SEC Obtains Final Judgments Against Michael M. Beck And Helen P. Robinson For A Penny Stock Fraud

On April 17, 2024, final judgments were secured by the Securities and Exchange Commission against Michael M. Beck, who was accused by the SEC of an alleged penny stock fraud, and his mother, Helen Robinson, who was named as a relief defendant.

Case Summary

From February 2017 to May 2019, Defendant Michael M. Beck, also known as @BigMoneyMike6, utilized his Twitter account with up to 3 million followers to promote the purchase of eight microcap stocks. He did this without revealing that he intended to sell, or was actively selling, his personal holdings in these stocks—a tactic known as "scalping."

Beck's scalping operation followed a specific pattern. Initially, Beck, either directly or through his proxy (his mother, Relief Defendant Helen P. Robinson), acquired a substantial amount of a penny stock. He then teased a forthcoming stock recommendation, or "alert," on Twitter and to his email group, TeamBillionaire, urging them to purchase the stock prior to the public announcement. Sometimes, he even paid third parties to post positive reviews about the stock on investor forums in advance of his public endorsement.

After acquiring the shares, Beck would issue recommendations to his vast Twitter audience and the public to buy the stock, all while concealing his ongoing or planned sales of those very stocks.

As the promoted stocks’ prices and trading volumes rose, Beck sold his shares in the inflated market, ultimately profiting approximately $870,000.

Beck’s actions breached the antifraud provisions of Section 10(b) of the Exchange Act and Rule 10b-5, as well as the antifraud provisions of Section 17(a) of the Securities Act.

The SEC is pursuing permanent injunctions to prevent future violations of the Exchange Act Section 10(b) and Rule 10b-5, as well as the Securities Act Section 17(a). They are also seeking an order for Beck and Robinson to return their wrongful profits with interest, impose civil penalties on Beck, and enforce a penny stock bar against him.

Defendants And Relief Defendant

1. Michael M. Beck

Michael M. Beck ("Beck") lives in San Pedro, California. During the relevant time frame, he operated under the Twitter handle "@BigMoneyMike6" and established the email group TeamBillionaire.

Between 2017 and 2019, Beck maintained at least one brokerage account at a financial institution where he engaged in stock trading.

Throughout this period, Beck utilized several email addresses for his activities: bigmoneymike6@gmail.com, pennystockcult@gmail.com, cryptopennystock@gmail.com, and godzillaprofits@gmail.com.

2. Helen P. Robinson

Helen P. Robinson ("Robinson"), residing in San Pedro, California, is the mother of Beck.

Robinson held at least five brokerage accounts across five different financial institutions, where she and/or Beck conducted stock trading from 2017 to 2019.

Robinson permitted Beck to utilize her accounts for trading stocks.

Related Entities

1. Pick-Ups Plus, Inc.

Pick-Ups Plus, Inc. ("Pick-Ups"), was a Delaware corporation, formerly based in Newport Beach, California. It focused on selling and installing sports utility vehicle accessories. The company ceased its common stock registration under Section 12(g) of the Exchange Act on June 18, 2018, and had its stock previously quoted on the OTC Link (formerly "Pink Sheets") under the ticker "PUPS." It is currently listed on the Expert Market of the OTC Markets Group, where stock quotes are unsolicited and limited to market professionals.

2. MK Automotive, Inc.

MK Automotive, Inc., a Nevada corporation, provided retail and commercial automotive diagnostic, maintenance, and repair services. It traded under the ticker "MKAU" on OTC Link until July 2017, after which it was renamed Clikia Corp., trading under the ticker "CLKA." From December 15, 2017, to September 10, 2020, it qualified for a Tier 1 offering under Regulation A six times. The company was later renamed Maison Luxe, Inc., and has been quoted under the ticker "MASN" on OTC Link since April 2021.

3. Zann Corp.

Zann Corp. ("Zann"), based in Las Vegas, Nevada, is a non-reporting company in its formative stage, exploring various business avenues including blockchain, information technology, and transportation logistics. Initially quoted under the ticker "ZNNC" on OTC Link, it is now listed on the Expert Market.

4. Vidaroo Corp.

Vidaroo Corp. ("Vidaroo"), a defunct Nevada corporation formerly based in Orlando, Florida, focused on video streaming and software distribution but ceased operations. Its common stock remains registered under Section 12(g) of the Exchange Act, although it has not been filed since March 17, 2014. Originally quoted under "VIDA," its stock is now on the Expert Market.

5. Canadian Aerospace Group International, Inc.

Canadian Aerospace Group International, Inc. ("CASG"), a defunct Florida corporation based in Herriman, Utah, developed aviation products and services. It was declared inactive by the Florida Secretary of State on September 23, 2016, due to failure to file necessary documents. Following a trading suspension by the SEC on May 10, 2019, its stock is now quoted on the Expert Market.

6. Music for Your Life

Music for Your Life, headquartered in Las Vegas, Nevada, operates a network of radio stations. Initially traded under "MYLY," it underwent a name change to Music for Your Life Inc. and now trades under "TMGI" on the Expert Market. Although it voluntarily files with the SEC, it declared an inability to file its Form 10-K on August 31, 2021.

7. Peoplesway.com, Inc.

Peoplesway.com, Inc. ("Peoplesway"), a defunct Nevada corporation previously located in North Carolina, was a multi-level marketing company focused on wellness products. After revoking its corporate status in 2014, it filed a Form 15-12G with the SEC on October 20, 2005, to terminate its common stock registration. Its stock is currently quoted on the Expert Market under "PLWY."

8. United Consortium Ltd.

United Consortium Ltd. ("UCSO"), a defunct Nevada corporation formerly based in Tampa, Florida, claimed to operate in four sectors: legal digital services, blockchain, palm oil, and cannabinoids. Its corporate status was revoked in 2019. It is a non-reporting company, with its stock currently quoted on the Expert Market under "UCSO."

The eight companies involved in Beck's scalping activity (Pick-Ups, MK Automotive, Zann, Vidaroo, CASG, Marquie, Peoplesway, and UCSO) are collectively referred to as the "Issuers."

These issuers' securities, known as "microcap stocks" or "penny stocks," are typically traded on OTC Link, often at very low prices, ranging from pennies to fractions of a penny per share.

