Avalon Investor Hauled in $1.7M in Single Day
WARREN, Ohio – The brokerage firm that Avalon Holdings Corp. says violated securities law and manipulated the company’s stock hauled in more than $1.7 million on a single transaction alone in after-hours trading on July 27, according to new documents filed with the U.S. Securities and Exchange Commission.
The firm, Bahamas-based MintBroker International Ltd., late Wednesday filed a schedule 13D with the SEC, documents Avalon alleges were not properly filed when the brokerage firm gobbled up 1.9 million shares of Class A stock late last month, only to sell most of it off in within two days.
The new SEC filing details more than 2,000 transactions, documenting MintBroker’s purchases and sales of Avalon stock between July 24 and Aug. 1.
Avalon filed suit against MintBroker, its owner Guy Gentile and 10 other unnamed parties in U.S. District Court for the Southern District of New York Aug. 13 alleging they failed to comply with SEC regulations when it was disclosed that the firm had purchased more than 10% of Avalon Class A stock.
The waste management company is also seeking “to recover from each and all defendants any and all short-swing profits” – estimated in excess of $5 million – that were realized as a result of the group’s transactions.
Under securities law, an investor holding more than 10% of interest in a company is mandated to file a 13D, which discloses the nature of the investment and a transaction record of stock sales and purchases.
Moreover, any note holder that controls more than 10% of a company’s stock is restricted from selling their shares for a period of six months, Avalon chairman and CEO Ron Klingle told The Business Journal on Wednesday. “The law says the money from the stock is to be returned to the company,” if it is violated, he said.
According to the latest filing, MintBroker’s buy-up of Avalon stock started on July 24 with the acquisition of 800 shares at a price of $2.21. The firm continued its buying spree for three more days, accumulating 1.9 million shares before it disclosed its purchase on July 27.
Avalon’s stock price skyrocketed over the three-day period from $2.21 to more than $17.50 in after-market trading on July 27, according to documents. MintBroker’s filing shows its last stock purchase occurred at 1:56 p.m., when it bought 2,600 shares at $5.98.
Just two minutes later, the firm started to sell off its stake in small portions – between 50 and 300 shares per transaction – as the stock value soared. In after hours trading that day, MintBroker unloaded 102,275 shares at $17.23 during a single sale worth $1.759 million, records show.
The firm bagged another $254,151 about 20 minutes later after dumping more than 14,000 shares at $17, the SEC filing shows.
Premarket trading the following Monday morning saw the stock hit $36, 1,600% higher than it was the previous Monday, according to records.
In one transaction, MintBroker successfully sold off 5,000 shares at $35 per unit worth about $175,000, the SEC documents show.
MintBroker, an investment firm based Nassau, Bahamas, is owned by Guy Gentile, an “experienced securities market operator and connoisseur of scams,” according to Avalon’s filing. In July 2012, the FBI detained Gentile at Westchester County Airport in connection with his participation in two “pump and dump” schemes that involved shares of a Mexican gold mining company and a Kentucky oil exploration company, according to court papers.In order to avoid prosecution, Gentile turned informant and wore a wire as he participated in various financial schemes including conspiracies to manipulate stocks, pump-and-dump capers and other financial frauds, Avalon’s complaint says.
Civil and criminal charges were filed against Gentile in 2016, but the charges were dismissed on the grounds that their statute of limitations had expired, according to documents.
In a Bloomberg article published July 31, Gentile denied the Avalon purchase was a “pump-and-dump” scheme, but rather an attempt at a hostile takeover of the company.
MintBroker said in its SEC filing that it acquired the position “in an attempt to gain control over the issuer and replace its board of directors with the near-term goal of selling the assets of the issuer.”
However, such an attempted takeover is futile since Klingle controls 67% of the company’s voting power.
Copyright 2023 The Business Journal, Youngstown, Ohio.