JB Oxford to Pay $2 Million to Settle Securities Fraud Probe
Los Angeles, Feb. 15 (Bloomberg) -- JB Oxford Holdings Inc. will pay $2 million to settle a U.S. criminal
investigation into whether convicted Canadian stock promoter Irving Kott secretly owned and controlled the discount
and online brokerage firm.
The settlement with the U.S. Attorney's Office ends a 2 1/2- year investigation of Oxford's former relationship with
Kott. The inquiry focused on trading activity associated with Kott and whether the firm filed accurate disclosures with
the U.S. Securities and Exchange Commission, Oxford said. The Beverly Hills, California-based firm said it lost more
than $7 million on the transactions.
'As far as the company is concerned, this is behind us,' said Oxford's Chairman and Chief Executive C.L. Jarratt.
While the settlement ends the possibility that the U.S. Attorney's Office will bring criminal charges against Oxford, the
firm said an SEC investigation is continuing. Oxford said it is 'actively' negotiating a possible settlement with the SEC.
The firm denied any wrongdoing and said its current managers and owners were not subjects of the investigation. As
part of the settlement, Oxford has agreed to cooperate with an ongoing investigation of others who have been
associated with the firm.
Kott, father of Oxford's former Chief Operating Oficer Ian Kott, became a consultant to the firm and its board in
1994. At issue, among other things, was whether he manipulated securities through secret ownership of the firm. His
consulting job ended after federal authorities searched the headquarters of Oxford's JB Oxford & Co. subsidiary in
1997.
Fined in Netherlands
Kott is a stock promoter who paid Dutch regulators nearly $4 million in 1990 to settle a criminal investigation into his
activities in the Netherlands. In 1976, he was fined $500,000 by an Ontario court after pleading guilty to conspiring
to defraud investors in the Canadian mining company Somed Mines Ltd. Kott's attorney couldn't immediately be
reached for comment.
Third Capital Partners, a Nashville-based investment banking company, became Oxford's controlling shareholder in
1998, replacing the firm's directors and managers and ending all business dealings with Kott. In addition, Third
Capital ended Oxford's clearing arrangements with East Coast brokerages, such as Monroe Parker Securities Inc.
and Stratton Oakmont Inc.
Some former executives of the defunct Monroe Parker and Stratton Oakmont firms have been charged in New York
with securities fraud, with some pleading guilty.
As part of the settlement, Oxford has agreed to appoint an independent auditor and implement the changes the
consultant recommends. The firm also has pledged not to engage in any future illegal activity. Failure to comply with
these conditions would subject Oxford to possible criminal prosecution and penalties of more than $4 million.
New Company
'We obviously have looked at the company very thoroughly and made sure there is no continuing relationship with
Irving Kott,' said Assistant U.S. Attorney Jeffrey Isaacs. 'It's essentially a new company.'
Oxford will recognize a first-quarter charge for the settlement, paying $500,000 in the first quarter of 2000 and the
remainder in annual installments over the next three years.
Shares of Oxford rose 13/32 to 6 1/2 on the Nasdaq Stock Market.
Feb/15/2000 17:29
For more stories from Bloomberg News, click here.
(C) Copyright 2000 Bloomberg L.P. |
