as seen on this thread->SEC SUES MILLENNIUM FINANCIAL, LTD. FOR RUNNING AN INTERNATIONAL BOILER ROOMOPERATION; COURT ORDERS FREEZE OF MILLENNIUM'S ASSETS
The Honorable Michael B. Mukasey of the Southern District of New York,in response to an emergency action filed today by the SEC, issued anOrder temporarily restraining Millennium Financial, Ltd. from violatingthe antifraud provisions of the federal securities laws. The Court alsoordered a freeze of Millennium's assets, an accounting of those assetsand other emergency equitable relief. The Commission alleges thatMillennium has been running an ongoing international boiler roomoperation that has defrauded at least 150 investors from over 20countries out of more than $2 million. The Commission also sued NewpontFiduciaries & Nominees, S.A. as a relief defendant, because Newpontreceived investor funds at the direction of Millennium.The Commission's Complaint alleges that Millennium made a number offraudulent statements to investors in connection with the offer and saleof the so-called pre-initial public offering (or "pre-IPO") stocks of atleast three U.S. companies -- Key Card Communications, Inc., kNutekHoldings, Inc. and Sonic Garden, Inc. The Complaint alleges that,through unsolicited telephone calls and mass mailings, Millennium madefraudulent statements concerning (i) whether and when a U.S. company wasgoing to have an IPO; (ii) whether investors could profitably reselltheir pre-IPO shares before the IPO; (iii) the price at which the stockwould be offered in the IPO itself; and (iv) the price at which thestock would trade shortly after the IPO.The Commission's Complaint specifically alleges, among other things,that:* In the case of Key Card, Millennium told potential investors that KeyCard would have an IPO within a few months. In fact, Key Card did not havean IPO within the promised timeframe and has never had an IPO.* Millennium sold Key Card pre-IPO shares to investors for $5 per share.Millennium fraudulently told investors that they could profitably sell theirpre-IPO shares before the IPO for between $7.50 and $10 per share.* Millennium further told investors that the stock would be offered in KeyCard's IPO for at least $10 per share and that trading would soar to $50 pershare in post-IPO trading - representing a 900 percent return relative to anoriginal investment of $5 per share. These price predictions were baseless.* Millennium falsely claimed that it is an international financialconsulting firm based in Uruguay, with offices in several foreign countries.In fact, Millennium does not have the offices it claims to have in thosecountries. It has also operated in Ireland without proper authorization fromthe Central Bank of Ireland.Documents filed in support of the Commission's Complaint further allegethat Millennium has solicited investors on a worldwide basis. Investorfunds have come from Australia, Belgium, Denmark, England, France,Germany, Greece, Guernsey, Indonesia, Ireland, Italy, Luxembourg,Malaysia, The Netherlands, New Zealand, Portugal, Saudi Arabia,Scotland, Singapore, Sri Lanka, Sweden, Switzerland, the United States,and the United Arab Emirates. The majority of the known investors arefrom the United Kingdom and Ireland.The Court's Order temporarily restrains Millennium from violating theantifraud provisions contained within Section 17(a) of the SecuritiesAct of 1933, and Section 10(b) and Rule 10b-5 of the Securities ExchangeAct of 1934. In addition to the asset freeze, the Order also providesthe Commission with other emergency equitable relief, including an orderdirecting Millennium to repatriate to the U.S. all funds and assets thatit obtained as a result of the activities alleged in the Complaint. TheCommission's Complaint ultimately seeks a final judgment orderingpermanent injunctive relief, disgorgement and monetary penalties.The Commission wishes to acknowledge the cooperation and assistance ofthe regulatory and law enforcement officials of several foreignjurisdictions in connection with this matter.In order to assist investors, the SEC has released an online brochure onpre-IPO fraud. Entitled "Risky Business: Pre-IPO Investing," thebrochure advises investors about the consequences of investing at thepre-IPO stage and provides key questions investors should ask. Thebrochure is available at sec.gov Commission is continuing its investigation in this matter. [SEC v.Millennium Financial, Ltd., and Newpont Fiduciaries & Nominees, S.A.,Civil Action No. 02 CV 3901 (MBM) (SDNY)] (LR-17528) |
