U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21129 / July 14, 2009
On July 14, 2009, the Securities and Exchange Commission (the Commission) filed settled Final Judgments against L. Dennis Kozlowski, the former Chairman and Chief Executive Officer of Tyco International Ltd. (Tyco), and Mark H. Swartz, the former Chief Financial Officer of Tyco, in the Commission's action arising from their violations of the federal securities laws while officers of that company. The Final Judgments permanently enjoin Kozlowski and Swartz from violating, or aiding and abetting violations of, the antifraud, proxy statement, periodic reporting, books and records, and lying to auditors provisions of the federal securities laws and permanently bar each of them from serving as an officer or director of a public company.
The Commission's complaint alleges that, from 1996 until June 2002, Kozlowski and Swartz failed to disclose hundreds of millions of dollars in executive indebtedness, executive compensation, and related party transactions that they received while at Tyco. As alleged in the complaint, Kozlowski and Swartz granted themselves undisclosed low interest and interest-free loans from the company that they regularly used for personal expenses and other unauthorized purposes. They repeatedly arranged to have many of these loans forgiven by Tyco. They also engaged in undisclosed related party transactions. In violation of the federal securities laws, Kozlowski and Swartz failed to disclose their indebtedness, loan forgiveness, and related party transactions and caused Tyco to fail to disclose those items in its proxy statements and annual reports.
Without admitting or denying the allegations in the Commission's complaint, Kozlowski and Swartz consented to the entry of Final Judgments that will permanently enjoin each of them from violating Section 17(a) of the Securities Act of 1933 (Securities Act), Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act), and Exchange Act Rules 10b-5, 13b2-1, and 13b2-2, and from aiding and abetting violations of Sections 13(a), 13(b)(2)(A), and 14(a) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1, and 14a-9. The proposed Final Judgments also bar Kozlowski and Swartz, pursuant to Section 20(e) of the Securities Act and Section 21(d)(2) of the Exchange Act, from serving as officers or directors of a public company. The proposed Final Judgments are subject to the approval of the United States District Court for the Southern District of New York.
In 2005, a New York State court sentenced Kozlowski and Swartz to prison terms of 8 1/3 to 25 years for their roles in the Tyco fraud. Pursuant to their criminal convictions, Kozlowski and Swartz also paid approximately $134 million in restitution to Tyco and criminal fines of $70 million and $35 million, respectively. On October 16, 2008, the New York Court of Appeals affirmed Kozlowski's and Swartz's convictions. On June 8, 2009, the United States Supreme Court denied a petition by Kozlowski and Swartz for a writ of certiorari.
Monday, July 20, 2009
Tuesday, July 7, 2009
Fund Pays SEC $17.8 Million To Settle Market Timing Scheme
July 7, 2009
The SEC claims Headstart Advisers LTD., which had at least $500 million in funds at its height, would trade mutual funds after the market closed but still receive the current day's net asset value, profiting on post-market events. The trades in question, took place between September 1998-September 2003. The scheme entailed engaging in late trading through Headstart's accounts at two broker-dealers. The commission alleges the fund earned about $198 million through the process.
As for its part in the scheme, Chief Investment Officer Najy Nasser, who was personally fined $600,000 commented, "Headstart is very pleased to have reached a settlement." He added, " We responded to U.S. concerns about market timing and immediately ceased this element of Headstart's business in September 2003." Given the CFO's statement, it is somewhat ironic that Headstart is neither admitting nor denying the allegations.
In total Headstart Advisers Ltd., its chief investment officer and the hedge fund itself will pay $17.8 million. Although Headstart Fund is now defunct, the adviser said the settlement will allow them to concentrate on its business as an investment adviser to offshore hedge funds and expand the core business with the launch of new funds.
