(HedgeCo.Net) The Securities and Exchange Commission has announced charges against Morningview Financial, LLC (“Morningview Financial”) and its managing member, Miles M. Riccio of Los Angeles, California, for failing to register as securities dealers with the SEC. Morningview Financial and Riccio allegedly sold billions of newly issued shares of microcap securities, or “penny stocks,” which generated millions of dollars for Morningview Financial and Riccio.
The SEC’s complaint, filed in the Southern District of New York, alleges that between at least July 2017 and December 2021, Morningview Financial engaged in the business of purchasing convertible notes and warrants from penny stock issuers, converting the notes into stock at a large discount from the market price, and selling those newly issued shares into the market at a significant profit. Morningview Financial allegedly purchased at least 68 convertible notes and 4 warrant agreements from 35 separate issuers and sold more than 3 billion shares of newly issued penny stock into the market, generating over $14.8 million in trading profits. As alleged, neither Morningview Financial nor Riccio was registered as a dealer with the SEC or associated with a registered dealer, in violation of the mandatory registration provisions of the federal securities laws. By failing to register, Morningview Financial and Riccio avoided certain regulatory obligations for dealers that govern their conduct in the marketplace, including regulatory inspections and oversight, financial responsibility requirements, and maintaining books and records.
The SEC’s complaint charges Morningview Financial and Riccio with violating the registration provision of Section 15(a)(1) of the Securities Exchange Act of 1934, and charges Riccio with violating Section 20(a) of the Securities Exchange Act of 1934. The SEC seeks permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, civil penalties, penny stock bars, and other equitable relief. The complaint also names as a relief defendant Riccio’s uncle, Joseph M. Riccio Jr., who allegedly received illicit proceeds from Morningview Financial and Riccio’s violations.
