It turns out the “next Apple” was actually a rotten piece of investment fruit.
A British Columbia Securities Commission panel has imposed penalties and market bans on three people and a Swiss wealth management firm after finding they were involved in market manipulation.
EHT Corporate Services S.A. - formerly known as EuroHelvetia TrustCo. S.A. - funded part of a 2011 marketing campaign that promoted a Nevada company called Kunekt, which had announced plans to enter the smartphone business. “Newsletters claimed that Kunekt was the ‘next Apple,’ even though it had just $360,000 in assets and no proprietary technology,” said a BCSC news release. “The campaign enabled the company to reach a market capitalization of almost $180 million.”
The BSCC said that two people – Raffi Khorchidian and Garo Aram Deyrmenjian – have been penalized for permitting the transfer of hundreds of thousands of dollars they “beneficially owned to pay for the marketing campaign. The panel ordered that Khorchidian disgorge $7.15 million, representing the net proceeds he received from trading in Kunekt shares in accounts beneficially owned by him, and that he pay an $850,000 administrative penalty. Similarly, the panel ordered that Deyrmenjian must disgorge $7.14 million, plus pay an administrative penalty of $700,000.”
Deyrmenjian and Khorchidian must also both resign any position they hold as a director or officer of an issuer or registrant, said the BCSC, and are permanently prohibited from taking any such role.
“They also were permanently barred from trading in or purchasing securities or exchange contracts; relying on any exemptions of the Securities Act; becoming or acting as director or officer a registrant or promoter; acting in a management or consultative capacity in the securities market; or engaging in investor relations activities,” said a news release.