The Allegations

A. Overview of Beck’s Scalping Scheme

As detailed below, Beck is accused of executing a deceitful scheme by promoting and manipulating penny stocks through his Twitter account under the username @BigMoneyMike6. He urged investors to buy certain stocks while secretly selling his own shares of the same stocks at inflated prices created by his promotional tweets.

From 2017 to 2019, Beck operated the Twitter account @BigMoneyMike6. During this period, @BigMoneyMike6 amassed up to 3 million followers. Additionally, Beck was the founder of the email group, TeamBillionaire.

Beck used his Twitter platform to recruit followers into TeamBillionaire.

(a) For instance, on September 13, 2017, Beck tweeted, “GOT #PENNYSTOCKS? WANNA TURN A $5,000 INVESTMENT INTO $50,000+? JOIN #TEAMBILLIONAIRE ASAP.”

(b) On another occasion, on October 3, 2017, he tweeted, “JOIN #TEAMBILLONAIRE NOW !!!!!!! CHANGE UR FINANCIAL LIFE FOREVER.”

In communications with his group, Beck portrayed TeamBillionaire as a “NETWORK of the TRADER for the TRADER,” with the goal of generating at least 200% profits every month for its members through exclusive stock alerts and picks.

Beck claimed that TeamBillionaire had over 740,000 members in 2017. Beck’s fraudulent activity exhibited a consistent pattern from 2017 to 2019.

Initially, Beck or his nominee, Robinson, would purchase shares in a microcap company before starting his promotional activities. Beck would then alert his Twitter followers and the public about an upcoming stock recommendation.

A few days before publicly posting his stock alert on Twitter, he would give a preview of the stock to his TeamBillionaire group via email, allowing them to buy shares before the broader market. This anticipation typically drove up the stock’s price and trading volume, enhancing its appeal when Beck eventually made his public recommendation.

In some cases, Beck also paid third parties to post positive comments about the stock on Investorshub.com. Like the previews to TeamBillionaire, these posts helped to increase the stock’s trading volume and price, further bolstering its attractiveness by the time Beck publicly recommended it.

Beck would then make his public stock pick via Twitter and often through emails to TeamBillionaire, promoting the stock as a high-growth, high-return investment. He frequently reiterated his recommendation through multiple tweets and emails.

As the stock’s price climbed—whether following an email preview to TeamBillionaire, message board posts, or his official stock pick alert—Beck concurrently sold his or Robinson’s shares of the stock.

None of Beck’s public stock recommendations disclosed his plans or actions to sell his stock holdings during the promotions, nor did he reveal that he had provided previews to his TeamBillionaire group or secretly paid for favorable online posts.

Beck gained financially from each issuer’s stock sales, capitalizing on the artificially high market prices during his promotional campaigns.

B. Beck’s Strategy to Profit from Issuers’ Stocks

1. Beck’s Pick-Ups Scalping Operation

Pick-Ups, a former auto accessory company, had its stock listed under the ticker PUPS, trading at approximately $0.0035 per share in April 2017.

Beck started buying shares of Pick-Ups on February 7, 2017, through his and Robinson's accounts, when the stock was priced at $0.0004 per share. He continued buying shares priced between $0.0004 and $0.0039, mostly purchasing at or below $0.0018 per share.

Around April 19, 2017, Beck hinted at an upcoming stock alert on Twitter, proclaiming, “THE APRIL 25TH MEGA ALERT IS LESS THAN A WEEK AWAY” and “NEXT TUESDAY COULD NOT ONLY BE MY BIGGEST ALERT EVER BUT COULD BE... THEE BIGGEST ALERT EVER.”

In the days leading up to the alert, Beck emailed his TeamBillionaire group, urging them to buy Pick-Ups stock before the public alert.

For instance, on April 23, 2017, Beck told a follower, “The stock I’m going to get you into is currently trading at $.005 and will be trading $.05+ by Tuesday the 25TH... The stock that is going to make you a ‘minimum’ of 500% on your investment is… $PUPS.”

From April 25 to May 9, 2017, Beck tweeted several endorsements to buy Pick-Ups stock. (a) For example, on April 25, 2017, Beck tweeted, “I'VE BOUGHT 27,000,000 SHARES OF $PUPS TODAY! I'M STILL LOADING.. LETS SQUEEZE THE SHORTERS !!!”

(b) On May 1, 2017, he further tweeted, “$PUPS WILL BE GREEN EVERYDAY TILL CHRISTMAS !!!!!! $PUPS WILL BE AMERICA'S #1 STOCK !!!”

At no point did Beck disclose in his tweets or emails that he or his nominee were actively selling or planning to sell Pick-Ups stock.

Beck's claims were significantly misleading, as he was both planning to and actually selling his shares in Pick-Ups stock during this time. This is crucial information that a reasonable investor would consider important when evaluating the reliability of a stock recommendation.

Beck was fully aware that his claims were misleading due to his ongoing trading activities.

During the time of Beck’s promotional activities, the price of Pick-Ups stock increased from $0.0050 to $0.0085 per share, from April 21, 2017 (just before the initial TeamBillionaire email) to April 24, 2017 (the day the emails began).

The trading volume for Pick-Ups stock surged more than ten times between April 21 and April 24, 2017.

Between April 24 and May 18, 2017, Beck and Robinson sold approximately 45.4 million shares of Pick-Ups stock, yielding total proceeds of about $218,000.

2. Beck’s MK Automotive Scalping Operation

MK Automotive, currently known as Maison Luxe, was an automotive maintenance and repair company whose shares were traded under the ticker MKAU, priced between $0.0105 and $0.0135 in June 2017.

Beck had been trading MK Automotive stock since at least 2016, but resumed purchasing shares on May 26, 2017, through his and Robinson’s accounts.

On June 27, 2017, Beck teased a major stock pick on Twitter, announcing, “WHO'S READY FOR MY BIGGEST #PENNYSTOCKS ALERT EVER? ON JULY 17TH, 2017 I WILL BE UNLEASHING AN ABSOLUTE MONSTER.”

From July 17 to July 27, 2017, Beck actively promoted buying MK Automotive stock.

