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Video Without Boundaries, Inc. (d/b/a China Logistics Group Inc.), Vernon Jeffery Harrell, and David J. Aubel (Release No. LR-20739)
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20739 / September 25, 2008
SEC v. Video Without Boundaries, Inc. (d/b/a China Logistics Group Inc.), Vernon Jeffery Harrell, and David J. Aubel, Civil Action No. 08-61517-CIV-GOLD/MCALILY (S.D. Fla., filed September 24, 2008)
SEC Brings Civil Action Against Electronics Company, Its Former CEO, and Its Largest Shareholder for Accounting Fraud and Orchestrating a Pump and Dump
The Securities and Exchange Commission (Commission) announced that yesterday it filed a civil injunctive action against Ft. Lauderdale-based Video Without Boundaries, Inc. (also known as China Logistics Group Inc.) (Video), an electronics and entertainment technology company, its former CEO and Principal Financial and Accounting Officer, Vernon Jeffrey Harrell (Harrell), and Video's largest shareholder, David J. Aubel (Aubel), in connection with accounting fraud related to Video's annual and quarterly filings and the issuance of false and misleading press releases.
The Commission's complaint, filed in the United States District Court for the Southern District of Florida, alleges that from at least April 2003 to November 2005, Video, at the direction of its then sole officer and director, Harrell, filed annual and quarterly reports with the Commission that, among other things, materially overstated its revenues, improperly accounted for a failed acquisition, and understated its net losses. Harrell maintained Video's books and records, created its financial statements and, as sole principal executive and financial officer, certified Video's annual reports for 2002 and 2003, and quarterly reports for 2002 to 2004, filed with the Commission, that he knew, or was severely reckless in not knowing, contained material misstatements and omissions.
The complaint further alleges that from November 2003 to September 2006, Harrell and Aubel issued a series of false and misleading press releases about Video. Taking advantage of Video's artificially inflated stock price, Aubel dumped millions of shares of Video stock (acquired at a steep discount from Video) into the market, reaping millions of dollars. Harrell participated in the scheme by signing bogus stock issuance resolutions that allowed Aubel to sell the shares immediately after he received them. Moreover, throughout this time, neither Harrell nor Aubel reported their ownership of Video stock, or changes in their ownership.
The Commission's complaint charges Video, Harrell, and Aubel with violating Sections 5(a) and 5(c) of the Securities Act of 1933 (Securities Act), Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder and, alternatively as to Aubel, aiding and abetting Video's violations of the antifraud provisions of the Exchange Act. The complaint further charges Video with violating the reporting, books and records, and internal control provisions of the Exchange Act, and Harrell with aiding and abetting those violations — Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act, and Rules 12b-20, 13a-1, and 13a-13 thereunder; charges Harrell with knowingly circumventing or failing to implement a system of internal controls, knowingly falsifying Video's books and records, and falsely certifying Video's Forms 10-KSB for 2002 and 2003 and Forms 10-QSB from 2002 to 2004 filed with the Commission in violation of Section 13(b)(5) of the Exchange Act and Rules 13b2-1 and 13a-14 thereunder; and charges Harrell and Aubel with violations arising from their failure to report their ownership of Video stock, Sections 13(d) and 16(a) under the Exchange Act and Rules 13d-1, 13d-2, and 16a-3 thereunder. The Commission's complaint seeks relief in the form of permanent injunctions against Video, Harrell, and Aubel enjoining them from future violations of the provisions charged, an order requiring that Video and Aubel disgorge their ill-gotten gains, with prejudgment interest, and imposing civil penalties against Harrell and Aubel. The Commission also seeks a penny stock bar against Harrell and Aubel and an officer and director bar against Harrell.
In a related settled action, the Commission filed a complaint against Norman Stumacher, CPA, who conducted audits of Video's financial statements for 2002 and 2003.
