On May 25, 2016 a cease and desist was issued by the SEC against transfer agent American Registrar & Transfer Company.
This is the same transfer agent the consulting team led by Ajene Watson consisting of Eric Noveshen insisted that microcap company Simulated Enviornment Concepts, INC (SMEV) use as a TA so that defendants, including Noveshen, could “control and influence” the transfer agent during their manipulation of SMEV’s stock price.
Click to access 33-10082.pdf
Connection to SMEV Stock and a list of some companies American Registrar & Transfer Co. associated with from http://www.otcmarkets.com
Below are parts of the complaint detailing the pump and dump scheme allegedly lead by Ajene Watson, and the entire complaint is here:
The SEC defines the important role of transfer agents in preventing microcap fraud scams below:
Revisiting the Role and Regulation of Transfer Agents
“Obviously, when trillions of dollars are involved, it is important that transfer agents fulfill their responsibilities with accuracy and professionalism. And, fortunately, that is usually the case.
Another critical responsibility of transfer agents is to keep track of the restrictive legends and “stop transfer” orders that distinguish restricted securities and control shares from freely-tradable securities. As such, transfer agents are often in a position to prevent unregistered securities from being distributed in violation of the Securities Act. This gatekeeper role takes on particular importance with microcap securities because typically there is little, if any, meaningful disclosure or independent research regarding such companies. The potential for fraud and abuse in the microcap markets is well-known. Indeed, violations of the registration provisions are often associated with microcap pump-and-dump schemes and other penny stock fraud.
In fact, the Commission has brought numerous cases against transfer agents who violate federal securities law in connection with fraudulent pump-and-dump schemes. You can expect the Commission to bring more cases since, as many of you know, the Division of Enforcement has created a Microcap Fraud Task Force that will, among other things, target gatekeepers such as transfer agents, attorneys, and auditors who participate in pump-and-dump schemes and penny stock fraud.
Unfortunately, in addition to those transfer agents that are active participants in fraud, there are also those transfer agents that have been duped into removing restrictive legends from stock certificates; as a result, unregistered securities have been illegally sold in the public markets. Frequently, this occurs on the basis of fraudulent attorney opinion letters Often, however, transfer agents have acted in the face of numerous red-flags warning of an illegal stock offering. This occurs with enough regularity that I believe the Commission should clarify the steps that could be taken by transfer agents and other gatekeepers to prevent violations in the microcap space.“