(a) For instance, on July 17, 2017, he tweeted: “$MKAU IS CURRENTLY TRADING $.017 … WITHIN 60 DAYS EXPECT $1.00+... My LAST MEGA ALERT RAN 4,000% !!! $MKAU WILL BE MUCH MUCH BIGGER !!!!” (b) Another tweet on July 18, 2017, stated, “$MKAU IS GOING TO $1.00+ WEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE LOAD THE BOAT !!!!!! CHOOOOOOOOOO CHOOOOOOOOOOO.”

Beck never disclosed in his tweets that he or his nominee were actively selling or planning to sell MK Automotive stock.

Beck’s promotional tweets were significantly misleading, as he was planning to and actually selling his MK Automotive shares at that time. Such information is crucial for investors to evaluate the credibility of a stock recommendation.

Beck was fully aware that his promotional statements were misleading because he was conscious of his own trading activities.

During the time of Beck’s promotional efforts, MK Automotive’s stock price increased from $0.017 per share on July 16, 2017, to $0.024 per share on July 24, 2017. Between July 17 and August 22, 2017, Beck and Robinson disposed of approximately 13.1 million shares of MK Automotive stock, generating total proceeds of $254,000.

3. Beck’s Zann Scalping Operation

Zann, a Nevada corporation engaged in blockchain, information technology, and transportation logistics, traded its stock under the ticker ZNNC, ranging from $0.009 to $0.039 per share in September 2017.

Beck started purchasing shares of Zann on July 26, 2017, through both his and Robinson's accounts.

On September 13, 2017, Beck tweeted about an upcoming stock pick, announcing, “#TEAMBILLIONAIRE ANNOUNCEMENT: I WILL BE RELEASING MY BIGGEST #PENNYSTOCKS ALERT EVER ON SEPT. 26TH.”

On September 24-25, 2017, Beck paid two third parties to post positive comments about Zann on investment forums. One post praised Zann, stating, “This holding Co. has lots going for itself and with this share structure it's worth having a long-term outlook.”

On September 26 and 27, 2017, Beck urged his followers to buy Zann’s stock with tweets like, “LOAD UP ALL THE $ZNNC U CAN!!!!!!!!!!!!!!!!!!!!!!!!!!!” and “$ZNNC IS BEIN LOADED BY SMART MONEY.”

Neither in his tweets nor in the sponsored message board posts did Beck disclose that he or his nominee were actively selling or planning to sell Zann’s stock.

Beck’s promotions were significantly misleading, as at that time, he was planning and actually selling his Zann stock. This is information that would be crucial for a reasonable investor when evaluating the validity of a stock recommendation.

Beck was conscious that his statements were misleading because he was aware of his trading activities.

During Beck’s promotional efforts, Zann’s stock price increased from $0.039 per share on September 22, 2017, to $0.069 per share on September 25, 2017, with trading volumes ten times higher than on September 22, 2017.

Between September 25 and 26, 2017, Beck and Robinson offloaded approximately 1.39 million shares of Zann’s stock, resulting in sales proceeds of $82,000.

4. Beck’s Vidaroo Scalping Operation

Vidaroo, a defunct company that specialized in video streaming and software distribution, had its stock listed under the ticker VIDA, trading between $0.0011 and $0.0038 per share in October 2017.

Beck had been trading Vidaroo stock since at least 2016 and resumed purchasing shares on May 26, 2017, through his own and Robinson’s accounts.

On October 3, 2017, Beck announced an upcoming stock pick, tweeting, “ON OCTOBER 31ST, IM ALERTING THE MEGA #PENNYSTOCKS...‘CHANGE-UR_LIFE ALERT’ SIGN UP NOW 2 GET IN EARLY.”

From October 30 to December 11, 2017, Beck promoted Vidaroo stock on Twitter.

(a) For instance, on October 30, 2017, he tweeted, “$VIDA IS CURRENTLY TRADING AT $.0045 & WILL CLOSE TOMORROW AT $.005+ …ITS GUARANTEED 2 GO UP 10% A DAY (EZ PROFITS).” (b) On November 3, 2017, he further claimed, “$VIDA WILL GO UP EVERYDAY TILL CHRISTMAS !!! ITS GOING TO $.05+ (CURRENT PRICE $.0053).”

Beck never disclosed in his tweets that he or his nominee were selling or planning to sell Vidaroo stock.

Beck’s promotional statements were significantly misleading, as he was planning to and actually selling his Vidaroo shares at that time. Such information is crucial for investors when evaluating the reliability of a stock recommendation.

Beck was fully aware that his statements were misleading because he knew about his trading activities.

During the promotional period, Vidaroo’s stock price increased from $0.0038 per share on October 27, 2017, to $0.0049 per share on October 30, 2017.

Between October 30 and December 11, 2017, Beck and Robinson liquidated approximately 17.2 million shares of Vidaroo stock, totaling $110,000 in sales proceeds.

5. Beck’s CASG Scalping Operation

CASG, a now-defunct aviation company, had its stock traded under the ticker CASG, with prices ranging from $0.0018 to $0.0035 per share in April 2018.

Beck started buying CASG stock on January 2, 2018, through both his and Robinson's accounts.

On April 20, 2018, Beck announced an upcoming stock pick on Twitter, stating, “ON MAY 1ST, I WILL BE ALERTING THE MOST PROFITABLE #PENNYSTOCK ALERT IN HISTORY!!!!!”

Between April 25 and May 1, 2018, Beck paid two third parties to post positive comments about CASG on investment forums. For instance, on April 28, 2018, a post read, “It looks like something big is going on here. Check out the volume on Friday.”

Beck then tweeted his CASG stock recommendation on May 1, 2018, claiming: “TURN UR $1,000 INVESTMENT INTO $20,000.00+ WITH $CASG THE #1 #PENNYSTOCK IN THE WORLD !!!”

None of Beck’s tweets or the sponsored message board posts disclosed that he or his nominee were selling or planning to sell CASG stock.

Beck's promotional statements were significantly misleading as he was actively selling his CASG stock at the time. This is crucial information for investors evaluating the validity of a stock recommendation.

Beck was fully aware that his statements were misleading due to his knowledge of his own trading activities.

Following the message board posts, CASG’s stock price increased from $0.0035 per share on April 24, 2018, to $0.0048 per share on April 25, 2018.

