Due to his participation in a penny stock scheme, the SEC has charged Dr. Phillip Frost, the non-executive chairman of Ladenburg Thalmann Financial Services, with fraud. Since the news broke on Sept. 7th, the Ladenburg Thalmann stock price has dropped roughly 20%. Just when you thought penny stocks couldn’t get any more interesting, right?
Penny Stocks: Ladenburg Thalmann
Ladenburg Thalmann is a Miami, Florida-based company that provides financial services. Currently, the company has three operating segments. Dr. Frost is not only the non-executive chairman but also one of the largest shareholders in the company.
On Friday, the SEC charged Frost along with nine others for their involvement in “long-running schemes.” These penny stock schemes generated more than $27 million from “unlawful stock sales.” According to the SEC lawsuit, these schemes caused retail investors serious harm.
Specifically, Frost, as well as Mr. Hoing, were charged with violating the following in their penny stock scheme:
- Antifraud
- Beneficial ownership disclosure
- Registrations provisions of the federal securities laws
However, Ladenburg Thalmann has a different opinion. In an email, Joseph Kuo, a company spokesperson, said the allegations in the SEC lawsuit “are unrelated to Ladenburg,” as well as “Dr. Frost’s involvement.” Not to mention OPKO said that the SEC’s complaint had “serious factual inaccuracies.”
In the OPKO statement, it was claimed that the SEC did not “provide notice of its intent to sue” before filing the Ladenburg Thalmann complaint.
Penny stocks come with risks, but were Ladenburg Thalmann investors expecting something as serious as this? Probably not; hence the nearly 5% drop.
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The Ladenburg Thalmann Share Price
As of 2:53 p.m. EDT, Ladenburg Thalmann (NYSEAMERICAN:LTS) is trading at $2.46, which puts the penny stock down 3.53%.
The Takeaway
What do you think about the Ladenburg Thalmann lawsuit? Will the LTS stock be able to redeem itself before the week’s end? Let us know what you think in the comments below.
Featured Image: Depositphotos/© yurizap