The SEC claims Headstart Advisers LTD., which had at least $500 million in funds at its height, would trade mutual funds after the market closed but still receive the current day's net asset value, profiting on post-market events. The trades in question, took place between September 1998-September 2003. The scheme entailed engaging in late trading through Headstart's accounts at two broker-dealers. The commission alleges the fund earned about $198 million through the process.
As for its part in the scheme, Chief Investment Officer Najy Nasser, who was personally fined $600,000 commented, "Headstart is very pleased to have reached a settlement." He added, " We responded to U.S. concerns about market timing and immediately ceased this element of Headstart's business in September 2003." Given the CFO's statement, it is somewhat ironic that Headstart is neither admitting nor denying the allegations.
In total Headstart Advisers Ltd., its chief investment officer and the hedge fund itself will pay $17.8 million. Although Headstart Fund is now defunct, the adviser said the settlement will allow them to concentrate on its business as an investment adviser to offshore hedge funds and expand the core business with the launch of new funds.
Monday, June 29, 2009
Madoff Gets Max 150 Years
Monday June 29, 2009
New York-
Convicted Wall Street financier Bernard Madoff was sentenced to 150 years in prison Monday for orchestrating a fraud so extensive that the judge said he needed to send a message to all potential imitators and to the victims who demanded harsh punishment.
Bernard Madoff rose to prominence in the 1960's when he founded Bernard L. Madoff Investment Securities LLC. His firm was an early user of the National Quotation Bureau's Pink Sheet and would eventually grow to become one of the largest market makers in the NASDAQ. Madoff would come to serve as Chairman of the board of Directors of the NASDAQ and on the NASD's Board of Governors.
U.S. District Judge Denny Chin announced the sentence with Madoff standing at the defense table wearing a dark suit that seemed to hang over his thinned frail frame, white shirt and a tie. He appeared to have lost many pounds while awaiting sentencing. Weighing possibly 10-12 pounds less than he did at his last court appearance in March. Head barely raised, he gave no noticeable reaction when the sentence was announced.
This sentence dwarfs other prison terms handed out for other high-profile white-collar fraud in recent years, such as former Worldcom Inc. Chief Executive Bernard J. Ebbers, 67, and Adelphia Communications founder John Rigas. Ebbers is serving 25 years in prison, while Rigas, 84, is serving 12 years in prison.
After the victims spoke, Mr. Madoff himself stood up from the defense table to acknowledge the damage he had inflicted and express regret.
“I’m responsible for a great deal of suffering and pain, I understand that,” the 71-year-old convicted swindler told the court. “I live in a tormented state now, knowing all of the pain and suffering that I’ve created. I’ve left a legacy of shame, as some of my victims have pointed out, to my family and my grandchildren.”
A short time later, Ruth Madoff, who was not in court to witness her husband's humiliation, broke the silence she has maintained since her husband's arrest. "I am embarrassed and ashamed," she wrote in a statement. "Like everyone else, I feel betrayed and confused. The man who committed this horrible fraud is not the man whom I have known for all these years."
Several victims applauded in the court room upon hearing Judge Chin's sentence. Many were more than happy to comment. Including especially moving remarks by Burt Ross, a Madoff victim and a former mayor of Fort Lee, N.J. Ross made it clear he was satisfied with the sentence and that Madoff deserves to go to his grave "an unmourned man."
New York-
Convicted Wall Street financier Bernard Madoff was sentenced to 150 years in prison Monday for orchestrating a fraud so extensive that the judge said he needed to send a message to all potential imitators and to the victims who demanded harsh punishment.
Bernard Madoff rose to prominence in the 1960's when he founded Bernard L. Madoff Investment Securities LLC. His firm was an early user of the National Quotation Bureau's Pink Sheet and would eventually grow to become one of the largest market makers in the NASDAQ. Madoff would come to serve as Chairman of the board of Directors of the NASDAQ and on the NASD's Board of Governors.
