COMMISSION INSTITUTES ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS AGAINST
CEO OF TOYMAKER AND A NEW JERSEY STOCK PROMOTER FOR ENGAGING IN ONGOING PUMP
AND DUMP SCHEME
On September 5, the Commission instituted public administrative and
cease-and-desist proceedings, pursuant to Section 8A of the Securities
Act of 1933 (Securities Act) and Sections 15(b) and 21C of the
Securities Exchange Act of 1934 (Exchange Act), against Steven Wise
(Wise), the Chief Executive Officer and sole director of Marx Toys &
Entertainment Corp. (MRXT), a Sebring, Ohio, penny stock issuer, and
Larry Vindman (Vindman), a New Jersey stock promoter. In the Order
Instituting Proceedings, the Division of Enforcement (Division) alleges
that, from in or about August 2003 through the present, Wise and Vindman
have engaged in fraudulent and manipulative practices to inflate
artificially the demand for, and the share price of, MRXT common stock
so that they, as well as associates of them who hold MRXT common stock,
can profit by selling their own shares of MRXT stock at inflated prices.
The Division further alleges that, as part of this conduct, Wise and
Vindman offered to pay-and in fact did pay-two registered
representatives of a New York registered broker-dealer a kickback,
consisting of 100,000 purportedly free trading shares of MRXT common
stock, to induce the registered representatives to make a market in MRXT
common stock and solicit their brokerage clients to purchase and hold
shares of MRXT common stock at inflated prices. The Division also
alleges that Wise and Vindman offered further kickbacks to the two
registered representatives dependent upon the registered representatives
selling certain specified quantities of MRXT shares to their brokerage
customers, while knowing or recklessly disregarding the fact that the
kickbacks that they paid to the two registered representatives would not
be disclosed to the registered representatives' brokerage customers.
The Division alleges that Wise and Vindman also engaged in other conduct
to manipulate the demand for, and share price of, MRXT common stock,
including paying undisclosed kickbacks to registered representatives of
at least one other registered broker-dealer as compensation for those
registered representatives selling shares of MRXT common stock to their
retail customers. While Vindman and Wise were engaged in this conduct,
MRXT filed, on August 29, 2003, a Form S-8, registering 8,000,000 shares
of common stock issuable under its 1998 Incentive and Non-qualified
Stock Option Plan.
The Order alleges that Respondents willfully violated, and committed or
caused the violation 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.
A hearing will be scheduled before an administrative law judge to
determine whether the allegations contained in the Order Instituting
Proceedings are true, to provide Respondents an opportunity to dispute
these allegations, and to determine what, if any, remedial sanctions
should be imposed against Respondents. (Rels. 33-8281; 34-48451; File
No. 3-11247) |
