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Phillip Frost
Phillip Frost

Ladenburg Chairman Caught in Pump-and-Dump Scheme

The SEC charged biotech billionaire Phillip Frost in a market manipulation scheme involving two microcap companies.

Phillip Frost, biotech billionaire and chairman of Ladenburg Thalmann, was involved in two of three pump-and-dump schemes that fleeced investors out of over $27 million, the Securities and Exchange Commission claims.  

According to the SEC, Frost was one of 10 individuals charged in the market manipulation scheme that lasted from 2013 to 2018. The scheme was led by Florida investor Barry Honig, who bought large quantities of three microcap companies at steep discounts. To artificially boost the stock prices, the alleged fraudsters illegally promoted the stocks and manipulated trading in them. They then offloaded the stocks, generating over $27 million. 

Along with Honig and Frost, the SEC also charged John Stetson, Michael Brauser, John R. O’Rourke III, Mark Groussman, Elliot Maza, Robert Ladd, Brian Keller and John H. Ford, as well 10 entities, including OPKO Health, Frost’s pharmaceutical company.

Frost became non-executive chairman of the board at Ladenburg Thalmann in 2006, and in part with his financial backing, the firm has acquired five broker/dealers: Securities America, Triad Advisors, Investacorp, Securities Service Network and KMS Financial Services. Under his board leadership, the firm has become one of the most aggressive acquirers in the independent space, with some 4,300 advisors.

“The allegations in the SEC complaint are unrelated to Ladenburg, our subsidiaries and our business activities, as well as Dr. Frost’s involvement as a non-executive Board member or shareholder of our Company,” said Joseph Kuo, a spokesperson for Ladenburg.

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