SEC Complaint in this matter
http://www.sec.gov/litigation/litreleases/2008/lr20739.htm
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See also: Complaint
http://www.sec.gov/litigation/complaints/2008/comp20739.pdf
Recent Press Releases - Links:
http://www.sec.gov/news/press.shtml
Enforcement Actions - Links:
Federal Court Actions - Litigation releases concerning civil lawsuits brought by the Commission in federal court >>> http://www.sec.gov/litigation/litreleases.shtml
Administrative Proceedings - Orders and related materials released by the Commission when administrative proceedings are instituted and/or settled >>> http://www.sec.gov/litigation/admin.shtml
ALJ Decisions - Opinions issued by Administrative Law Judges in contested administrative proceedings >>> http://www.sec.gov/litigation/aljdec.shtml
Commission Opinions - Opinions issued by the Commission on appeal of Initial Decisions or disciplinary decisions issued by self-regulatory organizations (e.g., NYSE or NASD) >>> http://www.sec.gov/litigation/opinions.shtml
Referring page: http://www.sec.gov/divisions/enforce/enforceactions.shtml
I would encourage everyone to use the above links to search recent enforcement actions. It's very useful and entertaining.
SEC v. Timothy M. Roberts / IFLB
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20730 / September 19, 2008
Securities and Exchange Commission v. Timothy M. Roberts, Case No. 06-cv-1611 T-23EAJ (M.D. Fla. filed May 16, 2006)
SEC Settles Charges With Video Game Executive
The Securities and Exchange Commission today announced that it has settled charges with Timothy M. Roberts, the former Chief Executive Officer of Seattle-based video game developer Infinium Labs, Inc. (also known as Phantom Entertainment, Inc.). As part of the settlement, Roberts agreed (without admitting or denying the Commission's allegations) to be barred from serving as an officer or director of any public company for five years, to barred from participating in any offering of penny stock for five years, and to pay a $30,000 civil penalty.
The settlement stems from a complaint filed by the Commission in May 2006 (as amended in May 2007) in federal court in the Middle District of Florida. According to the complaint, Roberts hired a stock promoter in November 2004 to send faxes to tens of thousands of potential investors across the country. The faxes made it appear as if Infinium Labs were on the verge of launching its flagship product, a home videogame system called the "Phantom." In fact, at the time of the fax campaign, Infinium Labs lacked the financial resources to overcome the significant technological and manufacturing hurdles preventing it from marketing the game system to consumers. The faxes also included baseless stock price targets, predicting that Infinium Labs' stock price would rise as much as 3,000% in the coming weeks.
The Commission alleges that, over the four months of the fax campaign, Roberts took advantage of the increased trading volume in Infinium Labs shares to sell his personal stock holdings without reporting the sales to the public. The Commission's complaint also alleges that Roberts paid the promoter with four million shares of his own Infinium Labs stock in violation of the registration provisions of the federal securities laws.
In the settlement, Roberts consented to a court order that:
enjoins him from future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Sections 10(b) and 16(a) of the Securities Exchange Act of 1934 and Rules 10b 5 and 16a 3 thereunder;
prohibits him, for a period of five years, from acting as an officer or director of a publicly-held company;
prohibits him, for a period of five years, from participating in any offering of penny stock; and
orders him to pay a civil penalty of $30,000.
Litigation Release Nos. 19701 (May 16, 2006) and 19305 (Jul. 18, 2005)
http://www.sec.gov/litigation/litreleases/2008/lr20730.htm
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SEC v. CSHD and Rufus Paul Harris a/k/a Paul Rufus Harris, Civil Action No. 1:06-cv-2568-CC (N.D.Ga.)
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20731 / September 19, 2008
Securities and Exchange Commission v. Conversion Solutions Holding Corporation and Rufus Paul Harris a/k/a Paul Rufus Harris, Civil Action No. 1:06-cv-2568-CC (N.D.Ga.)
Court Renders Final Judgment Assessing Civil Penalties of $1,170,000 Against Harris and $250,000 Against Conversion, Barring Harris From Serving as an Officer or Director of a Public Company for Seven Years, and Enjoining Further Violations
The Securities and Exchange Commission announced today that on September 17, 2008, United States District Judge Clarence Cooper, of the Northern District of Georgia, issued a final judgment resolving all remaining issues in the case and determining remedies against Rufus Paul Harris and Conversion Solutions Holding Corporation.
The Commission's Complaint, filed October 24, 2006, alleged that Harris, from September 26 through October 23, 2006, carried out a fraudulent scheme to inflate the market price of Conversion's stock through a series of false statements in press releases and Commission filings made by the company. Most of the false statements detailed in the Complaint concerned assets which Conversion claimed to own but did not, including the entirety of two series of sovereign Venezuelan bonds.
