A Bulgarian man losing money in Avon Products used a bogus takeover offer to boost its stock price, a lawsuit filed by the U.S. Securities and Exchange Commission claimed on Thursday.
The lawsuit accuses Nedko Nedev, 37, and four companies of working together to violate securities laws.
The SEC's suit said one of the companies, PTG Capital, gained access to a website maintained by the regulator and filed an offer for Avon falsely claiming it had proposed buying all the company's stock for a large premium. As a result, Avon soared as much as 20 percent on May 14, 2015.
The filing contained many clues that something was wrong. It included typographical errors and two different spellings of the company's own name. But the filing prompted millions of dollars of Avon's stock to be traded at inflated prices.
The lawsuit said Nedev and others who were not identified pulled off a similar scheme with the stock of Tower Group International, a thinly traded reinsurance company, on May 13, 2014, and with Rocky Mountain Chocolate Factory on Dec. 18, 2012. Shares of Tower Group temporarily soared 32 percent while Rocky Mountain rose 4.6 percent, the SEC said.
Avon Products said it is continuing to work with regulators on the matter. Rocky Mountain Chocolate didn't immediately respond to a request for comment.