U.S. District Judge Denny Chin announced the sentence with Madoff standing at the defense table wearing a dark suit that seemed to hang over his thinned frail frame, white shirt and a tie. He appeared to have lost many pounds while awaiting sentencing. Weighing possibly 10-12 pounds less than he did at his last court appearance in March. Head barely raised, he gave no noticeable reaction when the sentence was announced.
This sentence dwarfs other prison terms handed out for other high-profile white-collar fraud in recent years, such as former Worldcom Inc. Chief Executive Bernard J. Ebbers, 67, and Adelphia Communications founder John Rigas. Ebbers is serving 25 years in prison, while Rigas, 84, is serving 12 years in prison.
After the victims spoke, Mr. Madoff himself stood up from the defense table to acknowledge the damage he had inflicted and express regret.
“I’m responsible for a great deal of suffering and pain, I understand that,” the 71-year-old convicted swindler told the court. “I live in a tormented state now, knowing all of the pain and suffering that I’ve created. I’ve left a legacy of shame, as some of my victims have pointed out, to my family and my grandchildren.”
A short time later, Ruth Madoff, who was not in court to witness her husband's humiliation, broke the silence she has maintained since her husband's arrest. "I am embarrassed and ashamed," she wrote in a statement. "Like everyone else, I feel betrayed and confused. The man who committed this horrible fraud is not the man whom I have known for all these years."
Several victims applauded in the court room upon hearing Judge Chin's sentence. Many were more than happy to comment. Including especially moving remarks by Burt Ross, a Madoff victim and a former mayor of Fort Lee, N.J. Ross made it clear he was satisfied with the sentence and that Madoff deserves to go to his grave "an unmourned man."
Thursday, June 18, 2009
The Little Bill That Couldn't - Hedge Fund Regulation, Again???
On August 7, 2006, SEC Chairman Christopher Cox announced that the SEC would not appeal the recent decision of the U.S. Court of Appeals in Phillip Goldstein, et al. v. SEC. This Goldstein decision effectively overturned the SEC’s 2004 rule requiring most advisers to hedge funds to count investors in the funds for purposes of determining if registration as an
investment adviser is required. Cox confirmed that the SEC would neither seek en banc review of the Goldstein decision, nor would it petition the U.S. Supreme Court for a writ of certiorari. Accordingly, the Court of Appeals decision became effective upon its issuance of a final mandate.
Now, Senator Jack Reed (D-R.I.) has introduced a bill which covers hedge fund, private equity, venture capital and other investment pool managers and requires them to register with the SEC. Under his proposal, only firms managing more than $30 million would have to register on the federal level; smaller funds would be regulated on the state level. This is not the first time a Senator or Congressman has introduced such a bill since 2006. In fact, they seem to be a all the rage these days.
Since 2006 many Senators have introduced or threatened to introduce their own bills calling for regulation of the hedge fund industry including Senator Grassley (R-I.A.), who seems particularly focused introducing a bill bearing his name. The Grassley initiative was a direct response to the 2006 D.C. Circuit Court of Appeals overturning the regulation imposed by the Securities and Exchange Commission requiring hedge funds to register. The federal courts said the Securities and Exchange Commission was going beyond its statutory authority. The initiative was never passed.
Another bill was introduced in Congress by Rep. Barney Frank (D., Mass.); Rep. Michael Capuano (D., Mass.); and Rep. Paul Kanjorski (D., Pa.) They hoped to not only amend the Investment Advisors Act of 1940, but more importantly, they wished to re-establish the authority of the SEC to regulate hedge funds, a power the commission gave itself in a controversial rule enacted in 2004, Goldstein. It too, was not passed.
The focus on Phillip Goldstein et al. v. SEC is understandable, as is the ruling overturning it. Hedge funds are a private business. The government, Federal or State, clearly over steps its authority when they attempt to regulate private industry. In fact, it was only after billions and billions of tax payer dollars were used to bailout some of our countries largest companies, that the board members, officers and shareholders of these public corporations finally ceded much decision making and control to federal officials. Again, these are public companies, forced to relinquish much control due to poor management which led to forced bailouts utilizing TARP loans.
