Story Highlights
- SEC charges Ahmed Alomari and MCM Consulting for defrauding investors in a microcap stock manipulation scheme.
- Alomari promoted penny stocks, failed to disclose compensation, and then secretly dumped shares for $1.4M profit.
- SEC seeks penalties including trading bans, disgorgement, and officer bar against Alomari for deceptive tactics.
The Securities and Exchange Commission (SEC) has brought charges against Ahmed Alomari and his firm MCM Consulting for orchestrating a widespread Microcap Stock Manipulation scheme. The Rhode Island resident stands accused of securities fraud, misleading investors, and illegal stock promotion tactics.
Profiting from Pump-and-Dump Ploys
According to the SEC’s allegations, between March 2019 and February 2022, Alomari purchased shares in at least five microcap companies. He then utilized social media, chat rooms, and text message blasts to aggressively promote these penny stocks to his followers. Crucially, Alomari failed to disclose the compensation he received from the companies for touting their stocks.
While publicly urging investors to buy and driving up demand, Alomari privately offloaded his own shareholdings, pocketing over $1.4 million in illicit profits. The SEC claims he submitted false representation letters to facilitate these undisclosed stock sales, even enlisting his wife’s signature on the deceptive paperwork.
Deceptive Tactics to Conceal Fraud
The charges outline a pattern of deception employed by Alomari to cover his tracks. After pumping a stock and dumping his shares, he would delete previous social media posts and chatroom messages promoting the company. When inevitable stock declines followed, he misled followers about the reasons, obfuscating his role in manipulating prices and generating losses.
SEC Crackdown on Microcap Fraud
In announcing this enforcement action, the SEC reiterated its commitment to combating microcap fraud schemes that victimize retail investors. The agency seeks significant penalties against Alomari and MCM Consulting, including permanent trading bans, disgorgement of ill-gotten gains, civil fines, and a bar prohibiting Alomari from serving as a corporate officer.
This case underscores the regulator’s heightened scrutiny of social media stock touts. Investors are cautioned against uncritically following inflated claims and aggressive promotion of microcap stocks, which can often mask manipulative pump-and-dump schemes orchestrated by fraudsters like Alomari.
