SEC sues Bulgarian trader over bogus Avon takeover

The Securities and Exchange Commission sued a resident of Bulgaria and a bogus company over last month’s fake takeover bid for Avon Products.

Avon shares surged as much as 20 percent after a regulatory filing purported to show a bid of $18.75 a share — about three times Avon’s stock price at the time. Avon said there was no such offer.

PTG Capital, which claims to be incorporated in the British Virgin Islands and based in London, gained access to the SEC’s public filing system around April 21 and on May 14 falsely announced a tender offer for Avon, according to the lawsuit, filed Thursday in federal court in New York.

“There is no indication that PTG Capital is a legitimate company organized for any other reason than the stock manipulation,” the SEC said. “PTG Capital (to the extent it actually exists) is operated from Sofia, Bulgaria.”

Other bogus companies in the past filed fake takeover offers for Tower Group International and Rocky Mountain Chocolate Factory, resulting in a jump in their shares, according to the lawsuit.

Nedko Nedev, 37, a resident of Bulgaria, traded on the price changes in Avon, Tower Group and Rocky Mountain so he could benefit from the artificially inflated prices, the SEC said.

This story was originally published June 4, 2015 at 11:50 AM with the headline "SEC sues Bulgarian trader over bogus Avon takeover."