In a previous Order issued July 21, 2008, granting the Commission's motion for default judgment, the Court found that: (1) Harris and Conversion violated Section 10b-5 of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder; (2) Conversion violated the reporting provisions of the Exchange Act (Section 13(a) and Rules 12b-20, 13a-1 and 13a-11) with regard to five separate Commission filings; (3) Harris aided and abetted Conversion's violations of the reporting provisions of the Exchange Act (Section 13(a) and Rules 12b-20, 13a-1 and 13a-11) with regard to those same five separate Commission filings; and (4) Harris falsely certified three separate periodic reports of Conversion filed with the Commission in violation of Rule 13a-14 promulgated under the Exchange Act.
The Court's September 17, 2008 decision followed a live remedies hearing on September 10, 2008, at which the Commission presented evidence that short-selling had no meaningful effect on Conversion's share price from September 26 through October 23, 2006, as only approximately 250,000 shares of Conversion were sold short short out of a total of over 62,000,000 shares traded during that period.
On the basis of the evidence presented at the hearing, the Court found that Conversion never had any business-related revenue, and that its only source of funds was an ongoing offering of convertible notes and/or stock that began before the time period charged in the Complaint. The Court also found that Conversion had not paid any money for any of the purported assets carried on its books, which consisted of various series of bonds, uncollected interest due on the purported bonds, and a document called the UCC-1 Note. The Court found that the UCC-1 Note is not a standard piece of commercial paper, but an eight-page document signed by an individual named David Hawkins, which purports to be an "Affidavit of Obligation" in favor of Mad Dog Builders, Inc. and Mr. Hawkins, and which contains references to purported legal concepts including the "individual energy protection maxim," the "social cooperation protection maxim," and the "Hebrew/Jewish Commercial Code."
The Court found that, through three relatives, Harris attempted, unsuccessfully, to sell up to 1.6 million shares of Conversion into the public market during the time period alleged in the complaint, while the stock was trading at dramatically inflated prices as a result of his fraudulent misstatements about Conversion's purported assets in Conversion's press releases and SEC filings. The Court found that the scheme caused tremendous harm to the investing public, resulting in many millions of dollars of losses to thousands of innocent investors.
On the basis of these findings, the Court permanently enjoined Harris and Conversion from future violations of the statutes it had found them to have violated in its July 21, 2008 Order. Additionally, the Court barred Harris, pursuant to Section 21(d)(2) of the Exchange Act, from acting as an officer or director of any issuer with a class of securities registered pursuant to Section 12 of the Exchange Act or that is required to file reports pursuant to Section 15(d) of the Exchange Act for a period of seven (7) years. Finally, the Court ordered Harris to pay a civil penalty of $1,170,000, and Conversion to pay a civil penalty of $250,000. The Court did not find a basis for disgorgement of any ill-gotten gains by Harris or Conversion. Accordingly, there is no statutory authority for the creation of a Fair Fund in this case, and any funds collected pursuant to the Court's September 17, 2008 Order will be paid to the U.S. Treasury.
Additional information concerning this action and the Commission's actions related to this matter can be found at:
Litigation Release No. 19883 / Oct. 25, 2006
http://www.sec.gov/litigation/litreleases/2008/lr20731.htm
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That's what this thread needs! More on-topic posts. Keep it coming.
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20719 / September 15, 2008
Securities and Exchange Commission v. Jeanne M. Rowzee, James R. Halstead, and Robert T. Harvey, United States District Court for the Central District of California. Civil Action No. SACV 08-1025 AG (ANx)
SEC Charges Bogus PIPE Promoters in $52 Million Ponzi Scheme
The Securities and Exchange Commission today charged an Irvine, Calif., attorney and two other promoters for conducting a $52.7 million Ponzi scheme in which they sold investors bogus PIPE (private investment in public equity) investments, promised unrealistic profits, and misappropriated more than $20 million of investors' funds to function as their own personal piggy bank.
The SEC's complaint alleges that attorney Jeanne M. Rowzee along with James R. Halstead of Santa Ana, Calif., and Robert T. Harvey of Prosper, Texas, told investors that Rowzee was an experienced securities attorney who personally screened and selected each PIPE investment after thorough due diligence. Contrary to these representations, they did not place investor funds in PIPE investments. Rowzee, Halstead, and Harvey instead used new investor funds to pay principal and returns to earlier investors, and to finance their own personal endeavors such as trips to Las Vegas, property purchases, and alimony payments.
