Litigation Release No. 24475 / May 22, 2019
Securities and Exchange Commission v. Howard M. Appel, Civil Action No. 18-cv-3200 (E.D.Pa., Filed May 10, 2019)
On May 10, 2019, the Honorable Paul S. Diamond of the District Court for the Eastern District of Pennsylvania, entered a final judgment on consent against Howard M. Appel for his role in a market manipulation scheme.
The SEC’s complaint, filed on July 27, 2018, charged Appel for his role in orchestrating schemes to manipulate the trading price of three microcap companies. The complaint alleged that Appel and associates that he recruited and directed to buy and sell shares, secretly acquired ownership or control over enough of the companies’ stock that he effectively controlled the float. Then he and his associates artificially created a market for these stocks by engaging in matched trading designed to create the false appearance of genuine demand for the stock. During and after his alleged manipulative conduct, Appel obtained over $3 million in profits by selling his shares in the companies into the public market. Appel was previously convicted of criminal conspiracy to commit securities fraud and was on probation when some of the charged conduct occurred.
The final judgment permanently enjoins Appel from violating the antifraud provisions of Sections 17(a)(1) and 17(a)(3) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5(a) and 10b-5(c) thereunder, and the market manipulations provisions in Exchange Act Sections 9(a)(1) and 9(a)(2). The judgment further imposes permanent penny stock and officer-and director and bars, and awards $3,868,699 in disgorgement and $487,248 in pre-judgment interest.
As detailed in the final judgment, monetary relief was deemed satisfied by the order of forfeiture entered against Appel in the parallel criminal action brought by the United States Attorney’s Office for the Eastern District of Pennsylvania. In that action, Appel pleaded guilty to related criminal charges. Appel was sentenced to sixty months of incarceration, ordered to forfeit $3,868,699, and fined $200,000.
The SEC’s investigation was conducted by Adam S. Grace, Preethi Krishnamurthy, Rhonda L. Jung and Melissa A. Coppola and supervised by Lara Shalov Mehraban. The SEC appreciates the assistance of the United States Attorney’s Office for the Eastern District of Pennsylvania, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority.