Avon Products Inc. will finally get its day in court over the securities hoax in May 2015 organized by a disgruntled Bulgarian investor who faked an acquisition bid to spike the beauty company’s stock.
The man, Nedko Nedev, was arrested in Bulgaria and will be extradited to the U.S. to face a trial regarding a newly unsealed indictment, according to the Manhattan U.S. Attorney’s Office.
Nedko Nedev was arrested in Bulgaria and will be extradited to the U.S. to face a trial regarding a newly unsealed indictment, according to the Manhattan U.S. Attorney’s Office.
Nedev pretended to have a takeover offer for Avon in May 2015 that caused the stock price to explode more than 400 percent and enabling hundreds of millions of dollars in market manipulation. The event caused the New York Stock Exchange to halt trading in Avon’s stock three times in a half hour period following the sham offer.
According to the district attorney’s statement, Nedev had been losing money on his shares of Avon when he concocted the scheme. He created a fake company called PTG Capital Partners and a fake name “Steve Kohe” to file a form with the Securities and Exchange Commission for the fake offer. The offer proposed to acquire Avon stock for $18.75 a share, which was a 181 percent premium to the then trading price.
He filed the news midday in order to move the stock. Avon stated the offer was not real on Bloomberg, but investors continued to trade unaware that Avon disputed the story. Nedev sold a portion of his Avon stock 25 minutes after he filed the sham offer and earned profits. The trading volume of the day of the Avon offer was more than 69 million shares, an increase of 400 percent overaverage daily trading volumes.
Nedev is charged in eight counts. According to the statement, “In connection with the Avon market manipulation scheme, Nedev is also charged with one count of securities fraud (Count Four), one count of wire fraud (Count Five), and one count of aggravated identity theft (Count Six).”
“His alleged lies caused massive swings in share prices and trading volume, including a sham tender offer that required the New York Stock Exchange to halt trading in Avon shares,” said U.S. Attorney Preet Bharara. “If you manipulate the U.S. securities markets with disinformation and deception, whether from New York or from Bulgaria, as Nedev is alleged to have done, you will be held to account.”
In the same indictment, Nedev is accused of a similar stock scheme with Rocky Mountain Chocolate Factory stock.
Avon stock closed lower by 2 cents on Friday at $4.19.