From today's SEC Digest:
COMMISSION ISSUES CEASE AND DESIST ORDER AGAINST ARETE INDUSTRIES, INC.
On October 5, the Commission issued an Order Instituting Proceedings, Making Findings and Imposing a Cease And Desist Order (Order) against Arete Industries, Inc. (Arete) of Boulder, Colorado.
The Order finds that, in February 1998, Arete violated the antifraud provisions of the federal securities laws in connection with the issuance of two press releases concerning a potential transaction between Arete and a private sports apparel company. Specifically, the Order finds that on February 6, 1998, Arete issued a press release which stated that it had reached a "preliminary agreement to acquire" the private company, which the release projected would achieve over $10 million in sales in 1998, with projected sales "growing to in excess of $60 million by the year 2000." The Order finds that at the time the press release was issued, Arete had no agreement to acquire the private company, nor did that company have any firm orders for its products. The Order further finds that on February 19, 1998, Arete issued a second press release which stated that a "definitive agreement" to merge the two companies was imminent, and that the private company was in "final negotiations" to become "designated as a confirmed vendor for major retail department stores." The Order finds that, at the time this release was publicly disseminated, no agreement to merge had been reached between the two companies, and the private company had not received any orders for the sale of its merchandise.
In addition, the Order finds that between January 1988 and November 1998, Arete filed late, or failed to file, at least 37 Forms 10-KSB and 10-QSB.
Based upon the foregoing, the Commission's Order finds that Arete violated Sections 10(b) and 15(d) of the Securities Exchange Act of 1934 and Rules 10b-5, 15d-1 and 15d-13 thereunder, and orders Arete to cease and desist from committing or causing any violations and any future violations of those provisions. Arete consented to the issuance of the Order without admitting or denying the findings therein. Upon issuance of the Order, the Commission filed a motion to dismiss a pending civil injunctive action against Arete, which was based upon the same factual allegations. (Rel. 34-44911; File No. 3-10616)
CEASE AND DESIST ORDER ISSUED AGAINST THOMAS RAABE
On October 5, the Commission issued an Order Instituting Proceedings, Making Findings and Imposing a Cease and Desist Order (Order) against Thomas P. Raabe (Raabe), currently the president of Arete Industries, Inc. (Arete) of Boulder, Colorado.
The Order finds that in February 1998, Raabe, then general counsel to Arete, participated in the preparation and dissemination two press releases concerning a potential transaction between Arete and a private sports apparel company which violated the antifraud provisions of the federal securities laws. Specifically, the Order finds that on February 6, 1998, Arete issued a press release which stated that it had reached a "preliminary agreement to acquire" the private company, which the release projected would achieve over $10 million in sales in 1998, with projected sales "growing to in excess of $60 million by the year 2000." The Order finds that at the time the press release was issued, Arete had no agreement to acquire the private company, nor did that company have any firm orders for its products. The Order further finds that on February 19, 1998, Raabe participated in the preparation and dissemination of a second press release issued by Arete which stated that a "definitive agreement" to merge the two companies was imminent, and that the private company was in "final negotiations" to become "designated as a confirmed vendor for major retail department stores." The Order finds that, at the time this release was publicly disseminated, no agreement to merge had been reached between the two companies, and the private company had not received any orders for the sale of its merchandise.
Based upon the foregoing, the Commission's Order finds that Raabe violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and orders Raabe to cease and desist from committing or causing any violations and any future violations of those provisions. Raabe consented to the issuance of the Order without admitting or denying the findings therein. Upon issuance of the Order, the Commission filed a motion to dismiss a pending civil injunctive action against Raabe, which was based upon the same factual allegations. (Rel. 34-44912; File No. 10617)
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