SEC Charges Brothers with Fraudulent Stock Manipulation Scheme

Posted by on April 23, 2017 7:24 pm
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Categories: US news

Linus Unah – Fourth Estate Contributor

Washington, DC, United States (4E) – The U.S. Securities and Exchange Commission (SEC) has charged two brothers – Kent and Mike Watts – with arranging a fraudulent scheme to qualify the stock of Hydrocarb Energy Corp for listing on a major stock exchange.

At the time, Hydrocarb was a small oil-and-gas company whose stock was quoted for sale in the over-the-counter market, the SEC said.

The U.S. regulator said the two brothers believed that listing the stock on a major exchange would facilitate the company’s capital raising efforts and eventually provide a market in which they could sell their Hydrocarb shares at a profit.

However, the federal agency noted that the two men violated the federal securities laws while pursuing the exchange listing.

The SEC’s complaint, filed in a Texas federal court, alleged that Kent Watts signed and filed a misleading Schedule 13D with SEC, which failed to disclose the brothers’ plan to take control of Hydrocarb.

The complaint further alleged that both Watts executed “sham transactions” – including one with Kent Watts’s nephew, Kirby Caldwell – which allowed them to secretly control millions of shares of Hydrocarb stock.

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