In the Courts

According to prosecutors, Knox, together with others, illegally sold massive quantities of microcap securities via Silverton SA (later renamed to Wintercap SA), on behalf of investor "control groups" who secretly owned the stock through nominee shareholders (being fake shareholders that held the stock in name only). The "microcap" or "penny" stocks involved are publically traded U.S. companies that have a low market capitalization and are most often priced below $1 per share. They are particularly susceptible to price manipulation because large blocks can be controlled by a small number of individuals while also being subject to fewer reporting requirements than larger companies. Using nominee shareholders allowed the true investors to hide the actual depth of their ownership, avoiding regulatory disclosure requirements including the U.S. Securities and Exchange Commission's (SEC) so-called "5% rule" that requires disclosure when a person or group of persons acquires beneficial ownership of more than 5% of a voting class of a company's registered securities.