SEC v. Michael J. Forster — U.S. Securities and Exchange Commission Litigation Release No. 26586, dated July 15, 2026.
The SEC charged Michael J. Forster for orchestrating a pump-and-dump scheme involving Cuba Beverage Company stock between February and August 2012. He allegedly controlled the issuer, engaged in manipulative trading, and promoted the stock to unsuspecting retail investors. Forster profited $144,320 from selling his shares as the stock price rose due to investor demand. He has now been permanently enjoined from further violations and barred from penny stock offerings, with his disgorgement and interest payments deemed satisfied by a parallel criminal forfeiture order.
Imagine someone secretly buys a lot of stock in a small company. Then, they tell lots of people that the company is going to do great, making the stock price go up. As people buy the stock because they believe the hype, the person who secretly bought shares sells them all for a profit. This is like a 'pump and dump' – pumping up the price with fake excitement, then dumping the shares on unsuspecting buyers.
Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.
SEC Obtains Final Consent Judgment as to Michael J. Forster in Connection with Alleged Pump-and-Dump Scheme. On July 13, 2026, the United States District Court for the Southern District of California entered a final consent judgment as to Michael J. Forster in connection with his role in an alleged pump-and-dump scheme. The SEC filed its complaint against Forster on May 4, 2022. The SEC’s complaint alleged that between February and August 2012, Forster orchestrated a pump-and-dump scheme in the stock of Cuba Beverage Company. In connection with the scheme, Forster allegedly controlled the issuer, engaged in manipulative trading, and promoted the stock to retail investors. When investors began buying the stock, Forster would allegedly sell his shares, which netted him $144,320 in that period. The SEC charged Forster with violations of Sections 9(a)(2) and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder as well as Section 17(a) of the Securities Act of 1933. The Court entered a partial consent judgment with Forster on May 20, 2022. This judgment permanently enjoined him from further violations of the charged provisions of the federal securities laws and imposed a penny stock bar. The final consent judgment issued on July 13, 2026, orders Forster to pay disgorgement of $144,320 and prejudgment interest thereon of $12,040, payment of which is deemed satisfied by the order of forfeiture entered against him in the parallel criminal action, United States v. Forster, 20 cr. 325 (S.D. Cal.). The SEC’s litigation was led by Christopher J. Dunnigan and Lindsay S. Moilanen, and was supervised by Christopher Colorado and Sheldon L. Pollock. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of California and the FBI.
Named in this action: Michael J. Forster.