Law Street Media

SEC Alleges Market Manipulation Over $120M Deli Valuation

Table top view of spicy food.

Top looking down at restaurant food spread on table.

On Monday, the Securities and Exchange Commission (SEC) filed a complaint in the District of New Jersey against Peter Coker, Sr., Peter Coker, Jr. and James Patten alleging market manipulation that resulted in a $100 million valuation for a New Jersey delicatessen. 

According to the complaint, Coker Sr. and Patten are residents of North Carolina that formerly worked as broker-dealers and Coker, Jr. is a resident of Hong Kong and the former Chairman of the Board of Hometown International, Inc. 

The SEC alleges that the defendants perpetrated two fraudulent trading schemes by taking control of the issued and outstanding shares of Hometown International, Inc. and E-Waste Corp. and artificially inflating their share prices. The complaint states that Hometown International’s operations consisted of a single deli in southern New Jersey with less than $40,000 in annual revenue. Further, the SEC states that E-Waste Corp. was a shell company that had no substantive operations.

The complaint purports that Patten and the father-son duo artificially inflated the price of the two companies stock through manipulative trading executed through affiliated and nominee accounts they controlled and often used the same IP addresses to execute the trades. The complaint alleges that through these fraudulent trades the defendants artificially raised the price and trading volume of the entities’ common stock, creating the false appearance of active trading and a rising price for the security.  Further, the SEC states that the defendants used the entities to acquire privately-held companies in reverse mergers, with the intent to thereafter dump their shares at grossly inflated prices. 

Through the schemes, the defendants were able to inflate Hometown International shares to produce a a market capitalization of approximately $100 million and inflate the price of E-Waste Corp. common stock from $0.10 to $10.00 per share, which resulted in a market capitalization of approximately $120 million for a shell company with no revenue. 

Through an associated press release, the SEC states that “Such manipulative schemes diminish the trust investors must have in the integrity of the markets, and we will pursue those who engage in such wrongdoing.”

The SEC’s complaint  charges all three defendants with violations of the antifraud provisions of the securities laws, charges Patten with violating market manipulation provisions of the securities laws and charges Coker Sr. and Coker Jr. with aiding and abetting those violations. The SEC seeks injunctive relief, disgorgement plus prejudgment interest, civil penalties, and a prohibition against participating in any penny stock offerings.

In the press release the SEC further states that  the U.S. Attorney’s Office for the District of New Jersey has also announced criminal charges against Patten, Coker Sr., and Coker Jr.

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