"Investors must be wary of promoters, even securities attorneys or other purported 'experts' who offer investment opportunities with high returns but fail to disclose complete and verifiable information about the investment they're touting," said Rosalind R. Tyson, Regional Director of the SEC Los Angeles Regional Office. "In this case, as alleged in our complaint, the so-called PIPE investments did not exist. The defendants raised millions of dollars from unsuspecting investors and simply used it to enrich themselves."
The SEC's complaint, filed in federal court in Santa Ana, Calif., alleges that from at least March 2004 through December 2006, the defendants sold the purported PIPE investments to investors, promising returns of 19 to 54 percent within 12 to 16 weeks. The SEC's complaint also alleges that Harvey formed a California limited liability company, Harvest Income LLC, to pool investor funds to invest in the purported PIPE investments. The defendants allegedly solicited business clients and acquaintances and generated word-of-mouth referrals.
According to the SEC's complaint, Halstead misappropriated at least $10.4 million of investor funds to support an extravagant lifestyle that has included frequent trips to Las Vegas and three luxurious homes. He also used the funds to pay living expenses for his wife, children, and others. Rowzee misappropriated at least $5.6 million of investor funds to pay her home mortgage and credit card bills, and purchase property in Arizona. Harvey misappropriated at least $2 million of Harvest Income funds to pay his personal credit card bills and other expenses, including alimony payments to his ex-wife. Harvey also paid himself approximately $2.3 million in purported "management fees."
The defendants are charged with securities fraud under Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and with conducting an unregistered offering under Section 5 of the Securities Act. Rowzee and Harvey are also charged with investment adviser fraud under Sections 206(1) and 206(2) of the Investment Advisers Act of 1940, and Halstead is charged with aiding and abetting violations of Sections 206(1) and 206(2) of the Advisers Act. The Commission's complaint seeks permanent injunctions, disgorgement of ill-gotten gains, and civil penalties against each defendant.
The Commission acknowledges the assistance of the Federal Bureau of Investigation and the California Department of Corporations in this matter.
http://www.sec.gov/litigation/litreleases/2008/lr20719.htm
SEC accuses Boca man of penny stock violations
Posted on Tue, Sep. 16, 2008
The Securities and Exchange Commission on Friday filed a lawsuit against a Boca Raton man alleging he violated a SEC administrative order that bars him from selling penny stocks.
The SEC's suit claims Larry W. Kerschenbaum in 2005 solicited investors to purchase shares in Great Cities Media, a now-defunct Fort Lauderdale company that purportedly produced high-definition television shows.
The SEC's complaint seeks a permanent injunction, a judicial order barring Kerschenbaum from selling penny stocks, and a fine.
Weil, Gotshal & Manges' Releases "Survey of 2007 Securities Fraud Litigation"
http://slw.riskmetrics.com/2008/08/weil_gotshal_manges_releases_s.html
Hot off the presses is The 10b-5 Guide: A Survey of 2007 Securities Fraud Litigation from Weil, Gotshal & Manges.
Just as 2007 saw a substantial increase in the number of new federal securities class actions, the 2007 Weil guide needs more room (253 pages) to discuss all that is brewing in the wide world of securities class actions.
The guide is quite wide-ranging, discussing everything from pleading standards, loss causation and class certification to developments in the lead plaintiff appointment process and that ever popular cocktail party conversation topic, the Securities Litigation Uniform Standards Act of 1998, or SLUSA to the cognoscenti.
The guide, just as with the 2006 version, breaks down these the information by both topic and circuit.
Thanks again to co-author Paul Ferrillo for sending us a copy, which you can download here.
http://scas.issproxy.com/pdf/2007_10b-5_Guide_full.pdf
From: scion 8/19/2008 7:21:50 PM
#reply-24860874
New iBox:
This site is dedicated to the promoters, both long and short that the SEC has caught and punished.
Please post the copy of the SEC write up with link, and the stocks that the offenders are currently hyping, or shorting. By doing so, the message board investment community will have a centralized location to keep abreast of stocks and individuals that they might want to investigate further before they take a position in the stock involved, or any other stock these individuals may be involved with in the future.
The iHub search feature is a very useful tool. Help make searches fast by posting the ticker and the name of the individual that was busted in the first 8 words of each post.
