Spongetech ($SPNG) executives arrested for securities fraud
It’s all over the stock world today that top executives, accountants, and others related to Spongetech Delivery Systems (SPNG) were arrested by the SEC, charged with securities fraud.
The top executives of Spongetech Delivery Systems Inc. (SPNG) were arrested and charged Wednesday in an alleged scheme to defraud investors by reporting falsely and grossly overstated sales figures.
According to a criminal complaint filed Wednesday, Michael Metter, Spongetech’s chief executive and president, and Steven Moskowitz, the New York pre-soaped sponge maker’s chief operating officer and chief financial officer, were charged with conspiracy to commit securities fraud and obstruction of justice. They each face up to five years in prison on the conspiracy charge.
The article, and others, go on to reveal that SPNG overstated its sales by up to 99%, the percentage of which its sales were to entities which don’t even exist.
SPNG ended the trading day today at .0069, an 83% drop.
I rode SPNG through the pump-and-dump scheme last June (SPNG dropped 27.66% yesterday, or how I learned many lessons about the stock market, Out of SPNG, 7% profit, back in and holding).
I bought back in shortly after and have been holding since. I added a small position in November, bringing my average from .15 to .095. I bought a tiny position today for $75, bringing my average to .08. I somewhat regret this decision, as I probably could have bought and sold more intraday if I had more cash in my account.
Timothy Sykes has a fantastic article on the mess: The Biggest Penny Stock Pump & Dump Ever? Possibly $250+ Million, SEC Alleges SpongeTech Scheme Sold 2.5 Billion Shares, Suckering Sports Fans Everywhere, What Do You Think?
If what the SEC alleges is proven true and SPNG executives did sell 2.5 billion shares, this may go down as the largest penny stock pump and dump in history (the stock rose from under a penny/share to 30 cents/share so you gotta figure an average selling price of 10-20 cents/share would yield $250-$500 million in allegedly illegal profits)…pretty amazing considering SPNG is getting sued by half a dozen sports teams like The NY Mets, NY Islanders, Chicago Bears & NY Giants as The NY Post recently pointed out (nope, they didn’t ask me for my opinion, I am simply linking to a published article FYI) for mere six figures (where did all the money go from these 2.5 billion share sales?)
I, to this day, which that I had listened to @_TheDean when he warned me the morning of June 12 that he thought SPNG was a pump and dump and that I should take my profits (~99%) and run. Considering my goal of stock trading is to risk a little bit of extra, unplanned income to help pay off my student loans, I’d have been more than 2/3 of the way there had I followed his advice (and perhaps that of Sykes).
Live and learn. Risk is risk.
Anyway, worst case scenario is that I lose the couple thousand dollars I have in SPNG and get to perhaps partake in a shareholder lawsuit. Best case scenario? Current execs serve their time and someone else comes in, and takes this .0069 dollar stock to a 1.00 dollar stock in a few years. No matter what, I’m in for the ride. Profits or bust on this one.
Ironically, I just watched Wall Street last night.





