Stockbroker fined for deceit
The Federal Court of Australia has found stockbroker Adam Blumenthal guilty of serious and deliberate market rigging, involving shares of the cannabis start-up, Creso Pharma.
Justice Angus Stewart has ordered Blumenthal be banned from managing companies for five years and to pay a hefty $850,000 penalty, following an agreement with the corporate regulator four months prior.
Blumenthal, who was a chair of the now renamed Melodiol Global Health and the head of Sydney stockbroking firm EverBlu, admitted to his wrongful conduct as part of a settlement.
His infractions included breaches of director duties and engaging in deceitful market activities to manipulate stock prices, involving more than $2 million paid to Tyson Scholz, a known figure in stock promotion circles, for marketing purposes without adequate disclosure.
In addition to the ban and financial penalties, Blumenthal also agreed to a five-year prohibition from participating in any financial services, further highlighting the gravity of the misconduct.
The court specifically pointed out that Blumenthal's market rigging was not only serious and repeated but also intended to mislead the market by creating a false or misleading appearance of market interest in Creso shares.
ASIC Chairman Joe Longo said the penalties imposed “are a timely reminder to directors of their obligations, including to avoid conflicts of interest, and that serious consequences are imposed for contraventions to help maintain confidence in the financial system”.
This case is part of a broader investigation into market manipulation activities involving other stock promoters.