Last Updated: Wednesday 11 July 2001 LOCAL BUSINESS
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Regulator cites broker for mob link
B.C. Securities Commission accuses Pacific International and its top officers and directors of turning a blind eye to illegal stock dealings in U.S. accounts
David Baines Vancouver Sun
BERT QUATTROCIOCCHI: PI director and executive vice-president
MARTY REYNOLDS: Former PI chairman and former VSE chairman
MAX MEIER: PI chairman and CEO and former VSE vice-chairman
B.C. Securities Commission lawyer Sasha Angus
B.C.'s top securities enforcer has accused Pacific International Securities and nine of its senior officer and directors of turning a blind eye to mob-related securities fraud and money laundering.
B.C. Securities Commission executive director Steve Wilson alleged Tuesday that the Vancouver brokerage group ought to have known some of its clients were using U.S. dollar accounts to launder money and manipulate stocks, but failed to make the necessary inquiries.
In an eight-page notice of hearing, Wilson lists 14 clients of Pacific International who have been the subject of criminal or regulatory proceedings in the United States.
Many of these clients have also been associated with U.S. mobsters and mob-related stock scams.
Wilson said Pacific International's officers and directors had reason to doubt the motives of some of these clients, but failed to learn the essential facts of their "identity, reputation and reasons for retaining Pacific International."
Wilson was particularly critical of PI chairman and CEO Max Meier, who founded the firm 20 years ago, and Larry McQuid, the firm's senior vice-president of administration and designated compliance officer.
Meier has been a prominent Howe Street figure. He served as a member of the VSE board of governors for 10 years, including a stint as vice-chairman from 1994 to 1997.
McQuid, a former RCMP commercial crime officer and VSE compliance manager, also served on the VSE board of governors from 1997 until November 1999 when the exchange amalgamated with the Alberta Stock Exchange to form the Canadian Venture Exchange.
Wilson also cited seven other directors, nearly all of whom hold executive positions and are also well known in the Vancouver brokerage community:
l Jean-Paul Bachellerie, the firm's president and chief operating officer. He is a chartered accountant and member of the Chartered Accountants Institute of B.C.
l Germain Carriere, president and chief operating officer of National Bank Financial Ltd., a wholly-owned subsidiary of the National Bank of Canada. (National Bank Financial holds a 35-per-cent equity interest in Pacific International).
l John Eymann, co-founder and vice-chairman. He is also a member of the B.C. Securities Commission policy advisory committee, a member of the ethics committee of the Canadian Securities Institute, and has served on numerous VSE disciplinary panels.
l Bert Quattrociocchi, executive vice-president in charge of sales and research.
l Marty Reynolds, chairman from June 1994 to October 1998 and a director until March 1999. Reynolds was a long-time VSE governor and served as VSE chairman from 1989 to 1991.
l Robert Blades, a vice-president since 1990. He is a former employee of TD Greenline Investor Services.
l Theresa Mary Sheehan, a vice-president since August 1997. Sheehan is the daughter of John Sheehan, former president of B.C. Hydro.
"We have named all the directors because they bear the ultimate responsibility for what happens at the firm," said commission enforcement director Sasha Angus, who will represent Wilson at the hearing, tentatively scheduled for Sept. 19.
"What we're trying to address is the necessity of proper compliance procedures not only being in place but being followed. You must know who your client is and why are they at your firm and what they are doing at your firm."
John Woods, editor of Canada Stockwatch, a Vancouver-based stock-market information service, had a blunter description of what the notice is all about.
"They are accusing the heart of Howe Street brokerage fraternity of governing in the sprit of the three monkeys," he said.
Pacific International -- which has 154 employees in Vancouver, Victoria and Calgary -- immediately issued a statement charging that the notice of hearing contains "inaccurate and groundless statements."
"Any suggestion that PI condoned improper conduct in any of its more than 30,000 client accounts is simply unfounded," said Meier.
He said the notice of hearing "looks at past conduct and retroactively suggests new standards of supervisory responsibilities for a brokerage house."
He also questioned the naming of PI's senior officers and directors, who he described as "experienced and respected individuals who understand their corporate governance responsibilities and have acted responsibly throughout."
He said allegations that the firm's directors did not do enough to prevent misconduct by others "are unwarranted and unfair, particularly to those directors who did not have direct compliance responsibilities."
PI's lawyer, Don Sorochan, said the notice of hearing is "based on several faulty legal premises, is not based on the evidence, and contains allegations that are without foundation and overreaching in the extreme."
Records show Pacific International has been one of the most-disciplined brokerage firms on Howe Street.
