Another Zimmerman in Florida. Relative Dan?
SEC SUES VECTOR MEDICAL TECHNOLOGIES, INC., MICHAEL SALIT, JAMES FARNELL,
MICHAEL FARNELL, DAVID ZIMMERMAN AND STANLEY WASSER FOR FRAUD IN CONNECTION
WITH THE COMPANY'S UNREGISTERED SECURITIES OFFERING THAT RAISED APPROXIMATELY
$16 MILLION PRIMARILY FROM PHYSICIAN INVESTORS
The Commission announced that it filed an action for injunctive relief
in U.S. District Court for the Southern District of Florida on Sept. 11,
charging Vector Medical Technologies, Inc. (Vector), Michael H. Salit
(Salit), James P. Farnell (J. Farnell), Michael J. Farnell (M. Farnell),
David A. Zimmerman (Zimmerman) and Stanley B. Wasser (Wasser) with
securities fraud for their participation in a securities boiler room
operation that raised just under $16 million from defrauded investors,
mostly physicians, in an unregistered public distribution of stock. The
Commission's complaint alleges that the defendants sought out physician
investors to join Vector's medical advisory board as a ruse to solicit
them to purchase stock in Vector, a developmental stage biomedical
company purporting to have a patch capable of delivering insulin and
other high-density molecular weight drugs through the skin.
Specifically, the complaint alleges, among other things, that Vector and
Salit violated the anti-fraud provisions of the federal securities laws
by making false and misleading statements and omissions of material fact
to prospective investors concerning: (i) Vector's acquisition of
revolutionary, patented, transdermal technology; (ii) Vector's impending
initial public offering (IPO); (iii) Vector's purported success in
clinical trials; and, (iv) Vector's payment of sales commissions from
the offering proceeds. The Complaint also alleges that Vector and Salit
aided and abetted violations of the broker-dealer registration
provisions committed by J. Farnell, M. Farnell, Zimmerman and Wasser,
who acted as unregistered broker-dealers by soliciting investors to
purchase Vector stock.
The complaint further alleges that defendants J. Farnell, Zimmerman and
Wasser had direct communications with prospective investors wherein they
made numerous false and misleading statements and omissions concerning:
(i) Vector's transdermal patch technology; (ii) Vector's impending IPO;
(iii) Vector's current and future valuation; and, (iv) Vector's payment
of sales commissions. Similarly, the complaint alleges, among other
things, that M. Farnell wrote the initial sales script used to solicit
prospective investors which falsely represented that Vector had a firm
commitment for an IPO at $10 per share and that he knew or was reckless
in not knowing that Vector was paying undisclosed sales commissions on
investor funds raised.
Further, the complaint alleges that Vector did not own the rights to the
transdermal technology as represented to prospective investors in
Vector's offering materials and in solicitations by Vector's sales
agents. The Complaint also alleges that Vector had no firm commitment
for an IPO of Vector stock as represented to prospective investors by
the Farnells, Zimmerman and Wasser. Finally, the complaint alleges that
the business valuation report distributed to prospective investors was
also materially false and misleading because it failed to include the
assumptions on which the report was based.
Accordingly, the complaint alleges that Vector and Salit violated
Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 (Securities
Act) and Section 10(b) of the Securities Exchange Act of 1934 (Exchange
Act) and Rule 10b-5, thereunder, and that Vector and Salit aided and
abetted the sales agents violations of Section 15 (a) of the Exchange
Act. Additionally, the complaint alleges that J. Farnell, M. Farnell,
Zimmerman and Wasser violated Sections 5(a), 5(c) and 17(a) of the
Securities Act and Sections 10(b) and 15(a) of the Exchange Act and Rule
10b-5, thereunder. [SEC v. Vector Medical Technologies, Inc., Michael
H. Salit, James P. Farnell, Michael J. Farnell, David A. Zimmerman and
Stanley B. Wasser, Civil Action No. 03-80858-CIV-HURLEY, SD Fla.] (LR-
18348) |
