Indian-Origin Brothers Charged with Defrauding InvestorsTop Stories

November 09, 2018 07:00
Indian-Origin Brothers Charged with Defrauding Investors

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Two Indian-origin brothers have been charged by the United States federal regulator for defrauding investors by claiming to issue unbiased research reports on certain publicly-traded small and microcap firms.

The 41-year-old Ajay Tandon and the 47-year-old Amit Tandon, of New York and stock research company SeeThruEquity co-founded by them were charged by the Securities and Exchange Commission with defrauding investors by aforementioned claiming when actually they received thousands of dollars from issuers as a condition to providing each report.

Ajay is the co-founder and Chief Executive Officer of SeeThruEquity and has experience in the securities industry.

Amit is the Director of Research at SeeThru as well as an attorney and a member of the New York Bar.

According to the SEC's complaint, SeeThruEquity and the Tandon brothers camouflaged the payments by inviting companies to make a "presentation" at an investor conference in order to receive a research report for free. SeeThru and the Tandon's allegedly gathered up to several thousand dollars in conference presentation fees per company, and the issuers on a regular basis had input into the substance of the supposedly unbiased research reports, even including the price targets at times, according to the complaint.

The SEC asserts that the Tandon's frequently directed SeeThru analysts to use unalike, inflated price targets for covered issuers than those yielded through supposed quantitative analysis, and the price targets comprise in SeeThru's reports were in most cases over 300 percent above the actual trading price of the stock.

The SEC further alleges that Ajay oftentimes traded in the same stocks that SeeThru was evaluating despite stating in published interviews and elsewhere that neither the firm nor its principals traded in securities for which they published research.

It alleges that Tandon's likewise involved in scalping, which is a form of securities fraud that happens when a wrongdoer makes a stock recommendation to investors and contemporaneously trades against that very recommendation in the open market without adequate disclosure.

"There is a clear line between paid advertising and unbiased research coverage, and we allege that SeeThru and its co-founders crossed it to deceive investors and make money," Director of the SEC's Atlanta Regional Office Richard Best said. "According to our complaint, Ajay Tandon even scalped multiple issuers, further revealing the biased nature of SeeThru's research reports."

The complaint, which was filed in federal court in Manhattan, charges Ajay and SeeThru with breaching the antifraud provisions of the federal securities laws and charges Ajay and Amit with aiding and abetting certain violations by SeeThru.

The SEC seeks permanent injunctions, a conduct-based injunction that would bar the Tandon's and SeeThru from promoting the issuer of any security, and disgorgement of ill-gotten gains plus penalties, interest, penny stock bars, and officer-and-director bars.

-Sowmya Sangam

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