In July 1999, The Sun conducted a survey of the 18 brokerage firms under the VSE's audit jurisdiction and determined that, from January 1995 to June 1999, Pacific International and its brokers ranked as the VSE's most-penalized brokerage group with $999,200 in fines and costs.
The firm's brokers ranked second, behind Georgia Pacific Securities, in suspensions with 75 years of total suspensions during the same period. Most of the firm's woes stemmed from U.S.-related securities activity.
The notice of hearing says that in 1993, Pacific International's commissions from accounts trading securities listed or quoted in the U.S. totalled about $2.3 million, or 14 per cent of total commission revenue.
By Dec. 31, 1999, this figure had increased to $19.2 million, or 67 per cent of total commission revenue. Of this business, 80 per cent came was generated by non-resident accounts.
"This increase indicates the respondents had a business strategy to encourage the development of this business," the notice states.
Woods described the figures as "astonishing. It's absolutely revealing of how Pacific International and probably many other firms survived the demise of the VSE."
In a January 1999 interview with The Sun, Meier said his firm's clients were favouring speculative stocks in the U.S. because of "over-regulation" by the VSE under then-president Michael Johnston.
"We go where our clients want to go, and obviously in the last few years a lot of clients have gone to the ASE, Canadian Dealing Network and bulletin board," he said at the time.
"We don't recommend stocks in those markets, but there seem to be a lot of people who want to be involved in them."
According to Wilson, a lot of those people were involved in nefarious activities.
He alleges that on four occasions between July 1995 and December 1999, the U.S. department of justice filed indictments naming PI clients, citing their trading through PI accounts and alleging breaches of U.S. securities laws.
He alleges that during the same period, the U.S. Securities and Exchange Commission named accounts or clients of PI in an unspecified number of civil complaints. And on July 11, 1998, the VSE issued a citation against PI broker Jean Claude Hauchecorne for brokering mob-relating stock transactions. A VSE disciplinary panel subsequently banned him for life.
The notice makes no mention of former PI brokers Dirk Rachfall and David Patterson, who in 1999 were lured to the U.S. by FBI agents who arrested them for helping mob-related figures rig a U.S. stock. They were convicted, spent five months in jail and each ordered to pay $130,000 US.
"Pacific International knew or ought to have known of some or all the indictments, the complaints, the citation and some or all of the behaviour which led to them," the notice charges
"This information ought to have led Pacific International to conduct internal reviews of the trading in U.S. markets and account-opening activities and to address the compliance deficiencies those reviews should have revealed. This did not happen and the compliance deficiencies continued."
The notice states that certain of the accounts "displayed activities and characteristics that would have caused a reasonable registrant to investigate the owners and operations of the accounts ..."
It notes that each of these activities, "alone or in combination, is potentially a symptom of illegal conduct or conduct contrary to the public interest, including money laundering and share manipulation."
The notice names 14 clients who ran accounts at PI who had criminal or regulatory histories in the United States. They are Angel Lorie, David Hesterman, Anthony Elgindy, Steven Keyser, Richard Gladstone, Joseph Garofalo, Paul Harary, Jimmy Ray Carter, Maurice Rind, Randolph Beimel, Todd Moore, Gerald Burns, Salvatore Mazzeo and Shalom Weiss.
The most serious action was against Weiss. He was indicted in Orlando, Fla., in April 1999 on racketeering and money-laundering charges and sentenced to 845 years in jail and ordered to pay more than $100 million US in restitution to his victims.
Wilson said PI should have recognized some of the warning signs:
l Some accounts were cash accounts and ran significant debit balances.
l Large blocks of stock quoted on the OTC Bulletin Board flowed through the accounts. (The Bulletin Board is a virtually-unregulated over-the-counter market in the United States).
l Sales proceeds were frequently distributed to third parties.
l Some clients paid significant fees so they could receive cash from sales before the usual settlement date.
l Cash flowed through some of the accounts with little or no intervening trading activity.
Wilson said that given the extent of its U.S. business, PI should have registered as a broker dealer with the U.S. National Association of Securities Dealers, which could have assisted the firm in its gatekeeper and compliance functions.
