H. VIOLATIONS
30. As a result of the conduct described above, Sherman violated
Section 10(b) of the Exchange Act and Rule 10b-5 there under, which prohibits fraudulent conduct in connection with the purchase or sale of any security involving:
a) the use of any device, scheme, or artifice to defraud;
b) the making of material misrepresentations or omissions; and
c) any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.
31. As a result of the conduct described above, Sherman caused QSGI’s violations of Exchange Act Sections 13(b)(2)(A) and 13(b)(2)(B), which require reporting issuers to make and keep accurate books and records and devise and maintain effective internal accounting controls, respectively.
32. As a result of the conduct described above, Sherman violated
Exchange Act Section 13(b)(5), which prohibits any person from knowingly circumventing or knowingly failing to implement a system of internal accounting controls or knowingly falsifying any book, record or account subject to Exchange Act Section 13(b)(2).
Sherman also violated Exchange Act Rule 13b2-1, which prohibits any person from, directly or indirectly, falsifying or causing to be falsified, any book, record or account subject to Exchange Act Section 13(b)(2).
33. As a result of the conduct described above, Sherman violated
Exchange Act Rule 13b2-2, which prohibits any director or officer of an issuer from,directly or indirectly:
(a) making or causing to be made a materially false or misleading
statement; or
(b) omitting or causing another person to omit to state a material fact necessary in order to make statements made, in light of the circumstances under which such statements were made, no misleading, to an accountant in connection with financial statement audits, reviews, or examinations or the preparation or filing of any document or report required to be filed with the Commission.
34. As a result of the conduct described above, Sherman violated
Exchange Act Rule 13a-14(a), which requires that an issuer’s principal executive officer, or person’s performing similar functions, certify each periodic report containing financial
statements filed by an issuer pursuant to Section 13(a) of the Exchange Act.
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