Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Microcap & Penny Stocks : Zia Sun(zsun) -- Ignore unavailable to you. Want to Upgrade?

To: Francois Goelo who wrote (6779)	2/9/2000 8:45:00 PM
From: Sir Auric Goldfinger	Respond to of 10354

Twenty-one brokers indicted in IPO scheme By Gail Appleson, Law Correspondent NEW YORK, Feb 9 (Reuters) - Twenty-one brokers have been indicted in the government's expanding case against defunct brokerage Sterling Foster and its use of deceptive sales tactics to lure investors into buying shares of little known companies sold in public offerings. The six count securities fraud indictment, which was unsealed on Wednesday in Manhattan federal court, alleges that the former Sterling Foster brokers were involved in illegal stock sales as part of six public offerings between June 1994 and June 1997. Sterling Foster was the lead underwriter for five of the offerings. The Securities and Exchange Commission also filed a related civil suit on Wednesday in Manhattan federal court against 18 of the brokers. Sterling Foster, which was based in Melville, N.Y., closed in 1997 after the FBI raided its officers in search of evidence about the alleged fraudulent sales practices. The brokers named in the unsealed indictment held managerial or supervisory positions that included vice president, branch manager and account executive. They allegedly used fraudulent and deceptive practices to sell shares, known as "house stocks," in the public offerings. The alleged activity included "bait and switch" tactics in which the brokers opened customer accounts with "blue-chip" or better known stocks and then switched the customer's investment into house stocks. They also allegedly used high-pressure or "boiler-room" scripted sales techniques, made unauthorized purchases in customers' accounts and failed to take and execute customers' orders to sell house stocks. The indictment alleges that the purpose of the scheme was to artificially inflate and maintain the prices of house stocks. In this way the stock was protected from a lack of market demand, which would have cause the price to collapse. The defendants allegedly received excessive compensation to push the stocks. The payments, which were as high as 15 percent of the price of the stock, were not revealed to investors. In 1997 the SEC sued Sterling Foster and four individuals including its president Adam Lieberman for allegedly obtaining $75 million from investors using high-pressure sales practices and other unlawful conduct. Authorities said that the firm was secretly controlled by Randolph Pace, a former owner of the defunct brokerage Rooney Pace and by lawyer Alan Novich. The two men were indicted in 1998 for their alleged role in the public offering stock fraud scheme. Criminal charges against Pace and Novich were expanded in September 1999 to add new allegations including that the defendants earned illegal profits of more than $200 million from the scheme. Their trial is scheduled to begin in September. To date, six defendants have pleaded guilty in criminal charges stemming from the scheme and they have repaid or agreed to repay about $32 million in illegal profits. 18:15 02-09-00