If found to have contravened securities rules, the respondents could have their registrations revoked or suspended, be prohibited from acting as a directors or officers of any B.C. public company, ordered to pay administrative penalties up to $100,000 each and required to pay investigation and hearing costs.
dbaines@pacpress.southam.ca
Naked shorting sanctioned, broker fined:
http://www.nasdr.com/pdf-text/0106dis.txt
Firms Expelled, Individual Sanctioned
Falcon Trading Group, Inc. (CRD #30361, Boca Raton, Florida), Sovereign
Equity Management Corp. (CRD #20016, Deerfield Beach, Florida), and Glen
Thomas Vittor (CRD #1565323, Registered Principal, Deerfield Beach, Florida)
were fined $1 million, jointly and severally. In addition, the firms were expelled
from NASD membership and Vittor was barred from association with any NASD
member in any capacity. The sanctions were based on findings that the
respondents effected short sales for the firms' own accounts and failed to make an
affirmative determination that the firms could borrow the securities or otherwise
provide for delivery of the securities by the settlement date. The findings also
stated that the respondents, in cooperation with others, attempted to obtain stock
at below-market prices through the use of threats and coercion, and that, through
naked short sales and extortion, the respondents participated in a manipulation of
the market for those securities. (NASD Case #CAF980002)
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NASDR links to actions taken so far against daytraders;
http://www.nasdr.com/news/pr2001/ne_section01_031.html
http://www.nasdr.com/news/pr2001/ne_section01_030.html
http://www.nasdr.com/news/pr2000/ne_section00_039.html
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Daytrader firms fined:
http://biz.yahoo.com/rf/010607/n07484610.html
Thursday June 7, 7:04 pm Eastern Time
Five Texas day-trading firms settle NASD complaints
(UPDATE: Adds comment from ProTrader, CyBerBroker, details throughout)
By John Poirier
WASHINGTON, June 7 (Reuters) - Five Texas firms offering day-trading services settled allegations of violating various industry rules, the regulatory arm of the National Association Securities Dealers Inc. (NASD) said on Thursday.
ADVERTISEMENT
Without admitting or denying the allegations, the firms, located in Houston and Austin, were censured and ordered to pay fines of up to $75,000, said NASD Regulation Inc.
NASD Regulation said one of the firms, Landmark Securities Corp., was expelled from NASD. Its former president, James Gillock, was fined $50,000 and suspended for two years.
The Houston-based firm was accused of issuing misleading statements on customers' access to markets, misrepresenting the risks of day trading, allowing a person who was not properly registered to supervise day-trading activities, extending improper loans and violating short-sale and trade reporting rules, NASD Regulation said.
THE OTHER FOUR FIRMS
Allegations facing the other four firms include misleading advertisements, short sale and trade reporting violations, and operating without proper supervisory procedures.
Houston firm Momentum Securities LLC was fined $75,000. It, in addition, allegedly failed to disclose possible delays to system access and trade execution and allegedly paid compensation to unregistered entities.
Summit Trading Inc., also of Houston, and its President William Sunshine were fined a total of $20,000.
The NASD complaint also named Austin-based Cornerstone Securities Corp., which is now known as ProTrader Securities Corp., and its former president, Russell Grigsby. They were fined a total of $35,000 for the alleged violations, which also included questionable loans to customers.
CyBerBroker Inc., located in Austin, was only accused of allowing trade executions to be carried out by people not properly registered as equity traders. The firm and its former president, Mark Stryker, were ordered to pay $16,000 and give up $4,000 in commissions.
``The matter took place more than 2 years ago,'' CyBerBroker spokesman Trey Robinson said. ``We cooperated with NASDR during the inquiry and we continue to try to be compliant with all the rules at all times.''
ProTrader said it cooperated fully with NASD and has gone through a management shake up. ``As part of the cooperative process, we have worked diligently with the NASD to correct internal polices and procedures, to ensure violations of this type will not occur at ProTrader in the future,'' Michael Koch, chief compliance officer at ProTrader, said.
Attorneys for the other firms and individuals could not immediately be reached for comment.
This is not the first time industry regulators have cracked down on day-trading firms. In February 2000, NASD Regulation announced enforcement actions against five Texas firms and a former officer. Actions also were taken against a Chicago firm and individuals in New Orleans.
Currently, complaints are pending against Montvale, New Jersey-based All-Tech Direct Inc., one of the largest day trading companies, and three of its top officers, as well as Stock USA Inc. in San Diego, California.
