NEW JERSEY DOCTOR AND HIS MEDICAL PRACTICE PAY $1.3 MILLION TO SETTLE SEC CHARGES OF SELLING UNREGISTERED SYSTEMS OF EXCELLENCE SECURITIES
The Commission announced the filing of a complaint against Kenneth Steiner (Steiner), a New Jersey physician, and his corporate medical practice, Woodbridge Family Medical Associates, P.C. (Woodbridge), in the United States District Court for the District of Columbia. The complaint alleges that Steiner and Woodbridge illegally sold unregistered shares of Systems of Excellence, Inc. (SOE) stock between June and August 1996. Specifically, the complaint alleges that in two separate transactions in March and June 1996, Steiner acquired -- for himself, his corporate medical practice and in the names of family nominees -- a total of 689,655 shares of newly-issued SOE stock in a private placement at a total cost of $200,000. The shares that Steiner and Woodbridge acquired were neither registered nor exempt from registration but were nevertheless conveyed to them without the required restrictive legend as part of a scheme orchestrated by Huttoe, former president of SOE, to manipulate the market for SOE securities. According to the complaint, Steiner and Woodbridge soon resold nearly all of these newly-issued and unregistered shares into the manipulated market, realizing net profits of $924,789. The complaint further alleges that Steiner and Woodbridge violated Section 5(a) and 5(c) of the Securities Act of 1933. Simultaneously with the filing of the complaint, Steiner and Woodbridge, without admitting or denying the SEC's allegations, settled the action by consenting to entry of the court's Order that: (i) permanently enjoins them from violating Sections 5(a) and (c) of the Securities Act of 1933; (ii) requires Steiner to disgorge his illegal profits of $602,648, plus prejudgment interest of $220,433; (iii) requires Woodbridge and Steiner to jointly and severally disgorge $322,141, plus prejudgment interest of $111,376; and (iv) requires Steiner to pay a civil penalty of $50,000. [SEC v. Kenneth Steiner and Woodbridge Family Medical Associates, P.C., Civil Action No. 00-02145, D.D.C.] (LR-16695)
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