After Beck emailed his TeamBillionaire members about the CASG stock on April 30, 2018, the stock price jumped from a closing price of $0.0082 to $0.0138 per share the next day, with trading volume rising by about 322%.

Between April 26 and May 1, 2018, Beck and Robinson sold approximately 8.5 million shares of CASG stock, generating total proceeds of $218,000.

6. Beck’s Marquie Scalping Operation

Marquie, a radio station company, traded its stock under the ticker TMGI, with prices ranging from $0.041 to $0.096 per share in November 2018.

Beck started purchasing shares of Marquie on November 27, 2018, through Robinson’s accounts.

On November 5, 2018, Beck indicated an upcoming stock alert on Twitter, stating, “MY NEXT MEGA ALERT IS DECEMBER 18TH.”

Beck prepped his TeamBillionaire group before publicly announcing his stock pick for Marquie, urging them to buy in advance.

For instance, on December 15, 2018, Beck emailed his TeamBillionaire group:

"The MEGA December 18th alert will be released to the masses at 9:00 am EST on the 18th of DECEMBER. There will be a GLOBAL release to every TRADER on the planet via all SOCIAL MEDIA platforms. When I say I'll be releasing the BIGGEST PROFIT RUNNER in penny stock history, I mean it... December 18th will be HISTORIC. Many traders will quit their 9-5 jobs, buy businesses, invest in real estate globally, retire, become philanthropists, take luxury cruises, or even buy a minor league baseball team. I will get you in on the 17th (a day before the global alert). You will receive the alert on Sunday morning, the 16th, so you can plan how much stock to buy to achieve your financial dreams."

On December 18, 2018, Beck tweeted his recommendation to buy Marquie stock, saying: “THIS YEAR'S MEGA MAGICAL CHRISTMAS ALERT IS $MYLI !!!!!!! BUY EVERYTHING YOU CAN UNDER $1.00+ BEFORE THE HERBALIFE MERGER NEWS DROPS!!! $MYLI IS GOING TO $10+ (CURRENT PRICE $.44). TURN YOUR $5,000 INVESTMENT INTO $100,000+.”

Beck did not disclose in his tweets, emails, or message board posts that he or his nominee were selling or planning to sell Marquie stock.

Beck’s promotions were misleading, as he had already started selling his Marquie stock on December 17, 2018. This undisclosed information would be crucial for a reasonable investor assessing the reliability of his stock recommendation.

Beck was aware that his claims about Marquie were misleading because he was conscious of his own trading activities.

Marquie’s stock price increased from $0.29 per share on December 14, 2018, to $0.40 per share on December 17, 2018, following Beck’s initial email to TeamBillionaire.

From December 17 to December 20, 2018, Robinson’s accounts offloaded approximately 343,000 shares of Marquie stock, generating sales proceeds of $41,000.

7. Beck’s Peoplesway Scalping Operation

Peoplesway, a defunct wellness company, had its stock trading under the ticker PLWY, with prices ranging from $0.0027 to $0.0060 per share in February 2019.

Beck started purchasing Peoplesway stock on September 5, 2018, using Robinson’s accounts.

On February 28, 2019, Beck teased an upcoming stock alert on Twitter, announcing, “ON MARCH 12TH, I WILL BE ALERTING THE ‘MEGA GODZILLA ALERT!!! THIS WILL BE THE BIGGEST RUNNER IN #PENNYSTOCKS HISTORY !!! EXPECT TO TURN UR $10,000 INVESTMENT INTO $150,000+.”

On March 11, 2019, Beck emailed his TeamBillionaire group, giving them early access to the PLWY stock recommendation:

"Guess what FAM? I'm getting you in EARLY on March 11th so you don't have to deal with the stress of chasing a skyrocketing stock on March 12th. I don’t want you buying at $.25+ on Tuesday. I'm getting you in under $.05 tomorrow so you can secure your profits easily… I'm excited for us, the #MONEYGANG, because we're all going to profit first from the major announcement on March 12th. Drum roll please… The BIGGEST RUNNER IN PENNY STOCK HISTORY IS GOING TO BE PLWY!”

From March 8, 2019, to March 11, 2019, Peoplesway’s stock price increased from $0.011 to $0.027 per share, with trading volumes rising by approximately 1,760%.

On March 11, 2019, Robinson’s accounts sold about 3.56 million shares of Peoplesway stock, totaling $78,000 in proceeds.

Beck continued to promote Peoplesway stock from March 12 to March 14, 2019.

For example, on March 12, 2019, he tweeted: “I’M GOING TO PERSONALLY PUNISH EVERY SINGLE SHORT SELLER ON $PLWY !!!! I WILL FORCE THOSE BTCHES TO COVER OVER $.10 !!! SHT JUST GOT REAL !!!!”

Another tweet on March 14, 2019, stated: “I’M LOADING $PLWY ON THE BIDS.....ITS GOING BACK UP. I BUY ‘PANIC’. NO NEED TO WORRY WHEN #BMM IS ON BIDS.”

Beck did not disclose in any of his tweets, emails, or message board posts that he or his nominee were selling or planning to sell Peoplesway stock.

Beck’s statements were substantially misleading because as of March 11, 2019, he had sold all his PLWY stock and was not purchasing more. This information would be crucial for investors to assess the credibility of the stock recommendation.

Beck was aware that his statements were misleading because he was conscious of his trading activities.

8. Beck’s UCSO Scalping Operation

UCSO, a defunct company engaged in digital services, blockchain, palm oil, and cannabis, traded under the ticker UCSO with stock prices ranging from $0.0055 to $0.0099 per share in March 2019.

Beck began buying shares of UCSO on April 9, 2019, through Robinson’s accounts.

On March 31, 2019, Beck announced an upcoming stock alert via Twitter, proclaiming, “ARE U READY FOR THE BIGGEST #PENNYSTOCKS ALERT IN HISTORY? GET READY TO TURN UR $5,000 INVESTMENT INTO $100,000+ ON MAY 1ST!”

On April 29, 2019, Beck emailed his TeamBillionaire group about the upcoming UCSO stock pick:

"I will get you there first with the MEGA May 1st alert! Here's the good news: I’m not making you wait until May 1st to receive the GAME-CHANGING SUPER MEGA ALERT. I'm giving you the alert on April 29th, 48 hours before the general public gets it."

