SEC Charges Internet Message Board User in Alleged Market Manipulation Scheme

The Securities and Exchange Commission (SEC) has taken legal action against Jeremy Koski, a resident of Hawaii, on charges of securities fraud. This legal action pertains to Koski’s manipulation of the trading market involving structured equity securities linked to certain J.C. Penney Company, Inc. debentures, which are traded over the counter under the symbol COTRP. The SEC’s allegations assert that Koski engaged in fraudulent activities by creating and anonymously disseminating counterfeit documents on internet message boards using various usernames. His intent was to artificially inflate the trading price of COTRP and thereby increase the value of his substantial holdings in the stock.

According to the SEC’s complaint, in May 2021, Koski published counterfeit notices, supposedly on U.S. Bank letterhead, falsely claiming that the JCP Debentures would be prematurely redeemed at their full face value. This deceptive maneuver caused a significant 75% surge in the price of COTRP. Additionally, in September and November 2021, Koski is alleged to have fabricated and distributed bogus COTRP press releases, falsely asserting that “COTRP would become the first publicly traded security fund to transition into a cryptocurrency” and that this transition would “enable the fund to recover its face value of $25 as it embraced the realm of digitized currency.” The SEC contends that Koski was fully aware that these statements were entirely false.

The SEC’s complaint, which has been filed in the U.S. District Court for the Southern District of New York, charges Koski with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5. The complaint seeks a permanent injunction to prevent future violations of these anti-fraud provisions, a conduct-based injunction, civil monetary penalties, and a ban on trading penny stocks.

The investigation into this matter was conducted by Mariel Bronen, Daphne Downes, and George Stepaniuk, under the supervision of Tejal D. Shah at the SEC’s New York Regional Office. The litigation efforts are led by Christopher Colorado and Ms. Bronen. The SEC expresses its gratitude for the assistance provided by the U.S. Attorney’s Office for the Southern District of New York and the Federal Bureau of Investigation in this case.