- Three men behind last year’s Hometown Deli public market failure have been indicted on charges of stock market manipulation.
- The organized scheme has given New Jersey’s local deli sports a $100 million market cap.
- Hedge fund manager David Einhorn has accused the company of being an example of the SEC’s negligence over an equity scheme.
The three men behind Hometown International, the parent company of a New Jersey-based deli whose market cap surged to $100 million last year, have been indicted on charges of stock market manipulation and fraud.
Father-son duo Peter Coker Sr. and Peter Coker Jr., along with James Patten, were indicted Monday by the SEC and DOJ over a scheme involving artificially inflating Hometown International stock prices. it was done.
Hometown International operates a New Jersey deli with annual revenues of less than $40,000 and annual profits of less than $14,000. Despite its poor financial condition, Hometown’s stock price skyrocketed from $1 a share in October 2019 to $14 a share in April 2021, with a market valuation of over $100 million. I was.
David Einhorn of hedge fund icon Greenlight Capital last year wrote to investors to caution against deli when dealing with blatantly fraudulent firms traded on the stock exchange. , argued that the SEC was essentially behind the wheel.
“Hometown International, which owns a deli in rural New Jersey, reached a market cap of $113 million on February 8th. Pastrami must be great,” Einhorn said at the time, highlighting the number of questionable companies overlooked by regulators.
Just 15 months later, the SEC and DOJ are taking action.
“Patten, Coker Sr., and Coker Jr. … control the outstanding shares of Hometown International, and another shell company, E-Waste Corp., has acquired shares of both issuers through manipulative transactions. It artificially inflates the price and then the company sells the stock at a significantly inflated price,” the SEC argued.
Scott Thompson, Executive Deputy Director of our Philadelphia office, said: “Such a manipulative scheme undermines the confidence that investors should have in the integrity of the market and we do not tolerate such fraudulent practices. We will track down those involved,” he said.
According to DOJ, the questionable scheme began in 2014 and ultimately resulted in artificial gains of 939% and 19,900% in Hometown International and E-Waste shares respectively.
The SEC has filed a complaint in the United States District Court for the District of New Jersey, accusing all three defendants of violating the antifraud provisions of the Securities Act. The defendants have also been charged with securities fraud and money laundering, among others, by the New Jersey Department of Justice.