There is no bailout for hedge funds. There are no TARP loans. After all, it would make absolutely no sense for the taxpayer to bailout private industry. That being said, the same holds true of government regulation in private industry- it makes absolutely no sense. In fact, many managers went through the onerous process of registration in 2004. Imagine lots of lawyers, accountants, paperwork and then a process of question and answer that can take weeks or months. Once one is registered, often, the SEC will come to your offices for a formal review. This too is costly, the taxpayer pays for the SEC employees and the rest is paid for by the investor via management fee. The process takes time, the most precious commodity in the fund business. A manager now spends time on reviewing paperwork, filling out forms and SEC responses, instead of focusing their undivided attention on performing for the investor.
Ironically, in the long run with the overturning of Goldstein we realize the SEC had indeed overstepped its authority. The managers precious time and investors funds as well as taxpayer money, was wasted fulfilling the reckless, lobbyist infused needs of politicians. These are the same individuals who were responsible for overseeing the markets. These men sat on the banking committees that were in charge of overseeing the regulatory agencies that are being blamed for everything from acts as incredulous as looking the other way on Madoff, to simply not admitting that they lacked the knowledge needed to understand the complex financial instruments they were in charge of regulating. No matter how you view it, this was a massive failure of the regulators and a direct reflection on certain members of Senate and Congress whose committees were directly responsible for oversight.
The failure did not take place within the hedge funds. In fact, many survive in spite of the failure of the system. The ones that have gated, the ones that have restructured and even those that have failed, most are victims of the system rather than that of a flawed strategy. The system that was supposed to regulate, and protect them, failed them. The government checks and balances that oversee the regulators failed them. Hedge funds have actually been a scapegoat of blame. They are far from responsible for any of our systemic issues, so why call for regulation? The industry has not been offered any TARP funds and has managed to survive without any help from the government, so why regulate them now? The taxpayers have already paid enough between the bailout and the flailing economy, spending more to regulate an industry that survived economic turmoil without incident, would simply be adding insult to injury.
investment adviser is required. Cox confirmed that the SEC would neither seek en banc review of the Goldstein decision, nor would it petition the U.S. Supreme Court for a writ of certiorari. Accordingly, the Court of Appeals decision became effective upon its issuance of a final mandate.
Now, Senator Jack Reed (D-R.I.) has introduced a bill which covers hedge fund, private equity, venture capital and other investment pool managers and requires them to register with the SEC. Under his proposal, only firms managing more than $30 million would have to register on the federal level; smaller funds would be regulated on the state level. This is not the first time a Senator or Congressman has introduced such a bill since 2006. In fact, they seem to be a all the rage these days.
Since 2006 many Senators have introduced or threatened to introduce their own bills calling for regulation of the hedge fund industry including Senator Grassley (R-I.A.), who seems particularly focused introducing a bill bearing his name. The Grassley initiative was a direct response to the 2006 D.C. Circuit Court of Appeals overturning the regulation imposed by the Securities and Exchange Commission requiring hedge funds to register. The federal courts said the Securities and Exchange Commission was going beyond its statutory authority. The initiative was never passed.
Another bill was introduced in Congress by Rep. Barney Frank (D., Mass.); Rep. Michael Capuano (D., Mass.); and Rep. Paul Kanjorski (D., Pa.) They hoped to not only amend the Investment Advisors Act of 1940, but more importantly, they wished to re-establish the authority of the SEC to regulate hedge funds, a power the commission gave itself in a controversial rule enacted in 2004, Goldstein. It too, was not passed.
The focus on Phillip Goldstein et al. v. SEC is understandable, as is the ruling overturning it. Hedge funds are a private business. The government, Federal or State, clearly over steps its authority when they attempt to regulate private industry. In fact, it was only after billions and billions of tax payer dollars were used to bailout some of our countries largest companies, that the board members, officers and shareholders of these public corporations finally ceded much decision making and control to federal officials. Again, these are public companies, forced to relinquish much control due to poor management which led to forced bailouts utilizing TARP loans.