On May 1, 2019, Beck tweeted his recommendation to buy UCSO stock:

"#MONEYGANG, NO NEED FOR $UCSO TO RUN CRAZY TO $.10 TODAY. LOAD UP EVERYTHING U CAN UNDER $.06!!! TOMORROW WE LOAD EVERYTHING UNDER $.07…SLOW & STEADY ALWAYS WINS THE RACE. BUYING $UCSO WILL BE THE BEST FINANCIAL DECISION U HAVE EVER MADE IN UR LIFE!!!"

Beck did not disclose in any of his tweets or emails that he or his nominee were selling or planning to sell UCSO stock.

Beck’s promotions were significantly misleading, as he was actively selling his UCSO stock at the time. This is crucial information for investors assessing the reliability of a stock recommendation.

Beck was aware that his statements were misleading because he was familiar with his own trading activities.

During Beck’s promotional efforts, UCSO’s stock price increased from $0.065 per share on April 26, 2019, to an intraday high of $0.08 per share on April 29, 2019, with trading volume up by approximately 232%.

Between April 29 and May 2, 2019, Robinson’s accounts sold approximately 228,000 shares of UCSO stock, resulting in sales proceeds of $15,000.

C. Beck’s Intent and/or Negligence in Scalping Schemes

Beck intentionally, knowingly, and/or recklessly executed his scalping schemes involving the stocks of various issuers.

Beck was aware that he failed to disclose to his followers on Twitter and TeamBillionaire both his intentions and actual actions of selling the issuers’ stocks while advising them to buy the same stocks.

Beck facilitated his trades through his nominee, Robinson, which helped to obscure the extent of his trading activities.

Beck secretlycompensated third parties to generate positive commentary about several of the issuers, hiding his involvement in the promotion of these stocks.

Beck’s activities displayed a consistent pattern of deceptive conduct over several years across the eight issuers.

Alternatively, Beck could be considered negligent for recommending the issuers’ stocks without disclosing his ongoing or planned sales of those stocks.

Beck accrued substantial profits from his deceptive practices. Overall, from February 2017 to May 2019, Beck and his nominee’s accounts garnered $870,000 in sales proceeds—$358,000 of which were attributed to Beck’s personal account and $512,000 to Robinson’s accounts.

D. Beck Withheld Crucial Trading Information

A reasonable investor would have found it crucial to know that Beck was selling or planning to sell the issuers' stocks at the same time he was advising others to buy them.

The fact that Beck was selling or intending to sell the issuers' stocks, and was profiting from the price increases prompted by his own recommendations, would have been significant to a reasonable investor in assessing the credibility of Beck's advice to purchase those stocks.

Claims For Relief

I. Fraud in Connection with the Purchase and Sale of Securities: Violations of Section 10(b) of the Exchange Act and Rule 10b-5 (Against Defendant Beck)

The SEC restates and incorporates by reference paragraphs 1 through 134 as stated above.

Defendant Beck knowingly and/or recklessly executed a scheme to scalp the issuers’ stocks. Through his promotional activities, which included tweeting stock alerts, sending emails to his TeamBillionaire group, and arranging for posts on message boards under other names, Beck manipulated the issuers’ stock prices to enable sales at elevated prices. Beck neglected to disclose his simultaneous or intended sales of the very stocks he was recommending to others. This deceitful conduct spanned several years across the stocks of eight issuers, resulting in over $900,000 of unlawful profits in his and his nominee’s accounts.

By engaging in the aforementioned activities, Defendant Beck, with scienter, used means or instrumentalities of interstate commerce, the mails, or facilities of a national securities exchange to: (a) implement devices, schemes, or artifices to defraud; (b) make false statements of material fact or omit to state material facts necessary to make the statements made, under the circumstances, not misleading; and (c) participate in acts, practices, or courses of business that operated or would operate as a fraud or deceit upon others.

Through these actions, Defendant Beck has breached, and unless restrained and enjoined will continue to breach, Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rules 10b-5(a), 10b-5(b), and 10b-5(c) under 17 C.F.R. §§ 240.10b-5(a), 240.10b-5(b), and 240.10b-5(c).

II. Fraud in the Offer or Sale of Securities: Violations of Section 17(a) of the Securities Act (Against Defendant Beck)

The SEC restates and incorporates by reference paragraphs 1 through 134 as stated above.

Defendant Beck knowingly, recklessly, and/or negligently executed a scheme to scalp the issuers' stocks. Through his promotional activities, which included tweeting stock alerts, sending emails to his TeamBillionaire group, and arranging for message board posts under other names, Beck manipulated the stock prices of the issuers to facilitate sales at elevated prices. He failed to disclose his simultaneous or intended sales of the very stocks he was recommending to others. This pattern of deceit occurred over several years involving the stocks of eight issuers, resulting in over $900,000 in unlawful profits for himself and his nominee.

By participating in the activities described above, Defendant Beck, directly or indirectly in the offer or sale of securities, using means of transportation or communication in interstate commerce or the mail, has: (a) employed devices, schemes, or artifices to defraud; (b) acquired money or property through untrue statements of material fact or by omitting necessary material facts, making the statements made misleading in the context of their presentation; and (c) engaged in transactions, practices, or courses of business which operated or would operate as a fraud or deceit upon purchasers.

Defendant Beck, with scienter, orchestrated devices, schemes, and artifices to defraud; with scienter or negligence, acquired money or property through misrepresentations or omissions of essential facts needed to make his statements not misleading; and, with scienter or negligence, participated in transactions, practices, or courses of business that acted or would act as a fraud or deceit upon purchasers.

By conducting himself as described, Defendant Beck has violated, and unless restrained and enjoined will continue to violate, Sections 17(a)(1), 17(a)(2), and 17(a)(3) of the Securities Act, 15 U.S.C. §§ 77q(a)(1), 77q(a)(2), & 77q(a)(3).

