NASD charges underwriter of unjustly ditching IPO
By Reuters
Aug 16 2001 10:40 AM PDT
WASHINGTON, Aug 16 (Reuters) - Regulators Thursday charged Security Capital Trading, Inc., an independent New York brokerage, with unjustly terminating the $11 million initial public offering of Galacticomm Technologies Inc. after its shares had been trading for four days.
Security Capital, which was charged along with its President Ronald Heineman, "unilaterally and without justification, terminated the IPO," according to the National Association of Securities Dealers' regulatory arm.
Security Capital and Heineman's attorney could not be immediately reached for comment.
Initial public offerings are the first sale of shares by a company to the investing public. Brokerages and investment banks get a fee for arranging the sale and it is extremely rare for an IPO to be terminated after it is completed, which results in canceled trades.
The lost proceeds from the IPO, which took place on Sept. 23, 1998, in part led to Galacticomm going out of business, the NASD said. Galacticomm shares were trading on the Nasdaq SmallCap Market, the agency said.
More than 500 investors, several brokerage firms and stock- trade clearing agents also were adversely affected when trades placed over the four days had to be canceled, the NASD said.
One Securities Capital broker, Timothy Ryan, violated NASD and federal rules by placing buy orders as part of the IPO for customers who had not authorized them, the NASD said. Security Capital now operates under the name Vertical Capital Partners, Inc., the NASD said. |
