DIVISION OF ENFORCEMENT SEEKS PENNY STOCK BARS AGAINST RICHARD KERN, DONALD
KERN AND CHARLES WILKINS
On July 7, the Commission issued an Order Instituting Administrative
Proceedings pursuant to Section 15(b)(6) of the Securities Exchange Act
of 1934 against Richard S. Kern, Donald R. Kern, and Charles Wilkins,
based on the final judgment entered against them in SEC v. Lybrand, et
al., Civ. No. 00-1387 (S.D.N.Y.). The U.S. District Court for the
Southern District of New York entered a final judgment on Oct. 6, 2003,
enjoining the Kerns and Wilkins from future violations of Sections 5(a)
and 5(c) of the Securities Act of 1933. In addition, the U.S. District
Court for the Southern District of New York entered final judgments of
consent on June 28, 2004, enjoining the Kerns and Wilkins from violating
Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5
thereunder.
The Commission's complaint in that action alleged, among other things,
that from April 1998 through January 1999, the Kerns and Wilkins
participated in a scheme to create artificial trading markets for
certain shell corporations, and used manipulative trading practices to
drive up the stock prices of the shell corporations for their benefit.
In particular, the complaint alleged that the Kerns and Wilkins
transferred millions of unregistered shares of the shell corporations'
securities to Lybrand to manipulate, and sold unregistered shares to the
public. The Kerns and Wilkins realized profits of $5.9 million as a
result of their sales of the shell corporations' unregistered
securities.
A hearing will be scheduled before an administrative law judge to
determine whether the allegations contained in the Order are true, to
provide the Kerns and Wilkins an opportunity to dispute these
allegations, and to determine whether a penny stock bar is appropriate
and in the public interest. (Rel. 34-49980; File No. 3-11537) |