Prayer For Relief

The SEC respectfully requests that the Court:

Establish findings of fact and conclusions of law that the Defendant committed the alleged violations.
Enter a judgment, consistent with Rule 65(d) of the Federal Rules of Civil Procedure, permanently enjoining Defendant Beck, along with his officers, agents, servants, employees, attorneys, and those in active concert or participation with him who receive actual notice of the judgment via personal service or otherwise, from further violations of Section 10(b) of the Exchange Act, Rule 10b-5, and Section 17(a) of the Securities Act.
Require Defendant Beck and Relief Defendant Robinson to disgorge all profits gained from their unlawful activities, plus prejudgment interest, in accordance with Sections 21(d)(5) and 21(d)(7) of the Securities Exchange Act of 1934.
Impose civil penalties on Defendant Beck pursuant to Section 21(d)(3) of the Exchange Act and Section 20(d) of the Securities Act.
Issue an order under Section 20(g) of the Securities Act barring Defendant Beck from participating in any offering of penny stock.
Maintain jurisdiction over this action to enforce and administer any orders or decrees entered, or to consider any further applications or motions for additional relief within the court’s jurisdiction.
Award any other relief that the Court deems just and necessary.

Final Judgment

The Court issued a final judgment that permanently prohibits Beck from breaching the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, as well as Rule 10b-5 related to these sections.

Additionally, Beck is barred for five years from the date the judgment was entered from participating in any penny stock offerings. This includes any activities involving a broker, dealer, or issuer that relate to issuing, trading, or promoting the purchase or sale of any penny stock.

The Court also mandated Beck and relief defendant Helen Robinson to jointly and severally pay a disgorgement of $572,270.00, along with prejudgment interest totaling $112,062.32. Moreover, Beck is required to pay a civil penalty of $230,464.00. Robinson is similarly ordered, alongside Beck, to pay a disgorgement of $386,732.00 with an additional $75,730.14 in prejudgment interest.

Key Takeaways For Investors From The Case

1. Disclosure is Vital

This case underscores the importance of full disclosure in investment recommendations. Investors should be wary of influencers or promoters who fail to disclose their own financial interests or intentions, particularly when recommending stocks.

2. Be Cautious of Promotional Campaigns

Investors should approach promotional campaigns, especially those on social media platforms, with caution. While they may seem enticing, it's crucial to conduct thorough research and verify the credibility of the source before making investment decisions.

3. Watch Out for Pump-and-Dump Schemes

The case highlights the risks associated with pump-and-dump schemes, where individuals artificially inflate the price of a stock through misleading statements or promotional activities, only to sell their shares at a profit once the price has risen.

4. Legal Consequences

The legal consequences faced by the defendant serve as a reminder that securities fraud is taken seriously by regulatory authorities. Investors should be vigilant and report any suspicious activities to the appropriate regulatory bodies.

5. Seek Professional Advice

When in doubt, investors should seek advice from financial professionals or conduct thorough due diligence before making investment decisions. Consulting with a qualified financial advisor can help mitigate the risks associated with potentially fraudulent schemes.

Key Takeaways for Financial Market Practitioners and Management

1. Compliance is Paramount

This case underscores the critical importance of strict adherence to securities regulations and laws. Financial market practitioners and management must ensure that all activities, including promotional campaigns and investment recommendations, comply fully with regulatory requirements.

2. Transparent Communication

Clear and transparent communication with investors is essential. Practitioners and management should disclose any relevant financial interests or intentions, especially when making recommendations or promoting securities to investors.

3. Risk Mitigation Strategies

Implementing robust risk mitigation strategies is crucial to safeguard against fraudulent activities. This includes conducting thorough due diligence on investment opportunities and monitoring for any signs of market manipulation or irregularities.

4. Educating Staff

It's vital to educate staff members about securities laws and regulations to ensure they understand their responsibilities and obligations. Training programs should focus on compliance protocols, ethical conduct, and the consequences of non-compliance.

5. Monitoring and Reporting

Establishing effective monitoring and reporting mechanisms can help detect and prevent fraudulent behavior. Practitioners and management should encourage a culture of reporting suspicious activities and provide channels for employees to raise concerns confidentially.

6. Legal and Financial Consequences

The legal and financial consequences faced by the defendant in this case serve as a stark reminder of the potential repercussions of securities fraud. Practitioners and management must prioritize ethical conduct and integrity in all their dealings to protect investors and maintain trust in the financial markets.

Gayatri GuptaMay 14, 2024

Nasdaq Compliance

The Nasdaq Stock Market features three tiers of listed companies, namely: (1) The Nasdaq Global Select Market, (2) The Nasdaq Global Market, and (3) The Nasdaq Capital Market. These tiers are characterized by progressively stringent listing requirements, with the Nasdaq Global Select Market setting the highest standards for initial listings and the Nasdaq Capital Market serving as the entry-level tier, particularly suitable for most small-cap issuers.

To list securities on Nasdaq, a company must fulfill minimum listing requirements, encompassing defined criteria related to financial performance, liquidity, and corporate governance. Nasdaq retains extensive discretion in the listing process and reserves the right to reject an application, even if the technical prerequisites are satisfied, if it deems such denial essential to safeguard the interests of investors and the public.

After securing a listing on Nasdaq, a company is obligated to adhere to ongoing listing standards. To initiate the listing process, a company seeking inclusion on Nasdaq must diligently complete and submit a comprehensive listing application to Nasdaq. This application should include specific documents and information as outlined by Nasdaq's requirements.

Typically, the application process spans a duration of four to six weeks. Once the application is submitted, a Nasdaq analyst is designated as the primary liaison with the company. Within two to three weeks of submission, the company can expect to receive an initial comment letter. The comment and review process persists until a decision is reached on the approval or denial of the application. Similar to filing with the SEC, a meticulously prepared Nasdaq application tends to attract fewer comments and facilitates a more streamlined process. Generally, the company's securities counsel assumes a leading role, serving as the primary contact for preparing the application and engaging in communication with Nasdaq.

Similarly to the SEC review process, Nasdaq conducts a thorough examination of publicly accessible information pertaining to a company. This encompasses, but is not limited to, SEC filings, the company's website, management communications and speeches, as well as press releases. The iterative nature of the review process typically doesn't necessitate a formal protocol, and communication is commonly facilitated through email correspondence and phone calls.

