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by Mike Caswell

Jerry Williams, the Arizona man who gathered a large following for a short squeeze strategy called "Float Lock Down," has agreed to pay $4.9-million to settle civil fraud charges. (All figures are in U.S. dollars.) He accepted the sanctions Tuesday to end a civil action he faces from the U.S. Securities and Exchange Commission. The regulator accused him of scalping two companies, including Edmonton's Green Oasis Environmental Inc.

The proposed settlement is contained in a consent to judgment filed on Feb. 11, 2014, in the District of Connecticut. Mr. Williams's fine includes disgorgement of $2.35-million plus interest of $188,766, and a $2.35-million civil penalty. He has also agreed to an order prohibiting him from participating in an offering of penny stocks and barring future violations. In accepting the penalties, Mr. Williams did not admit to any wrongdoing.

The allegations against Mr. Williams are detailed in a July 20, 2012, complaint the SEC filed in the District of Connecticut. They stemmed from a trading strategy he promoted through worldwide seminars in 2009 and 2010 called "Float Lock Down." The idea was that a group of investors could buy all the shares of a heavily shorted company. This would force short-sellers to cover at a substantial loss (essentially a short squeeze). It would also cause the stock to rise and result in substantial profits, Mr. Williams told investors.

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