On March 8, 2023, the U.S. District Court for the District of Massachusetts entered final judgments against Canadian citizen Bradley Moynes and Canadian corporation Digatrade Financial Corp., in connection with the SEC’s allegations that they engaged in a deceptive scheme involving microcap companies that generated more than $1.5 million in unlawful stock sale proceeds at the expense of unsuspecting retail investors. Among other things, the defendants have been ordered to pay a total of over $3.4 million in disgorgement of ill-gotten gains, prejudgment interest, and civil penalties.
On June 27, 2022, the SEC charged that Moynes was the President, CEO and Director of two small and thinly traded companies, Formcap Corporation and Digatrade, whose stock was publicly traded in the U.S. securities markets. According to the complaint, Moynes used foreign nominee companies to hold stock in these microcap companies, thus concealing his ownership. The SEC alleged that Moynes and his associates generated demand for the stock they controlled by paying promoters to tout the stock and then secretly sold stock into that demand, generating substantial illicit profits from unsuspecting investors. The complaint alleged that, as a result of Moynes’ deceptive conduct, investors buying the stock he sold were deprived of important information-that the stock they purchased was being dumped by the President and majority shareholder of the company.
Without admitting or denying the allegations of the SEC’s complaint, Moynes and Digatrade consented to the entry of final judgments enjoining them from violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and also enjoined Moynes from directly or indirectly, including but not limited to, through any entity owned or controlled by him, participating in the issuance, purchase, offer, or sale of any security. The final judgments also imposed penny stock bars against Moynes and Digatrade and imposed an officer and director bar against Moynes. With respect to financial remedies, Moynes was ordered to pay disgorgement of $1,042,407, prejudgment interest of $253,868, and a civil penalty of $207,183. Digatrade was ordered to pay disgorgement of $510,000 and prejudgment interest of $133,309 and a civil penalty of $100,000. $62,007 of Digatrade’s disgorgement is joint and several with Moynes. The SEC’s complaint also named Vancap Ventures, Inc., a company owned by Moynes and that received trading proceeds from Moynes’ fraudulent schemes, as a relief defendant. Vancap was ordered to pay disgorgement of $980,400 and prejudgment interest of $235,577 on a joint and several basis with Moynes.