There is no bailout for hedge funds. There are no TARP loans. After all, it would make absolutely no sense for the taxpayer to bailout private industry. That being said, the same holds true of government regulation in private industry- it makes absolutely no sense. In fact, many managers went through the onerous process of registration in 2004. Imagine lots of lawyers, accountants, paperwork and then a process of question and answer that can take weeks or months. Once one is registered, often, the SEC will come to your offices for a formal review. This too is costly, the taxpayer pays for the SEC employees and the rest is paid for by the investor via management fee. The process takes time, the most precious commodity in the fund business. A manager now spends time on reviewing paperwork, filling out forms and SEC responses, instead of focusing their undivided attention on performing for the investor.
Ironically, in the long run with the overturning of Goldstein we realize the SEC had indeed overstepped its authority. The managers precious time and investors funds as well as taxpayer money, was wasted fulfilling the reckless, lobbyist infused needs of politicians. These are the same individuals who were responsible for overseeing the markets. These men sat on the banking committees that were in charge of overseeing the regulatory agencies that are being blamed for everything from acts as incredulous as looking the other way on Madoff, to simply not admitting that they lacked the knowledge needed to understand the complex financial instruments they were in charge of regulating. No matter how you view it, this was a massive failure of the regulators and a direct reflection on certain members of Senate and Congress whose committees were directly responsible for oversight.
The failure did not take place within the hedge funds. In fact, many survive in spite of the failure of the system. The ones that have gated, the ones that have restructured and even those that have failed, most are victims of the system rather than that of a flawed strategy. The system that was supposed to regulate, and protect them, failed them. The government checks and balances that oversee the regulators failed them. Hedge funds have actually been a scapegoat of blame. They are far from responsible for any of our systemic issues, so why call for regulation? The industry has not been offered any TARP funds and has managed to survive without any help from the government, so why regulate them now? The taxpayers have already paid enough between the bailout and the flailing economy, spending more to regulate an industry that survived economic turmoil without incident, would simply be adding insult to injury.
Thursday, June 11, 2009
Former CEO of USXP Richard Altomare Out of Appeals
Richard Altomare is a well known figure through out the penny stock industry. He was once the CEO of Universal Express, a publicly traded company on the bulletin board whose stock traded hundreds of millions of shares, daily, but eventually filed for bankruptcy. He had hoped to have the highest court in the nation hear his case. On Monday, the Supreme Court turned down his request.
While blaming short sellers for the companies trading woes, Altomare and his cohorts lived well by continually issuing and selling stock. This activity continued for almost a decade. Universal Express was a company whose bosses were in constant violation of securities laws. Incredulously, the appeal brief argued that as the company had been through bankruptcy, it could issue all the shares it wanted without regard to securities laws.
Amusingly, at one point, after negative press, Altomare and his USXP friends took out a full page ad in The
Times to denounce a particular writer, the S.E.C. and of course the- "bad guys" -the short sellers. Ironically, according to The Times advertising department, the ad was never paid.
While blaming short sellers for the companies trading woes, Altomare and his cohorts lived well by continually issuing and selling stock. This activity continued for almost a decade. Universal Express was a company whose bosses were in constant violation of securities laws. Incredulously, the appeal brief argued that as the company had been through bankruptcy, it could issue all the shares it wanted without regard to securities laws.
Amusingly, at one point, after negative press, Altomare and his USXP friends took out a full page ad in The
Times to denounce a particular writer, the S.E.C. and of course the- "bad guys" -the short sellers. Ironically, according to The Times advertising department, the ad was never paid.
