DiScala et al.

Litigation Release No. 25606 / January 4, 2023

Securities and Exchange Commission v. DiScala et al., Civil Action No. 1:14-cv-4346 (E.D.N.Y. filed July 17, 2014; amended January 19, 2016).

On December 22, 2022, the U.S. District Court for the Eastern District of New York entered a bifurcated judgments against Marc Wexler and Matthew Bell, enjoining them from violating certain provisions of the federal securities laws.

According to the SEC’s complaint, starting in 2013, Wexler and Bell, along with the other defendants, were involved in a scheme to manipulate the securities of CodeSmart Holdings, Inc. (“CodeSmart”). The SEC alleged that Wexler and others sought to flood the market with CodeSmart shares and engaged in a promotional campaign to artificially inflate the price of the stock. Meanwhile Bell and another individual invested their brokerage clients in CodeSmart. In short, the SEC alleged that the plan was for the defendants to profit at the expense of Bell’s brokerage clients.

The SEC’s complaint charged Wexler and Bell with violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Sections 9(a) and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. On December 22, 2022, the Court entered a partial judgment against Wexler and Bell by consent in which they agreed to be permanently enjoined from violations of the charged provisions and agreed to a penny stock bar. Wexler additionally consented to an officer-and-director bar.

In the parallel criminal proceeding, United States v. DiScala, et al., 14 Cr. 399 (E.D.N.Y.), both Wexler and Bell have pleaded guilty and are awaiting sentencing.

The SEC’s litigation is being handled by Todd Brody and Lindsay Moilanen of the New York Regional Office and is being supervised by Sheldon L. Pollock and Joseph Sansone. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Eastern District of New York and the Federal Bureau of Investigation.

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