Federal regulators on Thursday, October 7, Â brought securities fraud charges against more than a dozen penny-stock promoters â€” including Larry Wilcox, who played California Highway Patrol officer Jonathan “Jon” Baker on the hit TV show “CHiPs” in the late 1970s and early ’80s. The Securities and Exchange Commission said it caught the promoters in “various illicit kickback schemes to manipulate the volume and price of microcap stocks and illegally generate stock sales.”
1.Â What is another name for the type of scam that Larry is accused of perpetrating?
2. Briefly summarize the kickback scheme and tell why it is illegal.
3. What type of charges does Larry potentially face?
Source: SEC Staff. (2010) SEC Charges Penny Stock Promoters in Series of Kickback Schemes, SEC Press Release, October 7 (Retrievable online at http://sec.gov/news/press/2010/2010-187.htm)