Listing Criteria For Nasdaq
For a company to list its securities on Nasdaq, it must satisfy the following criteria:

Specific Initial Requirements:
- Quantitative Standards: Meeting defined thresholds for both quantitative and qualitative factors.
- Qualitative Standards: Fulfilling certain qualitative benchmarks.
Continuing Requirements:
- Quantitative Criteria: Adhering to ongoing quantitative benchmarks.
- Qualitative Criteria: Maintaining specified qualitative standards.

The initial quantitative thresholds are typically set at a higher level than those required for continued listing. This distinction aims to ensure that companies achieve a sufficient level of maturity before being listed. Additionally, Nasdaq imposes rigorous corporate governance standards that listed companies must adhere to throughout their tenure on the exchange.

Before formally submitting a comprehensive listing application, a company has the option to pursue a preliminary listing eligibility review. In this stage, the Listing Qualifications Staff conducts a thorough examination of the company's public filings to assess its compliance with numerical listing requirements. Additionally, the team evaluates the company's adherence to corporate governance requirements outlined in the Marketplace Rules ("Rules"). This preliminary review provides valuable insights into the company's eligibility for listing on Nasdaq before committing to the full application process.

Upon completion of the preliminary review, the Listing Qualifications Staff will make an assessment regarding whether the company meets the numerical listing criteria. Additionally, any corporate governance or regulatory concerns raised during this phase will be considered to determine their impact on the listing approval. It's important to note that while the preliminary review provides insights, final approval necessitates the submission of a formal listing application. This application undergoes a thorough examination by the NASDAQ Listing Qualifications Staff. Furthermore, the final approval process involves satisfactory compliance with specific qualitative reviews. This includes an examination of the regulatory history of the company's officers, directors, and significant shareholders. Meeting these criteria is integral to obtaining the final approval for listing on Nasdaq.

Financial And Liquidity Requirements

    Requirements

    Equity Standard
    Market Value of Listed Standard
    Net Income Standard

    Listing Rules

    5505(a)
and
5505(b)(1)
    5505(a)
and
5505(b)(2)
    5505(a)
and
5505(b)(3)
    
    Stockholders Equity

    	$5 million
    	$4 million
    	$4 million
    
    The market value of publicly held shares

    $15 million
    $15 million
    $
      5 million
    
    Operating History

    	Two years
    N/A
    N/A
    
    The market value of listed securities

    N/A
    $50 million
    N/A
    
    Net income from continuing operations (in the latest fiscal
a year or in two of the last three
fiscal years)

    N/A
    N/A
    $750,000
    
    Publicly held shares

    	1 million
    	1 million
    	1 million
    
    Bid Price

    	$4
    	$4
    	$4)
    
    Closing Price

    	$3
    	$2
    	$43
    
    Corporate Governance

    Yes
    Yes
    Yes
    
    Total Shareholders

    300
    300
    300

Corporate Governance Requirements

Across all three tiers of the Nasdaq Stock Market, corporate governance requirements remain largely consistent. The categories encompassing corporate governance standards include:

Distribution of Annual or Interim Reports
Independent Directors
Audit Committee
Compensation Committee
Nomination of Directors
Code of Conduct
Annual Meetings
Solicitation of Proxies
Quorum
Conflict of Interest
Shareholder Approval
Voting Rights

These governance elements play a crucial role in ensuring transparency, accountability, and ethical conduct within listed companies, irrespective of the specific tier within the Nasdaq Stock Market.

Companies seeking listing on Nasdaq must adhere to specific corporate governance standards, including the following:

Compensation Committee with Independent Directors:
- The company is required to establish a compensation committee comprised of independent directors.
- The committee must consist of at least two members.
- Rule 5605(d)(2)(A) introduces an additional independence test for compensation committee members.
Responsibility for Executive Compensation:
- The compensation committee is tasked with determining or recommending to the entire board the compensation of the chief executive officer (CEO) and all other executive officers.

These standards are designed to ensure a level of independence and scrutiny in the decision-making processes related to executive compensation within the company.

The Application And Documents

The Nasdaq application package encompasses several key components:

Symbol Reservation Form:
- Used to request the reservation of a specific trading symbol for the company.
Listing Application:
- Requires supplemental documents and details about the company's financials, operations, and other pertinent information.
Listing Agreement:
- A formal agreement outlining the terms and conditions of the listing on Nasdaq.
Corporate Governance Certification:
- A certification affirming the company's commitment to meeting Nasdaq's corporate governance standards.
Initial Application Fee:
- Payable via check or wire transfer, this fee is a prerequisite for initiating the listing process.
Logo Submission Form:
- Used for submitting the company's logo for use in Nasdaq's materials.

These application forms are completed through the Nasdaq website listing center, utilizing the online platform to facilitate the submission of supplemental and supporting documents. It is advisable to thoroughly review all required paperwork in advance, ensuring that the necessary information is readily available before initiating the application process.

Symbol Reservation Form

The symbol reservation form is a concise, one-page electronic form where applicants input information for Nasdaq's consideration. Nasdaq symbols, limited to 1-5 characters, adhere to guidelines established by the Intermarket Symbols Reservation Authority (ISRA). The ISRA system is designed to organize symbols efficiently, prevent duplication, and reduce programming and operational complexities. The ISRA operates within the framework of the NMS Symbology Plan, a plan utilized by Nasdaq.

Key details about the symbol reservation process:

Symbol Choices:
- The form allows applicants to propose three symbol choices in order of preference.
- While Nasdaq generally honors the first choice if available, it retains the authority to assign, rescind, or reassign a trading symbol at its discretion.
ISRA and Nasdaq Authority:
- The ISRA and Nasdaq have overarching authority in managing the assignment of symbols.
Additional Information:
- The form captures essential details about the issuer and the planned public offering.
- Information may include the name of the attorney, lead underwriter (if applicable), CEO and CFO names, yearly revenues, company website, and the sector in which the company operates.

Completion of this symbol reservation form initiates the process of securing a trading symbol on Nasdaq, and it's essential to provide accurate and comprehensive information to facilitate this stage of the listing application.

