SEC v. Joel David Castro Leon; and Shmuel A. Sherr, No. LR-26109, District of New Jersey (Sept. 17, 2024) — Press Release

U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 26109 / September 17, 2024 Securities and Exchange Commission v. Joel David Castro Leon and Shmuel A. Sherr, No. 2:24-cv-09214 (D.N.J. filed Sept. 17, 2024) SEC Charges Two Israeli Residents with Manipulative Spoofing Scheme The Securities and Exchange Commission today announced settled charges against Israeli residents Joel David Castro Leon and Shmuel A. Sherr for carrying out a manipulative trading scheme that netted them over $415,000 in profits. According to the SEC's complaint, filed in the District of New Jersey, Leon, with Sherr's assistance, engaged in manipulative trading practices known as spoofing to ensure that he could buy stocks at artificially low prices and sell the same stocks at artificially high prices. The complaint alleges Sherr opened brokerage accounts in his name and allowed Leon to trade in those accounts. The complaint further alleges Leon placed a series of non-bona fide orders to buy or sell stock. According to the complaint, the purpose of these orders - which Leon did not intend to execute - was to create a false appearance of market interest to increase or decrease the market price of the stock. After artificially inflating or depressing the market price of a particular stock, Leon allegedly bought or sold the stock at advantageous prices. The complaint alleges they shared the trading profits 90% to Leon and 10% to Sherr. The SEC's complaint charges Leon and Sherr with violations of the antifraud provisions of Sections 17(a)(1) and (3) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5(a) and (c) thereunder. The complaint also charges Leon with violating Section 9(a)(2) of the Exchange Act and charges Sherr with aiding and abetting Leon's violations. Without admitting or denying the allegations in the SEC's complaint, Leon and Sherr consented to the entry of final judgments, subject to court approval, that would permanently enjoin them from violating the charged provisions and order disgorgement against Leon and Sherr in the amounts of $373,581 and $41,509, respectively, plus prejudgment interest. The final judgments would also order Leon and Sherr to pay civil penalties of $125,000 and $14,000, respectively, and prohibit Leon, for a period of five years, and Sherr, for a period of three years, from, directly or indirectly, opening, maintaining, or trading in any brokerage account(s) in their names, the names of any immediate family members, the names of any company over which they have any control, or the names of any third party individual(s), without providing the relevant broker-dealer(s) a copy of the complaint and final judgments entered against them. The SEC's investigation was conducted by Han Nguyen, Matthew Koop, and Julia C. Green of the Division of Enforcement's Market Abuse Unit in the Philadelphia Regional Office under the supervision of Joseph G. Sansone, Chief of the Market Abuse Unit, with the assistance of trial counsel Judson Mihok under the supervision of Gregory Bockin.

U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 26109 / September 17, 2024 Securities and Exchange Commission v. Joel David Castro Leon and Shmuel A. Sherr, No. 2:24-cv-09214 (D.N.J. filed Sept. 17, 2024) SEC Charges Two Israeli Residents with Manipulative Spoofing Scheme The Securities and Exchange Commission today announced settled charges against Israeli residents Joel David Castro Leon and Shmuel A. Sherr for carrying out a manipulative trading scheme that netted them over $415,000 in profits. According to the SEC's complaint, filed in the District of New Jersey, Leon, with Sherr's assistance, engaged in manipulative trading practices known as spoofing to ensure that he could buy stocks at artificially low prices and sell the same stocks at artificially high prices. The complaint alleges Sherr opened brokerage accounts in his name and allowed Leon to trade in those accounts. The complaint further alleges Leon placed a series of non-bona fide orders to buy or sell stock. According to the complaint, the purpose of these orders - which Leon did not intend to execute - was to create a false appearance of market interest to increase or decrease the market price of the stock. After artificially inflating or depressing the market price of a particular stock, Leon allegedly bought or sold the stock at advantageous prices. The complaint alleges they shared the trading profits 90% to Leon and 10% to Sherr. The SEC's complaint charges Leon and Sherr with violations of the antifraud provisions of Sections 17(a)(1) and (3) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5(a) and (c) thereunder. The complaint also charges Leon with violating Section 9(a)(2) of the Exchange Act and charges Sherr with aiding and abetting Leon's violations. Without admitting or denying the allegations in the SEC's complaint, Leon and Sherr consented to the entry of final judgments, subject to court approval, that would permanently enjoin them from violating the charged provisions and order disgorgement against Leon and Sherr in the amounts of $373,581 and $41,509, respectively, plus prejudgment interest. The final judgments would also order Leon and Sherr to pay civil penalties of $125,000 and $14,000, respectively, and prohibit Leon, for a period of five years, and Sherr, for a period of three years, from, directly or indirectly, opening, maintaining, or trading in any brokerage account(s) in their names, the names of any immediate family members, the names of any company over which they have any control, or the names of any third party individual(s), without providing the relevant broker-dealer(s) a copy of the complaint and final judgments entered against them. The SEC's investigation was conducted by Han Nguyen, Matthew Koop, and Julia C. Green of the Division of Enforcement's Market Abuse Unit in the Philadelphia Regional Office under the supervision of Joseph G. Sansone, Chief of the Market Abuse Unit, with the assistance of trial counsel Judson Mihok under the supervision of Gregory Bockin.