AwesomePennyStocks' Babikian to pay $3.73M in settlement with SEC

John Babikian, who controlled stock promotion website AwesomePennyStocks.com, agreed to pay $3.73 million to settle the Securities and Exchange Commission's charges that he defrauded investors in coal mining company America West Resources Inc.

Under the settlement, Babikian will pay a $1.69 million civil penalty and disgorge $1.92 million in profits plus $128,073 in interest, the SEC said in a Tuesday, July 8, statement.

Babikian will also be banned from participating in penny stock offerings or from recommending any U.S.-traded stock without disclosing his plans to sell the stock within 14 days of the recommendation.

He agreed to the settlement without admitting or denying the SEC's allegations.

Through his stock promotion websites AwesomePennyStocks.com and PennyStocksUniverse.com, Babikian sent e-mails to 700,000 people on Feb. 23, 2012, recommending America West shares.

The e-mails did not disclose that Babikian held more than 1.4 million America West shares that he had prepared to immediately sell through a Swiss bank, the SEC said in its lawsuit filed in March of this year. The lack of disclosure constituted a kind of securities fraud known as scalping, according to the commission.

The e-mail campaign, which started shortly after 2:30 p.m., caused America West shares to spike. Babikian unloaded his holdings in the stock over the next 90 minutes, generating gains of more than $1.9 million, according to the SEC.

The settlement was approved by Judge Paul Crotty of the U.S. District Court in Manhattan.

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