LOS ANGELES (CN) – Beverly Hills-based Hunter World Markets, a stock broker and dealer, and the men who ran it manipulated the price of microcap stocks and skimmed more than $63 million from their “manipulative trading activity,” the SEC says. It claims Todd M. Ficeto, Florian Homm, and Colin Heatherington also profited from “an ancillary scheme to defraud investors in several now defunct hedge funds managed by Absolute Capital Management Holdings Limited.”
The complaint states: “During the relevant period, HWM was a registered broker-dealer located in Beverly Hills, California, and co-owned by Ficeto and Homm. Homm was also the co-founder and the chief or co-chief investment adviser for ACMH, a London-based hedge fund management company and SEC-registered investment adviser that managed eight equity hedge funds (the ‘Absolute funds’) and purportedly had $2.1 billion in assets under management as of August 31, 2007.
Using his position as the principal investment adviser of the Absolute funds, and as a co-owner of HWM, Homm misused the assets of the Absolute funds to allow him, Ficeto, Heatherington and HWM to manipulate upward the prices of a number of domestic microcap issuers whose stock was publicly traded in the United States. Homm, Ficeto, and their mutual friend and ACMH employee, Heatherington, made tens of millions of dollars as a result of that manipulative trading activity. When Homm abruptly resigned on September 18, 2007, the same day that ACMH’s new chief executive officer was to meet with Homm to discuss increased oversight of Homm’s investment decisions and bonus payments, the Absolute funds and their investors were left holding between $440 and $530 million in ‘illiquid positions.’ Most of those ‘illiquid positions’ were, in fact, U.S. microcap stocks purchased and traded by the Absolute funds through HWM.”
The complaint adds: “Rather than allow the markets to set the price of the Issuers’ securities through the natural interplay of supply and demand, the Defendants knowingly or recklessly rigged the market by participating in and furthering a market manipulation scheme to drive upward the prices of these thinly-traded microcap stocks. In conducting their market manipulation scheme, the Defendants used a number of classic manipulative techniques, including: placing matched orders; placing orders that marked the close or otherwise set the closing price for the day; and conducting wash sales, all of which were done for the principal purpose and effect of artificially affecting the Issuers’ stock prices. …
“The Defendants’ manipulation of the Issuers’ stock prices allowed Ficeto, Homm and Heatherington to generate enormous profits through Ficeto’s and Homm’s co-ownership of HWM, and through their sale of the Issuers’ shares to the Absolute funds at inflated prices. The Defendants’ manipulation of the Issuers’ stock prices also allowed Homm and ACMH to materially overstate the Absolute funds’ performance and net asset values (‘NAVs’) in a fraudulent practice known as “portfolio pumping.” As a result of their fraudulent conduct, Ficeto, Homm, and Heatherington collectively made at least $63.7 million in illicit proceeds.”
Ficeto, of Malibu, is the sole owner of Hunter World Markets.
Homm lives in Majorca, Spain, and Heatherington in Victoria, British Columbia.
The SEC seeks disgorgement, penalties and an injunction.