=DJ SEC Sues Conversion Solutions And Its CEO
10/25/2006
Dow Jones News Services
(Copyright © 2006 Dow Jones & Company, Inc.)
By Carol S. Remond
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--The Securities and Exchange Commission has filed a complaint against Conversion Solutions Holdings Corp. (CSHD) and chief executive Rufus Harris.
The SEC said in a complaint filed Tuesday in the U.S. District Court for the Northern District of Georgia, Atlanta Division, that the company made false and misleading statements in press releases and financial reports filed with the commission.
The SEC temporarily halted trading in Conversion Solutions stock because of questions about the accuracy of the company's press releases on Tuesday. Trading is scheduled to resume on Nov. 7.
The commission said in its complaint that Harris knew that statements made by Conversion Solutions were "false, misleading or recklessly disregarded the danger that they were."
Among false claims made by the Over-The-Counter company was the claim that it owns or controls the entirety of two separate Venezuelan bond issues with face values of EUR5 billion and $500 million, the SEC said in the complaint.
Conversion Solutions stock skyrocketed to a high of $4 a share on Sept. 28 with a trading volume of more than 14 million shares. The company had announced its acquisition of the euro-denominated Venezuelan bond in a press release on Sept. 27. On Sept. 28, the company said in another release that it planned to list on the Nasdaq stock exchange.
The SEC said in its complaint that 8K filings and an annual report filed by Conversion Solutions in September and October "fraudulently overstated Conversion's assets."
According to the complaint, Conversion Solutions doesn't own or manage as an asset the entire euro-denominated bond issuance identified in its press release and 8K filing. In fact, the company wrongly stated the amount of Venezuelan euro-denominated bond outstanding as EUR5 billion when there is only EUR700 million outstanding.
Conversion Solutions also misled investors about its ownership of $500 million in Venezuelan bonds, according to the SEC.
Conversion Solutions and Harris "directly and indirectly employed devices, schemes or artifices to defraud; made untrue statements of material facts or omitted to state material facts necessary in order to make the statements made," the SEC said in its complaint.
The SEC asked the court to issue restraining orders enjoining Conversion Solutions and Harris from violating securities laws. The SEC also asked the court to order them to disgorge ill-gotten gains.
Harris wasn't immediately available for comment.
Conversion Solutions stock rose from mere cents in early July to a high of $4 on Sept. 28. The stock closed at $1.87 a share on Oct. 20 before being halted by the SEC.
-By Carol S. Remond, Dow Jones Newswires; 201-938-2074; carol.remond@dowjones.com
(END) Dow Jones Newswires
10-25-06 1551ET
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