."In addition, the agency is seeking to bar Phan from acting as an officer of a public company."
SEC Alleges Hartcourt, Chairman Illegally Raised $800,000
Dow Jones, Wednesday, May 28, 2003 at 16:32
WASHINGTON (Dow Jones)--The Securities and Exchange Commission filed a complaint Tuesday against Hartcourt Cos. (HRCT), its chairman and another man for allegedly participating in an illegal scheme to raise money for the company.
Earlier Wednesday, the company issued a statement saying it"strongly denies any wrongdoing and will vigorously defend the lawsuit."According to the SEC, Hartcourt, Chairman and Chief Executive Alan Phan and Yongzhi Yang raised more than $800,000 in late 1999 by issuing 1 million shares to Yang's wife through a special registration statement, known as a Form S-8.
Among other things, the form allows companies to issue stock to consultants as compensation for their work, but it cannot be used by the company to raise capital for itself.
Essentially, the SEC is alleging that Phan and Yang filed with the agency to issue stock to Yang's wife as compensation for services she provided to Hartcourt, but instead sold the shares into the market.
Not only were the men selling the shares, but they were selling them at an inflated price, the SEC said.
At the time, Hartcourt allegedly issued a series of false press releases that pushed its stock to $4.50 from $1.27.
Phan said in Hartcourt's press release that the lawsuit will be a major challenge for the company."However, we have overcome many similar challenges in the past and we intend to fight this lawsuit with the same attitude,"he added.
Under the complaint, filed in Los Angeles federal district court, the SEC is seeking an order prohibiting further securities-law violations and an order requiring that Phan and Yang give up the $800,000 plus penalties. In addition, the agency is seeking to bar Phan from acting as an officer of a public company.
Attorneys representing Phan and Yang weren't immediately available to comment.
Hartcourt Cos., of Long Beach, Calif., is an investment holding company specializing in the acquisition and development of private companies within high-growth industries in China.
-By Phil McCarty, Dow Jones Newswires; 202-862-9251; Phil.McCarty@dowjones.com
(END) Dow Jones Newswires
05-28-03 1632ET
SOURCE Dow Jones
05/28/2003 |