Tuesday, June 9, 2009
Deutsche Bank Shutters Global Masters Fund
June 9, 2009
Last year, amid turmoil, Deutsche Bank closed its fund Topiary. The fund, with US $1.3 billion, was the sister fund of Deutsche Banks Global Masters Fund. According to Financial News the decision was made in February to shutter another Deutsche Fund, Global Masters.
The liquidation of Global Masters has reportedly been delayed by a redemption gate imposed by one of its portfolio funds. This type of gate has become extremely common as managers weigh the needs of the redeeming investor versus the needs of the investors who choose to stay, both groups need to receive the same fiduciary treatment. In addition many other factors come in to play, such as cash on hand, costs of closing and of course the losses incurred when selling into a weak market.
The German bank is finalizing plans to shut its Global Masters fund of hedge funds following a brutal 2008 and major redemptions. The fund which once managed almost US $10 billion, had fallen to just US $2 billion in assets. The fund fell, as investors fled, following an 18% drop in the previous year.
The fleeing of the fund of funds investor has become the unfortunate downfall of many hedge funds. It is also the beginning of the end of the fund of fund business. This type of investor seems to have the fatal and distinct inability to understand that as they extinguish all leverage with one hand and then redeem all funds with another, they are making reactionary decisions that will lead not only to their own losses, but also to their own extinction.
Last year, amid turmoil, Deutsche Bank closed its fund Topiary. The fund, with US $1.3 billion, was the sister fund of Deutsche Banks Global Masters Fund. According to Financial News the decision was made in February to shutter another Deutsche Fund, Global Masters.
The liquidation of Global Masters has reportedly been delayed by a redemption gate imposed by one of its portfolio funds. This type of gate has become extremely common as managers weigh the needs of the redeeming investor versus the needs of the investors who choose to stay, both groups need to receive the same fiduciary treatment. In addition many other factors come in to play, such as cash on hand, costs of closing and of course the losses incurred when selling into a weak market.
The German bank is finalizing plans to shut its Global Masters fund of hedge funds following a brutal 2008 and major redemptions. The fund which once managed almost US $10 billion, had fallen to just US $2 billion in assets. The fund fell, as investors fled, following an 18% drop in the previous year.
The fleeing of the fund of funds investor has become the unfortunate downfall of many hedge funds. It is also the beginning of the end of the fund of fund business. This type of investor seems to have the fatal and distinct inability to understand that as they extinguish all leverage with one hand and then redeem all funds with another, they are making reactionary decisions that will lead not only to their own losses, but also to their own extinction.
Wednesday, May 27, 2009
SEC CHARGES MATHEW BROWN OWNER OF INVESTORSHUB.COM
IN PUMP AND DUMP MANIPULATION SCANDAL
The U.S. Attorney’s Office for the District of Delaware announced felony criminal charges against Mathew Brown of INVESTORSHUB.COM
SEC Charges Eight Participants in Penny Stock Manipulation Ring
FOR IMMEDIATE RELEASE
2009-117
Washington, D.C., May 21, 2009 — The Securities and Exchange Commission has charged eight participants in a penny stock manipulation ring that allegedly pumped the market prices of at least four stocks and generated more than $6.2 million in illicit profits when they dumped shares on the market.
Additional Materials
* Litigation Release No. 21053
* SEC Complaint
The SEC alleges that Pawel Dynkowski, who resided in Newark, Del., carried out the market manipulation schemes with others he met through a penny stock web site InvestorsHub.com, which is operated by Matthew Brown of Aliso Viejo, Calif. Dynkowski, Brown, and other participants in the schemes often timed the manipulative trading to coincide with false or misleading press releases issued by the companies to hype the stock. The four companies were GH3 International, Inc., Asia Global Holdings, Inc., Playstar Corp., and Xtreme Motorsports of California, Inc.
“As we allege in our complaint, Dynkowski and his accomplices around the country met through the Internet and together spun a web of deception that gave investors the false impression that there was a real demand for these stocks,” said Scott Friestad, Deputy Director of the SEC’s Division of Enforcement. “Dynkowski went so far as to himself write some of the misleading press releases that pumped these penny stocks so they could line their own pockets with millions of dollars.”
