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by Mike Caswell

The U.S. Securities and Exchange Commission says that Lee Cohen, a U.K. man charged for a $1.2-million pump-and-dump on the U.S. markets that included two Canadians, has been ignoring charges he faces in New York. (All figures are in U.S. dollars.) The charges arise from a scheme in which Mr. Cohen ran a boiler room in the Philippines that pitched ultimately worthless companies to investors. He employed 50 call centre employees and called investors personally using an alias, the SEC claimed.

While the SEC charged Mr. Cohen over six months ago, he has yet to file an answer to the case. As the regulator sees things, this amounts to a violation of the rules of the court. The SEC says that the appropriate remedy is to find him in default, which would allow the SEC to seek penalties without a trial. The SEC's request is contained in a document filed on Monday, Oct. 30, in federal court in New York.

The SEC has not yet said what the penalties for Mr. Cohen should be, but when the regulator filed the case it sought the court-ordered disgorgement of his gains, which amounted to 15 per cent of the proceeds from the scheme. The SEC also sought an order permanently banning Mr. Cohen from penny stocks. Should Mr. Cohen be found in default, the judge would likely grant those penalties.

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