SEC charges Ahmed Alomari and MCM Consulting with fraud
The Securities and Exchange Commission (SEC) has charged Rhode Island resident Ahmed Alomari and his entity, MCM Consulting, with securities fraud and other violations related to the promotion of at least five microcap stock issuers.
After buying the stocks and urging their followers to invest as well, the defendants “routinely sold their shares without ever disclosing their plans to dump the securities while promoting them,” the SEC stated in a press release.
According to the regulator, between March 2019 and February 2022, Alomari used social media platforms, investor chatrooms, and text blasts to promote these stocks without disclosing the compensation he received from the issuers.
The agency also alleges that Alomari secretly sold shares in these issuers while publicly urging others to buy them, resulting in at least $1.4 million in profits. He is also accused of submitting false representation letters to sell shares acquired through promotional services, using his wife to sign off on these letters.
“Alomari also was able to publicly sell shares he had earned from his promotional services based on false representation letters confirming that the shares were available for public trading. The SEC alleges that Alomari directed his wife, whom he named as the sole officer of MCM Consulting, to sign the false representation letters,” the statement reads.
The complaint, filed in the U.S. District Court for the District of Rhode Island, claims that Alomari and MCM Consulting violated multiple sections of federal securities law, including anti-fraud, anti-touting, and registration provisions.
The SEC seeks a permanent injunction, disgorgement, civil penalties, and a ban on Alomari and MCM Consulting from penny stock trading, as well as a prohibition against Alomari serving as an officer or director of any public company.
The commission further explains that such fraudulent schemes often unfold in three phases: First, the scammers identify a stock and buy it at a lower price before any alleged manipulation. Next, they promote the stock to their followers, inflating its value by setting price targets and hinting at upcoming company news.
Finally, they sell their shares into the market demand generated by this hype, securing a profit. To conceal their scheme, they would delete old tweets and Discord chats and then mislead their followers about the reasons for declining stock prices, obscuring their involvement in causing follower losses.
