From today's SEC digest:
UNDERWRITER CHARGED WITH MANIPULATING TWO MICROCAP IPOS
On June 28, the Commission instituted administrative proceedings against LT Lawrence & Co., Inc., a New York broker-dealer, and its owners Todd E. Roberti of Florham Park, New Jersey, and Lawrence Principato of Staten Island, New York, for manipulating the initial public offering of two microcap companies. In the Order Instituting Proceedings the Division of Enforcement alleges that LT Lawrence, through Roberti and Principato, underwrote two microcap IPOs between December 1995 and July 1996 and manipulated the price of both securities, defrauding its retail customers of at least $2 million.
The Division alleges that LT Lawrence underwrote the IPOs of Ecotyre Technologies, Inc. on December 12, 1995, and Bigmar, Inc. on June 19, 1996. Both Ecotyre and Bigmar traded on the NASDAQ SmallCap market. The Division also alleges that Roberti and Principato, through LT Lawrence, engaged in a classic pump-and-dump manipulative scheme to artificially increase the price of the Ecotyre and Bigmar securities. Roberti and Principato, through LT Lawrence, controlled the distribution of both IPOs and dominated and controlled the first day of aftermarket trading in both Ecotyre and Bigmar securities. In both schemes, Roberti and Principato accumulated a large inventory position at LT Lawrence and then dumped the securities on its retail customers at the manipulated price. In addition, LT Lawrence had large short positions in its inventory accounts at the end of the first day of aftermarket trading in both securities.
The Division is seeking sanctions against the respondents including cease and desist orders, disgorgement and prejudgment interest, monetary penalties, and other remedial action. A hearing will be held before an administrative law judge to determine whether the staff's allegations against the respondents are true, and if so, what remedial sanctions are appropriate and in the public interest. (Rels. 33-7692; 34-41565; File No. 3-9923)
HEAD TRADER CONSENTS TO AIDING AND ABETTING CHARGES IN MANIPULATION OF TWO MICROCAP IPOS, ACCEPTS BAR FROM INDUSTRY
On June 28, the Commission entered an order instituting administrative proceedings, making findings, and imposing remedial sanctions (Order) against Thomas J. Dalton (Dalton), of Levittown, NY, for aiding and abetting the manipulations of the initial public offerings of two microcap companies. Dalton consented to the entry of the Order without admitting or denying the Commission's findings, except as to the Commission's jurisdiction and the fact that Dalton worked as the head trader at LT Lawrence & Co., Inc. (LAWR) between March 1993 and February 1997.
The Order finds that Dalton aided and abetted LAWR's manipulation of the initial public offering of two microcap companies between December 1995 and July 1996. LAWR, through its principals, manipulated the price of both securities, defrauding its retail customers of at least $2 million. Dalton aided and abetted the manipulations by being present in LAWR's trading room during the first days of aftermarket trading after both IPOs, time-stamping order tickets, and executing trades. The Order further finds that Dalton updated LAWR's market quotes and monitored LAWR's inventory account positions throughout the first day of aftermarket trading in both securities.
The Order imposes a cease and desist order, bars Dalton from association with any broker or dealer with the right to reapply after one year, and does not impose civil penalties based on Dalton's inability to pay penalties. (Rels. 33-7693; 34-41566; File No. 3-9924)
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