BARRED INDIVIDUAL’S ASSOCIATION WITH RIA RESULTS IN COMMISSION ACTION, INJUNCTION AND SUMMARY JUDGMENT IN FAVOR OF COMMISSION
The Securities and Exchange Commission (“Commission”) announced that on July 25, 2000, the District Court in Massachusetts entered a final judgment against former industry registrants, enjoining them from further violations of the registration provisions and the general antifraud and investment advisor antifraud provisions of the federal securities laws.
The judgment also directed the Defendants to pay disgorgement in the total amount of $304,703 plus prejudgment interest in the total amount of $62,501 and to pay civil monetary penalties in the total amount of $354,703.
According to the SEC Press Release, on September 18, 1998, the Commission filed a complaint alleging that in 1995 the Commission barred the Defendant from the securities industry due to prior securities law violations. Months later, the Defendant and his wife, implemented a scheme to evade the bar by setting up an investment adviser, Saxena Capital Management Inc., and two investment companies, Index Timing Fund L.P. and Saxena Growth Fund, for which the wife was nominally the principal.
In reality the barred husband was actively associated with these entities from the outset and their investment decisions tracked the recommendations in newsletters that he published over an Internet website entitled “Vital Information.” The Commission alleged that the husband violated the bar by associating with the entities as well as by continuing to receive fees under a separate consulting agreement with a broker-dealer.
Further, the SEC alleges that the couple made material misrepresentations and omissions to investors in their companies and they failed to register the two investment companies with the Commission.
Accordingly, the SEC believed that the Defendants violated the anti-fraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 and violated Sections 5(a) and 5(c) of the Securities Act of 1933 by offering and selling unregistered securities. The husband was also accused of violating Section 206(4) of the Investment Advisers Act of 1940.
On June 30, 2000, the Commission filed a motion for summary judgement against the defendants which the Court granted on July 18, 2000.
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SEC v. SAXENA Civil Action No. 98-11918-EFH (D. Mass.)
http://www.sec.gov/enforce/litigrel/lr16641.htm
Copyright 1995-2001 VGIS Communications and Mark J. Astarita. All Rights Reserved. Nothing herein is intended as legal or financial advice. The law is different in different jurisdictions, and the facts of a particular matter can change the application of the law. Please consult an attorney or your financial advisor before acting upon the information contained in this article.
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Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.
He is a partner in the national securities law firm Sallah Astarita & Cox, LLC, and the founder of The Securities Law Home Page - SECLaw.com, which was one of the first legal topic sites on the Internet. It went online in 1995 and is updated daily with news, commentary and securities law related links.
