Larry Stockett has an interesting background. From the Form SC 13D:
(e) Mr. Stockett has been an entrepreneur and venture capitalist for over 30 years. He has been involved in hundreds of projects and personally conducted 12 mergers and acquisitions. He has been involved in a number of projects which have not achieved their projected goals and has a regulatory history which has included a federal injunction and two state consent decrees for allegedly violating the disclosure and exemption requirements of complex federal and state securities laws. A summary of these regulatory matters follows. At all times, Mr. Stockett believed that he was complying with securities laws, and relied on a series of corporate counsel opinions for each of the transactions in which hereceived regulatory complaints
A complaint was filed alleging Mr. Stockett violated securities laws in 1983 relating to the $5 million Initial Public Offering of his first public company, PC Telemart. A litigation naming Prescott Ball and Turbin (subsidiary of Fireman's Fund) and Mr. Stockett as co-defendants was commenced and he was released as a defendant after the discovery stage. Subsequently a similar complaint was filed by the SEC and Mr. Stockett chose not to defend the law suit since the company's assets had been sold to Xerox Corporation and PC Telemart was no longer in business. Mr. Stockett had exhausted his financial resources in his successful legal defense of the first law suit. In order to avoid the additional time and legal expense associated with another potential litigation, Mr. Stockett settled the Government's complaint by accepting a consent decree and permanent injunction from violating securities laws, without admitting or denying that he had violated them in the first place. Mr. Stockett had not sold any of his personal shares and had lost his entire investment along with other shareholders. Mr. Stockett did not receive any fine or restriction from serving as an officer or director of a public company in the future.
A complaint filed by the California Securities Commission alleged that Mr. Stockett's company sold securities without a registration statement or exemption in the State of California in conjunction with the acquisition of three long distance telephone companies in 1987, made by his company, Fibernet Communications Corporation. Mr. Stockett relied on opinion of counsel that each of the acquisitions was exempt from registration. The California Corporation Commission claimed that the offerings should be integrated, thus exceeding the number of shareholders that could be solicited in a single exempt transaction. Since the transactions involved a stock for stock exchange with no cash sales and all shareholders desired to complete the transactions after being offered the right to rescind, Mr. Stockett agreed to a $1,000 fine and consent decree in which he agreed not to violate California Securities Regulations in the future, without admitting or denying that he violated such regulations in the first place.
In 1991, Mr. Stockett filed a personal bankruptcy after receiving a default judgment of $5 million in conjunction with a real estate transaction which he personally guaranteed in 1987. Mr. Stockett's bankruptcy was brought about by the collapse in real estate values of the real estate purchased in the transaction and the collapse in value of his collateral stock.
In April, 1996 Mr. Stockett entered a consent decree with the State of Oregon relating to OTC Emerging Growth Fund. The State of Oregon alleged that the private placement offering memorandum omitted material disclosures and was advertised on the nationally syndicated IPO Television and Radio Shows causing them to disallow the private placement exemption. Mr. Stockett relied on the advice of experienced securities counsel who also served on the Board of Directors and prepared the offering memorandum. The State of Oregon subsequently determined that no exemption was available under Oregon securities law and that the investors were not provided with adequate disclosure of Mr. Stockett's prior regulatory history or personal financial bankruptcy. Mr. Stockett was fined 15,000 with $10,000 waived. |
