By Stacey Doyle
All information in this bi-monthly report on penny stock violations was compiled from public records maintained by the SEC.
Going Over the Edge
On March 7, the SEC charged Silver Edge Financial, Equity Acquisition Company, owners of both companies, and Sales Edge sales staff with unregistered broker-dealer activity in sales of pre-IPO companies. The order found that since January 2019, Silver Edge, owner Daniel J. Mackle, Sr., and six salespeople solicited accredited investors, raising over $65 million, without registering as brokers.
Additionally, the order found Equity Acquisition Company and its founder, Carsten Klein, acted as unregistered brokers in obtaining pre-IPO shares and offering them for sale to pre-IPO funds, including Silver Edge. EAC bought over 14 million shares of pre-IPO companies, selling over $13.4 million in shares to pre-IPO funds and keeping the rest of the shares in inventory.
Silver Edge Financial was incorporated in December 2018 with a primary place of business in Hackensack, New Jersey. Silver Edge Pre-IPO Fund was incorporated in Delaware in January 2019, and Silver Edge Venture Fund was incorporated in Delaware in January 2020. Daniel J. Mackle, Sr., 53, is a Pomona, New York resident.
Silver Edge and Mackle agreed to pay disgorgement and prejudgment interest of over $2.5 million and a civil penalty of $975,000. They are also barred from the industry with the right to reapply in five years.
EAC’s Edgy Role
EAC is a trust organized under Bermuda laws, and its sole shareholder is Church Bay Trust Co., a Bermuda limited liability company. Carsten Klein is a citizen of Germany and a lawful permanent United States resident residing in Parkland, Florida.
EAC and Klein agreed to pay disgorgement and prejudgment interest of over $3.6 million with a civil penalty of $269,360 following an SEC cease and desist order for operating as an unregistered broker. Klein further agreed to help ensure EAC’s orderly and legal distribution.
Silver Edge Salespeople on the Edge
Six salespeople agreed to pay civil penalties, including Scott Esposito, Daniel Valentino, Dave Nicholas, Richard Konopka, Joshua Simmons, and Robert Daniel Louis.
The six salespeople involved with Silver Edge agreed to penny stock bars for at least two years and were ordered by the SEC to pay various civil penalties as follows.
Robert Daniel Louis
Robert Daniel Louis, 54, of Blackwood, New Jersey, was a sales representative and training manager at Silver Edge from January 2019 to the present and solicited at least 12 pre-IPO offerings of Silver Edge Funds. In addition, Louis provided training and guidance to trainee sales representatives who cold-called potential investors. He was previously a registered representative with SEC-registered broker-dealers from October 1995 through March 2000.
In December 2000, the National Association of Securities Dealers, the predecessor to the Financial Industry Regulatory Authority (FINRA), permanently barred Louis from association with any member firm and fined him $50,000 for providing false information and falsifying records while employed at Barron Chase.
Unlike the other five salespeople involved, Louis is barred from association with broker-dealers and offering penny stocks until he pays disgorgement and fulfills other SEC conditions. Also, he is ordered to pay civil penalties of $124,320.
Daniel Valentino, 53, of Edgewater, New Jersey, solicited investment in at least 14 pre-IPO series offerings of Silver Edge funds and was never registered with the SEC or associated with a registrant. As a result, Valentino is ordered to pay civil penalties of $123,000 to the SEC.
Joshua Simmons, 35, of Edgewater, New Jersey, solicited investment in a minimum of 12 pre-IPO series offerings of the Silver Edge Funds. He was previously a registered representative associated with SEC-registered broker-dealers from February 2010 through March 2010, and June 2010 through April 2014. Simmons is ordered to pay civil penalties of $105,000.
Scott Esposito, 48, of Fort Lee, New Jersey, solicited investment in a minimum of ten pre-IPO series offerings of the Silver Edge Funds and was never registered with the SEC or associated with a registrant. Esposito is ordered to pay civil penalties of $88,000 to the SEC.
Dave Nicholas, 36, of Hoboken, New Jersey, solicited investment in at least eight pre-IPO series offerings of Silver Edge Funds. This salesperson was a previously registered representative associated with SEC-registered broker-dealers from July 2007 through March 2019, June 2019 through July 2020, and September 2020 through December 2020. Nicholas is ordered to pay civil penalties of $70,000 to the SEC.
Richard Konopka, 39, of Hackettstown, New Jersey, solicited investment in at least seven pre-IPO series offerings of Silver Edge Funds. He was previously a registered representative associated with SEC-registered broker-dealers from March 2008 through July 2019. Konopka is ordered to pay civil penalties of $61,000 to the SEC.
Stay tuned for more updates on microcaps and penny stock violations.