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In the Courts
UK Founder of Swiss Asset Management Firm Pleads Guilty in $164 Million Global Securities Fraud Scheme
On Jan. 13, 2020, Roger Knox, 47, a UK citizen and the former founder and operator of Swiss asset management firm Silverton SA, plead guilty to one count each of securities fraud and conspiracy to commit securities fraud before U.S. District Court Judge Nathaniel Gorton in federal court in Boston. The charges against Knox, who was arrested in 2018, relate to a global market manipulation scheme involving so-called "pump and dump" frauds that generated proceeds of approximately $164 million.
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.
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