SEC v. Steve Pappas (2016)
Settled
Checked against the primary document on October 3, 2026. The library's summary, tags and figures for this record were compared with the regulator's own document by an AI model (Claude) following written instructions, with sampled and disputed records read a second time. No lawyer has reviewed them. A checked record can still contain errors, and checked does not mean endorsed. See how we check records or report a correction.
In April 2016 the SEC settled administrative proceedings against Steve Pappas, chief executive of Xemex Group, finding he agreed to pay a secret 50 per cent kickback to an undercover FBI agent posing as a hedge fund manager in exchange for stock purchases. He agreed to a $50,000 penalty and bars.
The record
| Agency | SEC |
|---|---|
| Release number | 34-77525 |
| Date filed | 2016-04-05 |
| Date resolved | 2016-04-05 |
| Status | settled |
| Asset class | equities |
| Criminal parallel | Yes: sentenced (Barry Hawk, the other person in the same Envirokare conduct (pleaded guilty 2 December 2014; 36 months' probation, no custodial term); not Pappas), U.S. District Court, District of Massachusetts, 2015-03-13 |
| Bars imposed | officer-and-director bar, penny stock bar |
| Defendants | Steve Pappas |
| Cited as charged or alleged | Exchange Act s.10(b) and Rule 10b-5 |
| Techniques |
What was ordered
- Civil penalty
- $50k
- Disgorgement
- —
- Prejudgment interest
- —
- Total relief
- $50k
- Alleged gain
- —
What is alleged to have happened
The Securities and Exchange Commission instituted and settled this proceeding on April 5, 2016 (Exchange Act release 77525), without admission or denial by Pappas.
The order finds that in September 2011 Pappas and another man met an FBI agent posing as a corrupt hedge fund manager who offered to invest up to $5 million of a fund's money in Xemex in return for a secret 50 per cent kickback, to be disguised through bogus consulting invoices from a nominee company. Pappas agreed, sent the paperwork, and Xemex wired about half of the first tranches back. It finds he violated Section 10(b) and Rule 10b-5. Xemex's predecessor became public through a reverse merger, which is only background, and the fund was fictitious, so the reverse-merger tag is removed.
Pappas was ordered to cease and desist, barred for five years from serving as an officer or director of a public reporting company, barred from penny-stock offerings, and ordered to pay $50,000 in instalments. The record had shown the status as judgment.
For the regulator's own account of the facts, read the primary document linked above. This page deliberately summarises the structured record rather than reproducing the release.
Timeline
Primary documents
Everything on this page derives from the documents below. Where our summary and the primary document disagree, the primary document is right.