Fraud Dropped against Garber,Yellin, Feinstein
The Securities and Exchange Commission (“SEC”) announced today that three individuals Jordan Feinstein (“Feinstein”), Danny Garber (“Garber”) and Kenneth Yellin (“Yellin”) consented to an injunction, without admitting or denying the allegations in the Second Amended Complaint filed by the SEC on August 13, 2014. The injunction prohibits Messrs. Feinstein, Garber and Yellin from selling unregistered securities in violation of Sections 5(a) and 5(c) of the Securities Act of 1933. Such violations do not require a finding of intent or recklessness.
In its Second Amended complaint, the SEC alleged that Messrs. Feinstein, Garber and Yellin ran afoul of federal registration requirements in their sales of unregistered securities, by selling such securities after obtaining attorney opinion letters invoking various regulatory exemptions from the federal registration requirements. Under the terms of the settlement, Messrs. Feinstein, Garber and Yellin are required to “neither admit nor deny” the SEC’s claim that the exemptions did not apply.
On December 21, 2012 the SEC announced through Press Release 2012-78 that it had filed a complaint alleging that Messrs. Feinstein, Garber and Yellin and another individual engaged in a “fraudulent penny stock scheme” and in so doing obtained, “approximately $17 million in illicit profits.” Further, in its 2013 Agency Financial Report at p. 137 under the heading “Actions Related to Market Manipulation” the SEC again repeated that the abovementioned four individuals were alleged to have “conduct[ed] a fraudulent penny stock scheme.” . . . and made “approximately $17 million in illicit profits.”
Of the alleged $17 million in profits, the final judgment filed yesterday requires Mr. Feinstein to pay a total of approximately 2% of this figure in profits and pre-judgment interest and a penalty of $25,000; Mr. Garber to pay a total of approximately 5% of this figure in profits and pre-judgment interest and a penalty of $25,000; Mr. Yellin to pay a total of approximately 2% of this figure in profits and pre-judgment interest and a $25,000 penalty; and the fourth individual to pay approximately 5% of this figure in profits and pre-judgment interest and a penalty of $25,000.
The SEC abandoned its claim of “fraudulent” conduct and never alleged “market manipulation” in any complaint, contrary to the claim made in its Agency Financial Report. All prior complaints filed before the Second Amended Complaint were dismissed.
The case was pending before Judge Shira A. Scheindlin of the United States District Court for the Southern District of New York, under the case number 12-Civ-9339.
Messrs. Feinstein, Garber and Yellin were represented by Ira Lee Sorkin and Amit Sondhi of Lowenstein Sandler LLP.
Contact: Ira Lee Sorkin (646) 414-6830
AI
