Global pump-and-dump player sentenced

The founder of a Swiss asset management firm has been sentenced to prison for his role in a massive global pump-and-dump scheme that generated over US$150 million.

A U.S. district court judge ordered that Roger Knox — who operated a firm based in Switzerland called Silverton, and later Wintercap — serve 36 months in prison, forfeit US$10.9 million, and pay restitution that will be determined at a letter date. Knox previously pleaded guilty to securities fraud and conspiracy.

According to U.S. authorities, Knox’s firm helped orchestrate a series of pump-and-dumps by selling large quantities of microcap securities on behalf of groups of traders that secretly controlled stakes in various companies, and worked together to stoke demand for the shares, before cashing out at inflated prices and dumping their shares on unsuspecting investors.

“Knox then funneled the proceeds of the pump-and-dumps — totaling over US$137 million between 2016 and 2018 — to co-conspirators in the United States and around the world through a complex money-transfer system that disguised the source and nature of the funds,” the U.S. Department of Justice (DoJ) said in a release.

U.S. authorities have already collected approximately US$9 million from Knox that was held in bank and brokerage accounts in the U.S., Canada, Malta, Mauritius, the United Arab Emirates and the U.K.

Several other co-conspirators have already pleaded guilty and been sentenced for their roles in the scheme, and there are criminal complaints pending against others.

“Roger Knox was a critical participant in a massive global securities fraud scheme that generated more than US$150 million in illegal proceeds. While today’s sentence cannot make up for the significant financial and emotional harm he and others inflicted upon their unwitting victims, it does send a message to those who may be looking to profit from similar schemes—think twice because the penalties you’ll face are steep,” said Jodi Cohen, special agent in charge of the U.S. Federal Bureau of Investigation’s Boston division.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.