SEC v. Competitive Technologies, Inc.; Chauncey D. Steele; John R. Glushko; Thomas C. Kocherhans; Richard A. Kwak; Sheldon A. Strauss, et al., No. LR-18827, District of Connecticut — Press Release
raw: Competitive Technologies, Inc., Chauncey D. Steele, John R. Glushko, Thomas C. Kocherhans, Richard A. Kwak, Sheldon A. Strauss, Stephen J. Wilson and Frank R. McPike
Competitive Technologies, Inc., Chauncey D. Steele, John R. Glushko, Thomas C. Kocherhans, Richard A. Kwak, Sheldon A. Strauss, Stephen J. Wilson and Frank R. McPike, No. LR-18827
Seven individuals, including broker Chauncey Steele and former CTT CEO Frank McPike, orchestrated a nationwide stock manipulation scheme from 1998 to 2001 using 'painting the tape,' matched trades, and 'marking the close' to inflate Competitive Technologies, Inc.'s stock to over $20 per share, deceiving investors before it collapsed to $3, leading the SEC to charge them with securities fraud and seek disgorgement, penalties, and a permanent bar against McPike.
The SEC charged seven individuals and Competitive Technologies, Inc. (CTT) with securities fraud for manipulating CTT’s stock price between 1998 and 2001 through illegal practices including 'painting the tape,' 'marking the close,' and matched trades, artificially inflating the stock from nominal levels to over $20 per share. The defendants—six brokers from Prudential Securities, Morgan Stanley, Finance 500, and Shamrock Partners, plus former CTT CEO Frank McPike—placed hundreds of coordinated buy orders on nearly 300 trading days, falsely creating the appearance of demand and raising closing prices over 90% of the time. The SEC alleges violations of Sections 17(a), 9(a), and 10(b) of the Securities Act and Exchange Act, plus Rule 10b-5, with Steele additionally accused of falsifying order tickets; the Commission seeks disgorgement, civil penalties, injunctive relief, and a permanent bar against McPike from serving as a public company officer or director.
The SEC filed a civil fraud action against seven individuals and Competitive Technologies, Inc. (CTT) for orchestrating a nationwide stock manipulation scheme from 1998 to 2001 that artificially inflated CTT’s stock price from nominal levels to over $20 per share before collapsing to $3. Led by broker Chauncey Steele of Prudential Securities, the defendants included five other brokers from Morgan Stanley, Finance 500, and Shamrock Partners, along with former CTT CEO Frank McPike, who allegedly executed stock purchases at Steele’s direction to support the scheme. The group employed illegal tactics such as 'painting the tape'—placing numerous small, coordinated buy orders—and 'marking the close,' where trades were timed near market close to inflate reported closing prices, while also conducting matched trades to neutralize downward price pressure. On nearly 300 trading days, these manipulative practices succeeded in raising CTT’s closing price over 90% of the time, misleading innocent investors into buying shares at inflated values. Steele further falsified order tickets to conceal that he had solicited trades rather than receiving customer-initiated orders, violating Rule 17a-3. The SEC alleges violations of Section 17(a) of the Securities Act and Sections 9(a) and 10(b) and Rule 10b-5 of the Exchange Act, and is seeking injunctive relief, disgorgement of illicit gains, civil penalties, and a permanent bar against McPike from serving as an officer or director of any public company.
