Litigation Release No. 24490 / June 5, 2019
Securities and Exchange Commission v. Einstein Investments LLC, No. 2:19-mc-00072 (C.D. Cal. filed June 4, 2019)
On June 4, 2019, the Securities and Exchange Commission filed a subpoena enforcement action against Einstein Investments LLC, an Arizona-based investment firm, seeking an order directing it to comply with an investigative subpoena.
According to the SEC’s application filed in the U.S. District Court for the Central District of California, the SEC is investigating a potential pump-and-dump scheme in the stock of three microcap companies which were previously subject to trading suspensions by the SEC: Cherubim Interests, Inc.; PDX Partners, Inc.; and Victura Construction Group, Inc. The SEC’s application provides that these microcap companies may have issued false public statements in January 2018 to “pump” their stock price, claiming that it had acquired hundreds of millions of dollars of “AAA-rated” assets, when each company purportedly had little to no assets. After the stock price and trading volume for each company increased, an entity associated with the companies – and possibly Einstein – may have “dumped” their overvalued shares for significant profits.
In November 2018, the SEC issued a subpoena to Einstein for the production of documents. According to the SEC’s application, Einstein has failed to produce any documents responsive to this subpoena.
The SEC’s application seeks a court order compelling Einstein to fully comply with the SEC’s subpoena. The SEC previously filed subpoena enforcement actions in October and December 2018 against other parties in this matter, including CHIT, PDXP, and VICT. The SEC is continuing its fact-finding investigation in this matter and has not concluded that anyone has violated the securities laws.