The Securities and Exchange Commission has charged two securities professionals, a hedge fund trader and two firms with manipulating several U.S. microcap stocks to pump up stock sales, commissions and sales credits generating more than $63 million in fraudulent proceeds between September 2004 and September 2007.

The SEC said Florian Homm of Spain, Todd M. Ficeto of Malibu, Calif. and Colin Heatherington of Canada used reverse mergers to bring microcap companies public through their Beverly Hills, Calif.-based broker-dealer Hunter World Markets.

The trio allegedly manipulated stock prices upward before selling shares at inflated prices to eight offshore hedge funds controlled by Homm. By using manipulation techniques such as placing matched orders, placing orders that marked the close or otherwise set the closing price for the day, and conducting wash sales, Homm was able to overstate the hedge funds' performance and net asset values by approximately $440 million through a practice called portfolio pumping.

The SEC further alleges that Ficeto garnered additional fraudulent profits through his control of Hunter Advisors LLC, which directed a fund of funds that also participated in the stock manipulation scheme.

The SEC also instituted separate but related administrative proceedings against Hunter World Markets' chief compliance officer Elizabeth Pagliarini as well as trader Tony Ahn for their participation in the scheme. Both settled their cases with the SEC. Ahn agreed to pay a $40,000 penalty, comply with certain undertakings and be barred from associating with a broker and dealer for five years. Pagliarini agreed to pay a $20,000 penalty and received a one-year suspension as a supervisor with a broker or dealer.