Schneider Securities/Sovereign Equity Management Corporation/Technigen and YBM director Michael Schmidt
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"E. The Complaint further alleges that Vittor, through a brokerage firm he formerly owned, Sovereign Equity Management Corporation ("Sovereign"), engaged in manipulative trading in Technigen stock using, among other things, prearranged trading between controlled nominee accounts, matched trades, and a parking arrangement that hid the true ownership of the shares." sec.gov
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and then in another SEC complaint about Technigen:
sec.gov
RESPONDENTS
A.Schneider, a broker-dealer registered with the Commission since May 1985, is headquartered in Denver and during all times relevant to this proceeding had approximately sixteen branch offices located nationwide.
B.Tull resides in Englewood, Colorado. He was Schneider's compliance director during the relevant time period, January 1992 through in or about May 1993. Additionally, Tull had responsibility for supervising the sales activities of Schneider’s southeast Denver, Colorado branch office.
C.Pinholster presently resides in Tucson, Arizona. He was associated with Schneider as a registered representative from June 1991 to October 1993 and was the putative branch manager of Schneider's southeast Denver branch office in 1992 and 1993.
RELATED ENTITY
D.Technigen Corporation ("Technigen") is a publicly-held Canadian corporation based in Vancouver, British Columbia. During the relevant time period, Technigen developed and manufactured golf-related products. The common stock of Technigen traded on NASDAQ until mid-1997. Schneider made a market in Technigen stock during the relevant time period.
SUMMARY
E. From around January 1992 through around May 1993, the securities of Technigen were offered for sale to the public in an unregistered distribution and the price of the securities was manipulated. Pinholster facilitated the distribution and manipulation of Technigen stock in his capacity as a registered representative and branch manager of Schneider's southeast Denver, Colorado branch office. Based on these activities, Pinholster and another representative associated with Schneider who owned the Schneider branch office in southeast Denver (hereafter referred to as "RR") violated or caused violations of the registration provisions of the Securities Act and antifraud provisions of the Exchange Act. Schneider and Tull failed reasonably to supervise Pinholster and the RR with a view to preventing their violations.
FACTS
F. Between January 1992 and February 1993, Technigen issued a total of 6,047,500 common shares, which were illegally transferred to entities controlled by the RR. The RR deposited a portion of the Technigen shares in an account at Schneider (the "Account"). Pinholster was the nominal registered representative on the Account, although the RR directed all trading in the Account.
G. As the result of an aggressive retail sales campaign based on leads furnished through an entity in which the RR had an ownership interest, during the period from March 1992 through September 1992 Schneider sold 2,079,850 Technigen shares to 490 retail customers. The Account supplied 93 percent of the Technigen stock for Schneider's retail sales. The RR also effectively controlled Schneider's inventory account with regard to trading in Technigen stock. Although the firm required that the inventory of Technigen stock be "flat" at the end of each month, the RR determined the source and disposition of Technigen shares for Schneider, set retail and wholesale prices, and established inventory levels throughout each month.
H. In late July 1992, Tull became concerned about Schneider's trading in Technigen and asked the RR to explain in writing his relationship to the Account. The RR falsely responded in writing that he had no relationship with the Account. Additionally, Tull mandated that 20 percent of Schneider's trades in Technigen be inter-dealer transactions and that Schneider's retail ask price be marked-up from the inter-dealer prices by no more than 5 percent. The RR provided the requisite inter-dealer trading, and thereby made it appear that the firm's 20 percent requirement was being complied with, by causing Schneider to engage in matched trading of Technigen shares with another broker-dealer involved in the manipulative scheme. Also, the RR directed the other broker-dealer to funnel Technigen stock to Schneider from another company controlled by the RR, thus supplying additional stock for Schneider's retail sales effort.
I. Despite numerous continuing apparent improprieties in Schneider's trading of Technigen stock, Tull never took further steps to determine whether the RR was associated with the Account or whether Schneider's inter-dealer and retail trading of Technigen was legitimate. Moreover, although they were aware that the RR had been the subject of a state disciplinary action, they did not impose additional supervision or control over the RR.
J. The RR left Schneider's Denver office in February 1993. From approximately February 1993 through May 6, 1993, when the Commission suspended trading in Technigen stock for ten days, Pinholster directed Schneider's trading in Technigen. As part of these activities, to cover Schneider's short position in Technigen stock, Pinholster contacted broker-dealers with which the RR had arrangements to supply Technigen shares to Schneider. Pinholster also continued engaging in matched inter-dealer trading to create the appearance of a legitimate market for Technigen securities.
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groups.google.com.
YBM director Michael Schmidt is described in the company's literature and
on its web-site as an "independent businessman." An original director of
Pratecs, Mr Schmidt, a resident of Burnaby, BC, honed his public company
skills through handling investor relations for a Saskatchewan-rooted,
VSE-listed scam called Technigen Corp. Technigen was a VSE high-flier that
reached $16 a share in 1987 based upon the company's false claims to have
sold more than $100 million in computerized golf-driving ranges to a Swiss
entity, Corporacion Relacio S.A. It turned out that the Swiss company was
really the front for a Panamanian-registered shell whose only known
representative was an ex-convict stock swindler from Maple, Ontario, named
David Charles Stuart. Mr Schmidt appeared at Technigen's 1987 AGM at a
Vancouver hotel most upset with press reports questioning the company's
legitimacy. At that time he presented himself as an independent
shareholder. Technigen's president, Larry Nesis, was subsequently banned
from the BC market by securities regulators over his golf machine lies. Mr
Schmidt became Technigen's investor relations representative after the
stock promotion was exposed publicly as a fraud. By the time he joined
Pratecs' board years later, Technigen stock was trading OTC in the US for
pennies a share.
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