A Bulgarian man suspected in the alleged buyout offer for Avon Products in the 2015 hoax has been indicted. The man has been charged with market manipulation and insider trading, said federal prosecutors on Thursday. The accused is 38-year Nedko Nedev, who was arrested in Bulgaria.
What’s the Avon hoax case?
Nedev has become the target of a federal extradition effort to bring him to the U.S. for trial on a newly unsealed eight-count indictment, said prosecutors. The prosecutors alleged that to carry out the Avon scheme, Nedev created and used a sham company called PTG Capital Partners.
During the late morning hours on May 14, Nedev allegedly filed a fake Avon buyout offer of $18.75 per share on the Edgar. A 400% increase in the average per-day trading volume in the cosmetic company’s shares was caused last May due to his alleged sham takeover offer for Avon, said Manhattan U.S. Attorney Preet Bharara’s. This resulted in hundreds of millions of dollars in market manipulation, he added.
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Noting that the 2015 hoax forced the New York Stock Exchange (NYSE) to halt trading in Avon shares, Bharara said, “His alleged lies caused massive swings in share prices and trading volume. If you manipulate the U.S. securities markets with disinformation and deception, whether from New York or from Bulgaria … you will be held to account.”
Other cases involving Nedev
Nedev is also accused of being the mastermind behind a similar manipulation hoax in 2012 involving shares of Colorado-based confectionery manufacturer Rocky Mountain Chocolate Factory. In addition to this, he is also accused of illegally trading on non-public information with the intent of reaping gains in the stock of U.S-based insurer Tower Group International.
Initially, U.S. authorities had little information about Nedev. However, he and several related co-defendants were accused in a civil lawsuit the Securities and Exchange Commission (SEC) filed in June accusing them of producing phony buyout offers and posting them on its electronic system known as Edgar, a site for storing official regulatory filings. Responding to the SEC action, a federal judge froze two of Nedev’s brokerage accounts which held assets of $2 million.