PR Newswire December 20, 1990, Thursday
HEADLINE: FLORIDA COMPTROLLER TAKES LEGAL ACTION AGAINST 11 PENNY
STOCK COMPANIES AND 65 INDIVIDUALS
DATELINE: FORT LAUDERDALE, Fla., Dec. 20
BODY:
Florida Comptroller Gerald Lewis today took legal action against 11 penny
stock companies and 65 individuals, claiming that they violated a new rule
designed to prevent high pressure sales tactics.
The firms and individuals, which face possible revocation of their licenses,
are accused of violating the state's "cold call" rule -- a regulation adopted by
Lewis' office Jan. 1, which prohibits brokers from selling penny stocks to
strangers over the telephone.
"Consumers are entitled to be treated fairly, and in these cases we feel that
was not the case," Lewis said.
Under the rule, a potential customer contacted by phone who has had no
business relationship with the salesperson, who is calling, must agree to the
transaction in writing before a sale can be finalized. It is designed to protect
customers from high-pressure sales pitches.
The cases brought today began last spring as part of a
coordinated, nationwide effort between Lewis' agency, the Securities and
Exchange Commission and the National Association of Securities Dealers.
Last March, the three organizations participated in a sweep of some 188
companies to determine whether they were violating either state or federal "cold
call" restrictions. Florida was the only state asked to participate.
In addition to allegedly violating the state's "cold call" rule, the
companies named in enforcement actions today also are accused of failing to make
determinations that the persons who were sold the stocks were suitable
investors, failing to supervise their sales staffs and failing to maintain
proper books and records.
The companies in question operate 23 branch offices and employ 695 sales
agents.
They have 21 days to challenge the legal actions or face the sanctions being
sought, which include the revocation of their licenses as well as fines.
The companies named are:
Brennan Ross Securities Inc., a Colorado-based company with
a branch office in Fort Lauderdale;
First Eagle Inc., a Colorado-based company with branch offices
in Boca Raton and Palm Harbor;
G.K. Scott and Company Inc., a New York-based company with
branch offices in Boca Raton, Fort Lauderdale, West Palm Beach
and Port St. Lucie;
Global Capital Securities Inc., a New York-based company with
a branch office in Boca Raton;
GSG Global Securities Group Inc., a New York-based company
with branch offices in Boca Raton and Sunrise;
H.T. Fletcher Securities Corp., a Colorado-based company with
a branch office in Boca Raton;
Horizons International Corp., a Michigan-based company with
a branch office in Boca Raton;
Kober Financial Corp., a Colorado-based company with branch
offices in Tampa and Boca Raton;
Koch Capital, a Washington-based company with the branch offices
in Boca Raton, Tampa and Deerfield Beach;
Malone and Associates Inc., a Colorado-based company with branch
offices in Fort Lauderdale and Boca Raton;
MLB Investments Limited, a Colorado-based company with branch
offices in Longwood, Pensacola and Palm Beach Gardens.
Today's action comes on the heels of a concentrated effort
by Lewis, the SEC and NASD of ridding Florida of fraudulent penny
stock dealers.
Since January 1988, 45 penny stock companies with 70 branches
and over 4,300 sales agents have closed in Florida following either
enforcement actions or examinations by Lewis' office.
"Cooperation among agencies has been the key to our efforts,"
Lewis said.
CONTACT: Terence McElroy of the Florida Office of Comptroller, 904-488-4844
LANGUAGE: ENGLISH
LOAD-DATE: 122090 FL007 |