Exhibits & Attached Documents (1)
Extracted insights
- agency Securities and Exchange Commission
- organization Securities and Exchange Commission
- Securities and Exchange Commission filed a civil fraud action against seven individuals for manipulating and fraudulently inflating the price of Competitive Technologies, Inc. (CTT) stock
The Securities and Exchange Commission filed a civil fraud action today in federal court in Hartford alleging that seven individuals engaged in a nationwide scheme to manipulate and fraudulently inflate the price of stock of Competitive Technologies, Inc. (CTT), a small technology company in Fairfield, Connecticut. The defendants include six current or former brokers at four different brokerage firms, and the former CEO of Competitive Technologies, as well as the company itself. Chauncey Steele, of Cohasset, Massachusetts, allegedly orchestrated the scheme while working as a broker at the Hyannis, Massachusetts office of Prudential Securities Inc., acting in concert with Richard Kwak, of Escondido, California, a broker at Morgan Stanley Dean Witter, John Glushko of Las Vegas, Nevada, a broker at Finance 500, Stephen Wilson of Pompano Beach, Florida, a broker at Shamrock Partners at the time, and former brokers Thomas Kocherhans of Orem, Utah and Sheldon Strauss of Beachwood, Ohio. Frank McPike of Ridgefield, Connecticut, while acting as CTT's CEO, allegedly made purchases in the company's stock repurchase plan at Steele's direction in order to further the manipulative scheme and CTT is named as a defendant due to his conduct. According to the Commission's complaint, from at least 1998 through 2001, the defendants artificially raised the price of CTT stock, which is listed on the American Stock Exchange, through several manipulative practices, all designed to maximize the benefit to themselves. On almost every trading day, defendants "painted the tape," that is, made multiple small purchases at arranged times and prices in order to give the misleading appearance of investor interest in the stock Their favored "painting" technique was "marking the close," placing numerous orders at or near the close of the market in order to inflate the reported closing price. Defendants also allegedly made pre-arranged matched trades, so that any impact sales might have on CTT's price would be offset by simultaneous buys at the same price. The complaint alleges that, employing these devices, defendants placed hundreds of purchase orders in both their own and their customers' accounts, making the closing trade in the stock on almost 300 trading days during the period. On more than 90% of those days, they succeeded in raising the reported closing price of the stock. The complaint alleges that defendants' fraudulent scheme resulted in CTT's stock trading at far above its true value. Innocent investors bought the stock at inflated prices of over $20 per share at the stock's high point, which fell to $3 per share after the manipulation ceased. The specific charges against the defendants in the federal court action are that they violated Section 17(a) of the Securities Act of 1933, Sections 9(a) and 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934, which prohibit fraudulent conduct, and that Steele also violated Section 17(a) and Rule 17a-3 of the Exchange Act by falsifying order tickets to indicate that his customers had initiated orders to buy CTT when in fact he had solicited the purchases. TheCommission is seeking injunctive relief, disgorgement, and civil penalties, and an order permanently barring defendant McPike from serving as an officer or director of a public company. SEC Complaint in this matter
The Securities and Exchange Commission filed a civil fraud action today in federal court in Hartford alleging that seven individuals engaged in a nationwide scheme to manipulate and fraudulently inflate the price of stock of Competitive Technologies, Inc. (CTT), a small technology company in Fairfield, Connecticut. The defendants include six current or former brokers at four different brokerage firms, and the former CEO of Competitive Technologies, as well as the company itself. Chauncey Steele, of Cohasset, Massachusetts, allegedly orchestrated the scheme while working as a broker at the Hyannis, Massachusetts office of Prudential Securities Inc., acting in concert with Richard Kwak, of Escondido, California, a broker at Morgan Stanley Dean Witter, John Glushko of Las Vegas, Nevada, a broker at Finance 500, Stephen Wilson of Pompano Beach, Florida, a broker at Shamrock Partners at the time, and former brokers Thomas Kocherhans of Orem, Utah and Sheldon Strauss of Beachwood, Ohio. Frank McPike of Ridgefield, Connecticut, while acting as CTT's CEO, allegedly made purchases in the company's stock repurchase plan at Steele's direction in order to further the manipulative scheme and CTT is named as a defendant due to his conduct. According to the Commission's complaint, from at least 1998 through 2001, the defendants artificially raised the price of CTT stock, which is listed on the American Stock Exchange, through several manipulative practices, all designed to maximize the benefit to themselves. On almost every trading day, defendants "painted the tape," that is, made multiple small purchases at arranged times and prices in order to give the misleading appearance of investor interest in the stock Their favored "painting" technique was "marking the close," placing numerous orders at or near the close of the market in order to inflate the reported closing price. Defendants also allegedly made pre-arranged matched trades, so that any impact sales might have on CTT's price would be offset by simultaneous buys at the same price. The complaint alleges that, employing these devices, defendants placed hundreds of purchase orders in both their own and their customers' accounts, making the closing trade in the stock on almost 300 trading days during the period. On more than 90% of those days, they succeeded in raising the reported closing price of the stock. The complaint alleges that defendants' fraudulent scheme resulted in CTT's stock trading at far above its true value. Innocent investors bought the stock at inflated prices of over $20 per share at the stock's high point, which fell to $3 per share after the manipulation ceased. The specific charges against the defendants in the federal court action are that they violated Section 17(a) of the Securities Act of 1933, Sections 9(a) and 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934, which prohibit fraudulent conduct, and that Steele also violated Section 17(a) and Rule 17a-3 of the Exchange Act by falsifying order tickets to indicate that his customers had initiated orders to buy CTT when in fact he had solicited the purchases. TheCommission is seeking injunctive relief, disgorgement, and civil penalties, and an order permanently barring defendant McPike from serving as an officer or director of a public company. SEC Complaint in this matter