The SEC’s complaint, filed in federal district court in Delaware, charges six others in addition to Dynkowski and Brown:
* Jacob Canceli of Mission Viejo, Calif., who is a stock promoter.
* Gerard J. D’Amaro of Pompano Beach, Fla., who is a stock promoter.
* Joseph Mangiapane Jr. of Laguna Niguel, Calif, who was a registered representative at AIS Financial, Inc and is currently CEO of Rubicon Financial, Inc., which owned AIS Financial, Inc. during the relevant time period.
* Nathan M. Michaud of Boston, Mass., who is a web site designer.
* Marc J. Riviello of Redwood City, Calif., who was a registered representative at AIS Financial, Inc.
* Adam S. Rosengard of Voorhees, N.J., who was a student at the University of Delaware during the relevant time period.
According to the SEC’s complaint, these fraudulent schemes generally followed the same pattern. In 2006 and 2007, Dynkowski and his accomplices received large blocks of shares to sell for the penny stock companies, and they received a portion of the proceeds from those sales. The companies put these shares in nominee accounts that Dynkowski and his accomplices controlled. The defendants pumped the market price of the stocks using wash sales, matched orders and other manipulative trading. After artificially inflating the market price of the stocks, Dynkowski and his accomplices then dumped the shares obtained from the issuers and divided the illicit proceeds.
For example, in the scheme involving Asia Global stock, the SEC alleges that Dynkowski personally saw to it that the manipulative trading was coordinated with misleading press releases from the company, and in some instances he wrote the press releases for Asia Global himself. According to the SEC’s complaint, Dynkowski instructed Brown on Aug. 24, 2006, to have Asia Global issue a press release hyping the company’s second quarter 2006 financial results and to “make it sound ENORMOUS.” On September 1, Asia Global issued a press release claiming that its profits for July 2006 were 745 percent greater than its profits for July 2005. Meanwhile, during that same week, Dynkowski and Brown sold 7.75 million shares from nominee accounts, resulting in illicit profits of more than $1.3 million.
Furthermore, according to the SEC’s complaint, Asia Global issued a press release on Feb. 6, 2007, claiming that its subsidiary had just received a license to produce 104 episodes of “Who Wants to Be a Millionaire” in China. The volume of trading in Asia Global increased by more than 65 percent, and Dynkowski and Brown, through orders submitted to Mangiapane and Riviello, were able to sell approximately 5.5 million shares held in nominee accounts, representing approximately 25 percent of the total volume that day. From February 2 through February 8, Dynkowski and Brown, through orders submitted to Mangiapane and Riviello, sold approximately 24.5 million shares held in nominee accounts, making illegal profits of more than $1.2 million.
The SEC’s complaint alleges violations of the antifraud, registration, and other provisions of the federal securities laws. The complaint seeks to have the court permanently enjoin each defendant from future violations, require disgorgement of ill-gotten gains with prejudgment interest, and impose financial penalties. Additionally, the Commission seeks to have certain defendants barred from participating in penny stock offerings.
The U.S. Attorney’s Office for the District of Delaware also today announced felony criminal charges against Dynkowski, Brown, Canceli, D’Amaro, Mangiapane, and Riviello.
The SEC thanks the U.S. Attorney’s Office for the District of Delaware; the Department of Homeland Security, Immigration and Customs Enforcement; the Internal Revenue Service – Criminal Investigations; and the Delaware State Police for their assistance in this matter.
The SEC’s investigation is continuing.
# # #
For more information, contact:
Scott Friestad
Deputy Director, Division of Enforcement
(202) 551-4962
Robert Kaplan
Assistant Director, Division of Enforcement
(202) 551-4969
http://www.sec.gov/news/press/2009/2009-117.htm
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