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Blank check companies and penny stock fraud.
http://www.bosbbb.org/lit/0051.htm
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Affinity Fraud.
con men using religion to prey upon investors:
http://www.sec.gov/litigation/litreleases/lr16355.htm
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Sterling Foster has to pay.
scroll down to the link on the page, it's in the middle:
http://www.nasdr.com/2500.htm#Services
Here's the SEC web page that lists the actions taken:
http://www.sec.gov/news/digest.shtml
Wednesday May 9, 4:20 pm Eastern Time
Stock Web site owner settles SEC case, pays fine
WASHINGTON, May 9 (Reuters) - The owner of an Internet Web site that allegedly claimed a 90 percent accuracy rate in predicting stock prices agreed to pay a $25,000 fine to settle charges of making false and misleading statements, the Securities and Exchange Commission said on Wednesday.
Arcangelo Capozzolo, 25, and a resident of Williamsville, N.Y., and his company, Market Traders LLC, agreed to the fine and a permanent injunction without admitting or denying the charges, said the SEC, which filed a civil suit in Boston.
Capozzolo's attorney was out of the office and not immediately available for comment.
From October 1999 to at least May 2000, Capozzolo and his company solicited customers by misrepresenting Market Traders' stock-picking system, according to the complaint.
Capozzolo is a high school graduate with no experience in the securities industry, does not have any securities licenses and has never been registered with the SEC in any capacity, the complaint added.
Market Traders, which charged $395 a month for stock tips, claimed that it executed the trades it recommended, trackedstock purchases by big, institutional investors, achieved ``90 percent accuracy over the past 10 years'' in predicting stock prices and has made millions of dollars, the SEC said.
``In reality, Market Traders does not execute the trades it recommends, cannot identify stock purchases by institutional investors and has not made millions of dollars,'' the SEC said, adding ``its system has not been in existence for 10 years and derived its results by applying hypothetical trades to historical data.''
http://biz.yahoo.com/rf/010509/n09657040.html
Market Traders had about 185 paying subscribers as of last month.
Hey Sam, doesn't IBM pay you ???
LOL ... JB
I don't have an answer to that question for you, I only have the story as posted on the SEC site. They feel it's different, so I don't guess anything will be accomplished at this point by being critical of the SEC in this matter. I guess you could email the SEC and ask them, as they are the ones that would have the definitive answer. I don't think they were just "picking on" him though, it seems they usually know what they are doing when it comes to prosecuting someone.
Interesting story... but I fail to see how it's much different than a MM playing the part of an axe to either run or beat down a price. Am I missing something?
Sam
I guess since I started the thread, I should be the first one to post.
SEC BRINGS LIMIT ORDER DISPLAY MANIPULATION CASE AGAINST ROBERT MONSKI
On May 3, the Commission entered a settled cease and desist order
against Robert J. Monski, a self-employed investor living in Birmingham,
Alabama. The order finds that between early October and mid-November
1997, Monski placed hundreds of small buy and sell limit orders
(typically the one-hundred share minimum necessary to trigger the
display requirement) to affect the National Best Bid or Offer (NBBO) of
thinly traded stocks. Monski used the change in the NBBO that resulted
from his limit order, as required by the Limit Order Display Rule, Rule
11Ac-4, to trigger execution of pre-existing, significantly larger "all
or none" limit orders he had placed on the other side of the market.
Monski intended to use small limit orders to move the NBBO quote to meet
the execution price of larger "all or none" limit orders which were
purposefully placed with one of the many brokers that guarantee
execution of customer orders of 1000 to 3000 shares at the NBBO
regardless of the size of the NBBO quote. After moving the bid or offer
quote to the desired price, Monski immediately attempted to cancel the
small order. In this manner, Monski manipulated the public quote to
obtain better execution prices for hundreds of orders.
The order finds that Monski's conduct, known in the industry as
"spoofing", violated the antifraud provisions, Section 17(a) of the
Securities Act of 1933 and Section 10(b) of the Securities Exchange Act
of 1934 and Rule 10b-5 thereunder. Without admitting or denying the
allegations, Monski consented to the entry of an order requiring him to
cease and desist from violating these provisions, and requiring him to
pay disgorgement and pre-judgment interest totaling $15,000. At the
same time, Monski consented to the entry of a final judgment in federal
court requiring him to pay a $10,000 civil penalty. [SEC v. Robert J.
Monski, Civ. Action No. 1:01CV00943, D.D.C.] (LR-16986); (Administrative
Proceedings Rels. - 33-7975; 34-44250; File No. 3-10465)
http://www.sec.gov/news/digest/05-03.txt
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