or acting as a registrant or promoter
- advising or acting in a management or consultative capacity in the securities or derivatives markets
- engaging in promotional activities by or on behalf of an issuer, security holder, party to a derivative, or a person that is reasonably expected to benefit from the promotion
- engaging in promotional activities on his behalf that would reasonably be expected to benefit him, and
- relying on any exemptions of the Securities Act, the regulations or a decision.
"This conduct significantly harmed unsuspecting investors," the BCSC panel said. "Sharp's misconduct was extremely egregious, and we find there to be no mitigating factors."
Sharp did not appear or participate in the US civil proceedings. He is also facing related criminal charges in the US federal court.
