The Securities and Exchange Commission has filed a proposed judgment in its case against Florida businessman Barry Honig on Monday for a civil case involving allegations of manipulating three microcap stocks.
The SEC also filed a proposed judgment against GRQ Consultants, a Florida corporation owned and operated by Honig, according to court documents released on Monday.
Neither Honig nor GRQ admit or deny the SEC's allegations, according to the proposed judgments.
Honig signed both proposed judgments. In each, he agreed to civil penalties to be determined later, being barred from offering of penny stocks and owning more than 4.99% of any penny stock, among other restrictions.
Michael Osnato, the attorney for Honig who signed the proposed judgments, did not immediately respond to CNBC's request for comment. Honig's other attorneys also did not immediately respond.
The SEC declined to comment beyond the court filings.
Last September, the SEC said it charged a group of 10 individuals and 10 associated entities that included Honig as well as John O'Rourke, who was once the CEO of Riot Blockchain, a cryptocurrency company that was the subject of a CNBC investigation last year. The case is unrelated to Riot Blockchain.
The SEC said the scheme generated more than $27 million from alleged unlawful stock sales, according to a news release. Honig and his associates, also based in South Florida, manipulated the stock of three companies in "pump-and-dump" schemes, where they allegedly acquired shares at a discount and artificially boosted prices before selling, according to the release. Riot Blockchain was not one of the companies.
"Honig was the primary strategist, calling upon other Defendants to, among other things, acquire or sell stock, arrange for the issuance of shares, negotiate transactions, and/or engage in promotional activity" in the $27 million schemes, according to the SEC's amended complaint, filed in March.
The agency already settled in full or in part with nine defendants, including Miami biotech billionaire Phillip Frost, according to court filings.
The SEC case is a civil suit, but criminal charges could be filed. According to a transcript of a May hearing in the SEC case, there is a parallel criminal investigation by the U.S. Attorney's office in San Francisco that may include O'Rourke. No other details are publicly known.
"My understanding is they [the U.S. Attorney's Office] now have a cooperating witness and things have slowed down," said O'Rourke's attorney, Gregory Morvillo, during a May hearing, according to the court transcript.
The witness, he said, is "among the defendants in this group, I believe, [who] has started to cooperate, and there may be a criminal case coming down the pike reasonably shortly," according to the transcript.
Morvillo and his co-counsel for O'Rourke did not respond to CNBC's request for comment.
A spokesperson for the U.S. Attorney's office could not "confirm the existence or non-existence in this district of an investigation into these parties or issues."
The proposed judgments Honig and others in the case signed say, "... this Consent resolves only the claims asserted against the Defendant in this civil proceeding. Defendant acknowledges that no promise or representations have been made by the Commission ... with regard to criminal liability that may have arisen or may arise from the facts underlying this action ...," according to court documents.
A CNBC investigation in February 2018 found a number of red flags at Riot Blockchain, including annual meetings that were postponed at the last minute, sales of stock by company insiders soon after the company's name change, dilutive share issuances on favorable terms to large investors, confusing SEC filings and evidence that a major shareholder was selling shares while everyone else was buying. The SEC case is unrelated to Riot.
As bitcoin's price hit record highs in late December 2017, Riot was making news on a daily basis. The company's stock shot from $8 a share to more than $40 as investors chased the craze of all things crypto.
CNBC visited the offices of GRQ Consultants in early 2018 during the course of the investigation to speak with Honig but found O'Rourke in the office.
O'Rourke declined an interview for the original investigation but agreed to answer questions by email. One of CNBC's first questions was whether he worked in the same office as Honig, which could raise eyebrows.
"I have my own office in a separate location," O'Rourke said in an email sent by his lawyer, Nick Morgan, a partner with Paul Hastings, in February 2018. "I do have a good relationship with Mr. Honig and we speak often."
"John O'Rourke does not work out of my office," Honig said in an interview in February 2018. "John O'Rourke has his own office ... at one time John O'Rourke had space in my office ... we speak often."
Securities attorneys told CNBC that if a CEO were using the office of a major investor, it might raise concerns about the exchange of information.
"You just can't imagine that the CEO and the investor are going to have an appropriate wall between them where they're not engaging in discussions or dialogue about what's appropriate for the company on a day to day basis or in the future," said Richard Birns, a corporate partner at Gibson, Dunn & Crutcher LLP, to CNBC during its initial investigation.