SEC v. David Ferraro; and Justin Costello, No. LR-25773, Western District of Washington (July 11, 2023) — Press Release
raw: Costello et al.
Costello et al., No. 2:22-cv-01388 (July 11, 2023)
summary
The SEC obtained a final judgment against David Ferraro for microcap stock promotion schemes that generated over $140,000 in profits.
paragraph
David Ferraro was charged with violating Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act for promoting microcap stocks without disclosing profit-sharing arrangements. The scheme involved promoting stocks owned by co-defendant Justin Costello and conducting separate promotions, generating significant illicit profits. Ferraro was ordered to pay a total of $154,429.89 in disgorgement and prejudgment interest.
narrative
The SEC obtained a final judgment against David Ferraro for his role in microcap stock promotion schemes that generated more than $140,000 in profits. Alongside co-defendant Justin Costello, Ferraro promoted at least five microcap stocks to Twitter followers without disclosing that Costello intended to sell shares as prices rose or that Ferraro would receive a portion of the profits. Ferraro also conducted separate promotions for two additional microcap stocks, generating approximately $68,000 in profits. Without admitting or denying the allegations, Ferraro consented to a permanent injunction against securities violations and a bar from participating in penny stock offerings. The court ordered Ferraro to pay $142,724.97 in disgorgement plus $11,704.92 in prejudgment interest, totaling $154,429.89. No civil penalty was imposed due to Ferraro's sworn statement of financial condition.
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Parties
BlackDavol, Inc.
Keywords
ferrarocostellosecurities exchangestockexchange commissionfinal againststock promotionprofits ferrarosecuritiesexchangesecmicrocapprofitsjuly securitiesmicrocap stock
Extracted insights
Dollar amounts 7
- $154K $154,429 $100K–$1M
- $143K $142,724 $100K–$1M
- $140K $140,000 $100K–$1M
- $68K $68,000 $10K–$100K
- $41K $41,000 $10K–$100K
- $32K $32,000 $10K–$100K
- $12K $11,704 $10K–$100K
Entities 5
- person bifurcated settlement
- person david ferraro
- person final judgment
- person justin costello
- agency Securities and Exchange Commission
Triples 11
- Securities And Exchange Commission Obtained Judgment David Ferraro
- David Ferraro Generated Profits More Than $140,000
- David Ferraro Engaged In Scheme Stock Promotion Scheme With Justin Costello From October 2019 Through January 2021
- David Ferraro Recommended Stocks At Least Five Microcap Stocks Owned By Justin Costello
- Justin Costello Shared Profits Approximately $32,000 With David Ferraro
- David Ferraro Profited Approximately $41,000 From Own Trading
- David Ferraro Generated Profits Approximately $68,000 From Separate Stock Promotion Scheme
- David Ferraro Consented To Settlement Bifurcated Settlement
- David Ferraro Enjoined From Violations Section 17(a) Of Securities Act Of 1933, Section 10(b) Of Securities Exchange Act Of 1934, and Penny Stock Offerings
- Final Judgment Ordered Payment $142,724.97 Disgorgement Plus $11,704.92 Prejudgment Interest Total $154,429.89
- Securities And Exchange Commission Litigation Conducted By Pascale Guerrier, Samuel Kalar, Tian Wen Under Supervision Of Celeste a. Chase And Sheldon L. Pollock
Extracted body text (2,269c)
U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 25773 / July 11, 2023 Securities and Exchange Commission v. Costello et al., No. 2:22-cv-01388 (W.D. Wash., filed Sept. 29, 2022) SEC Obtains Final Judgment Against Microcap Stock Promoter On July 11, 2023, the Securities and Exchange Commission obtained a final judgment against defendant David Ferraro for his role in alleged microcap stock promotion schemes that generated more than $140,000 in profits for Ferraro. According to the SEC’s complaint, from at least October 2019 through January 2021, Ferraro and his co-defendant Justin Costello engaged in a stock promotion scheme in which Ferraro recommended and promoted to his Twitter followers and the public at least five microcap stocks that Costello owned, without disclosing that he and Costello intended to sell shares of those stocks as their prices rose, or that Costello would pay Ferraro a portion of his profits from some of those sales. Costello shared approximately $32,000 of his profits with Ferraro, and Ferraro profited approximately $41,000 from his own trading in this scheme. The SEC’s complaint also alleged that Ferraro separately conducted his own stock promotion scheme respecting two additional microcap stocks, generating profits of approximately $68,000. Ferraro previously consented to a bifurcated settlement and consented, without admitting or denying the allegations in the complaint, to be permanently enjoined from violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and from participating in any offering of a penny stock. The final judgment against Ferraro awards the previously imposed injunctive relief and penny stock bar; orders Ferraro to pay disgorgement in the amount of $142,724.97, plus prejudgment interest thereon in the amount of $11,704.92, for a total of $154,429.89; and does not impose a civil penalty, based on Ferraro’s sworn statement of financial condition. The SEC’s litigation is being conducted by Pascale Guerrier of the Miami Regional Office and Samuel Kalar and Tian Wen of the New York Regional Office, under the supervision of Celeste A. Chase and Sheldon L. Pollock of the New York Regional Office.
OCR text (2,269c · html-text · 99% conf)
U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 25773 / July 11, 2023 Securities and Exchange Commission v. Costello et al., No. 2:22-cv-01388 (W.D. Wash., filed Sept. 29, 2022) SEC Obtains Final Judgment Against Microcap Stock Promoter On July 11, 2023, the Securities and Exchange Commission obtained a final judgment against defendant David Ferraro for his role in alleged microcap stock promotion schemes that generated more than $140,000 in profits for Ferraro. According to the SEC’s complaint, from at least October 2019 through January 2021, Ferraro and his co-defendant Justin Costello engaged in a stock promotion scheme in which Ferraro recommended and promoted to his Twitter followers and the public at least five microcap stocks that Costello owned, without disclosing that he and Costello intended to sell shares of those stocks as their prices rose, or that Costello would pay Ferraro a portion of his profits from some of those sales. Costello shared approximately $32,000 of his profits with Ferraro, and Ferraro profited approximately $41,000 from his own trading in this scheme. The SEC’s complaint also alleged that Ferraro separately conducted his own stock promotion scheme respecting two additional microcap stocks, generating profits of approximately $68,000. Ferraro previously consented to a bifurcated settlement and consented, without admitting or denying the allegations in the complaint, to be permanently enjoined from violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and from participating in any offering of a penny stock. The final judgment against Ferraro awards the previously imposed injunctive relief and penny stock bar; orders Ferraro to pay disgorgement in the amount of $142,724.97, plus prejudgment interest thereon in the amount of $11,704.92, for a total of $154,429.89; and does not impose a civil penalty, based on Ferraro’s sworn statement of financial condition. The SEC’s litigation is being conducted by Pascale Guerrier of the Miami Regional Office and Samuel Kalar and Tian Wen of the New York Regional Office, under the supervision of Celeste A. Chase and Sheldon L. Pollock of the New York Regional Office.