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by Mike Caswell

The U.S. Securities and Exchange Commission has won a seven-year penny stock ban and $1.3-million in penalties against Ontario resident George Tazbaz. (All figures are in U.S. dollars.) The SEC claimed that he took part in a $10.6-million scheme to manipulate two Chinese OTC Bulletin Board companies. He participated in wash trades and sold hundreds of thousands of overvalued shares, the SEC said.

Mr. Tazbaz's sanctions are contained in a consent judgment filed on Monday, Aug. 31. His fine includes disgorgement of $800,871 in gains from the scheme plus $92,224 in interest. It also includes a $400,000 civil penalty. In addition, he is barred from participating in penny stock offerings and from trading penny stocks for seven years. The penalties represent a negotiated settlement, in which Mr. Tazbaz did not admit to any wrongdoing.

The sanctions stem from a case in which the SEC claimed that Mr. Tazbaz and others carried out two nearly identical market manipulations that occurred between 2008 and 2010, those of China Auto Logistics Inc. and Guanwei Recycling Corp. A group of men led by Ontario resident S. Paul Kelley was able to artificially keep the stocks between $3 and $4 for over a year, the SEC said. During the scheme they secretly sold millions of shares through entities in Hong Kong and other places, the regulator claimed.

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