The Application

The Nasdaq listing application process is comprehensive and varies based on the circumstances surrounding the listing sought. There are twelve distinct listing applications catering to different situations, including changes of control, switches from other exchanges or markets, spin-offs, and initial public offerings (IPOs). Each application, spanning approximately seven pages, collects detailed information about the company, covering areas such as address, contact and billing details, securities attorney and auditor information, transfer agent particulars, and the company's officers and directors. Specific information on the company's securities, including type, par value, and cusip number, is also required.

Furthermore, the application mandates disclosure of legal proceedings involving the company, its officers or directors, or significant shareholders over the past ten years. This encompasses inquiries, investigations, lawsuits, litigation, arbitrations, and other legal and administrative proceedings. Documents supporting the backup and final disposition of these matters must be provided.

Regarding private offerings within the prior six months, including bridge financings, shelf registrations, and Regulation S offerings, the company is required to disclose such activities. Additionally, the application delves into the company's background, posing questions to ensure compliance with seasoning rules.

While Nasdaq retains the right to request relevant supporting documents, specific documents are mandatory based on the application type. For an uplisting from an existing U.S. market, the application must include letters from three market makers confirming their commitment to making a market in the subject securities. Other required documents include a listing agreement, a logo submission form, a corporate governance certification form, regulatory correspondence over the past 12 months, and shareholder confirmation documents. Nasdaq often seeks confirmation from the company's transfer agent regarding the eligibility of the security for the direct registration program (DRS).

During the review of an up listing application, Nasdaq may request additional information, such as a Broadridge share range analysis and NOBO list, a certified shareholder list, details about mitigating any going concerns or opinions, income statement and/or balance sheet projections for the next 12 months, and confirmation of Sarbanes Oxley Section 302 and 906 certifications by the company, among other inquiries related to compliance and financial matters.

The Listing Agreement

The Listing Agreement is a concise document, spanning two pages, serving as a formal affirmation of the company's commitment to adhere to all rules and regulations set forth by the Nasdaq Stock Market. It includes provisions for indemnifying and holding Nasdaq harmless from liability. Notable points in the agreement include:

Compliance Assurance:
- The company explicitly agrees to comply with all rules and regulations stipulated by the Nasdaq Stock Market.
Indemnification Clause:
- The company indemnifies Nasdaq, meaning it undertakes to compensate or reimburse Nasdaq for any losses or damages incurred. This includes harm resulting from third-party trademark infringement claims related to the company's symbol and logo, as well as Nasdaq's use of the same.
Disclaimer of Warranty and Liability:
- The agreement contains a disclaimer of warranty and liability against Nasdaq for trading issues, with the exception of those resulting from gross negligence or willful misconduct.

This agreement establishes a clear framework for the relationship between the listed company and Nasdaq, emphasizing the company's commitment to regulatory compliance while providing indemnification for certain specified matters and delineating the scope of Nasdaq's liability.

Corporate Governance Certification Form

The corporate governance certification form certifies compliance with the governance requirements related to an audit committee, director nomination process, compensation committee, board composition, executive sessions, quorum, and codes of conduct. Where an exemption applies, the form requires specification of the exemption terms. The document specifies the different rules and exceptions in a check-the-box format.

Logo Submission Form

The logo submission form contains the guidelines for the logo and affirms Nasdaq’s rights to use the same. Nasdaq uses company logos in its marketing materials, on the MarketSite Video Wall and Tower, and websites.

Fees

Entry fees are based upon the aggregate number of shares to be listed at the time of initial listing, regardless of class, with a maximum cap of $75,000. Fees are assessed on the entry date in The Nasdaq Capital Market, except for $5,000, representing a non-refundable application fee. This fee must be submitted with the company’s application.

Nasdaq does not charge application or entry fees for any securities transferred from a national securities exchange.

Benefits Of Trading On An Exchange

There are many benefits to trading on an exchange instead of the OTC Markets. The most significant benefits to a business are the ability to attract analyst coverage and institutional investors and the corresponding increase in liquidity that comes with both. Stocks that trade on Nasdaq tend to have a lower bid/offer spread — again encouraging trading volume and liquidity. Exchange-traded securities are exempt from the penny stock definition, allowing more market maker and broker-dealer participation. As further explained below, a broker-dealer cannot recommend a penny stock transaction to its retail clients. Therefore, no analysts, financial advisors, or institutional investors make recommendations for purchases of penny stocks.

As an aside, this is one of the reasons that OTC Markets created the OTCQX market tier, which does not list penny stocks. It is also why the small-cap industry is pushing for a supported valid venture exchange (for further reading.

In today’s world, depositing stock and/or trade-in non-exchange traded securities is increasingly difficult. Despite the congressional efforts and SEC rulemaking in support of small-cap capital formation (for example, the JOBS Act, including the emerging growth company regulations, new Regulation A+ and Title III Crowdfunding and the new FAST Act), through enforcement and investigative proceedings, both the SEC and FINRA continue to apply pressure on broker-dealers, clearing firms and transfer agents to reduce the secondary trading and free flow of penny stocks. For more information on difficulties in depositing stocks.

Further On Penny Stocks

NASDAQ and NYSE MKT traded securities are exempted from the definition of a “penny stock” due to the initial and ongoing listing standards. Penny stock rules focus on broker-dealers’ activity in effectuating trades in penny stocks. The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 (the “Penny Stock Act”) prohibits broker-dealers from effecting transactions in penny stocks unless they comply with the requirements of Section 15(h) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The rules promulgated thereunder, particularly Exchange Act rules 15g-1 through 15g-100 (the “penny stock rules”).

Section 15(h) of the Exchange Act provides that no broker or dealer may effectuate a customer’s purchase or sale of any penny stock unless such broker or dealer.

Approves the customer for the specific penny stock transaction and receives a written agreement to the transaction from the customer.
Furnishes the customer a risk disclosure document describing the risks of investing in penny stocks.
Discloses to the customer the current market quotation, if any, for the penny stock, including the bid and ask prices and the number of shares that apply to such bid and ask prices.
Discloses to the customer the amount of compensation the firm and its broker will receive for the trade.

In addition, after executing the sale, a broker-dealer must send its customer monthly account statements showing the market value of each penny stock held in the customer’s account.

Moreover, brokers and dealers subject to the penny stock rules are subject to additional disclosure requirements outlined in Rules 15g-2 through 15g-9. For my information on penny stocks and the rules affecting broker-dealer activity.

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