UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSIONSECURITIES ACT OF 1933
Release No. 7406 / March 24, 1997SECURITIES EXCHANGE ACT OF 1934
Release No. 38432 / March 24, 1997ADMINISTRATIVE PROCEEDINGFile No. 3-9104
____________________________________ :
In the Matter of : ORDER MAKING FINDINGS,
: ISSUING CEASE-AND-DESIST
PETER TOSTO and INVESTOR : ORDERS AND DISGORGEMENT
RELATIONS, INC. : AGAINST RESPONDENTS
: PETER TOSTO AND INVESTOR
Respondents. : RELATIONS, INC.
:
___________________________________: I.
On September 26, 1996, the Securities and Exchange
Commission ("Commission") issued an Order Instituting Public
Administrative and Cease-and-Desist Proceedings and Notice of
Hearing Pursuant to Section 8A of the Securities Act of 1933
("Securities Act") and Sections 15(b), 19(h) and 21C of the
Securities Exchange Act of 1934 ("Exchange Act") ("Order
Instituting Proceedings") against Respondents Peter Tosto
("Tosto"), Investor Relations, Inc. ("IRI"), George Panagiotou
("Panagiotou"), Mark Savage ("Savage"), and Dean Verrigni
("Verrigni") (collectively, the "Respondents"), to determine
whether the allegations contained in the Order Instituting
Proceedings were true; what remedial and other sanctions, if any,
were appropriate in the public interest against the Respondents;
and whether cease-and-desist orders should issue against theRespondents.
Respondents Tosto and IRI have submitted Offers of
Settlement ("Offers") which the Commission has determined to
accept. Solely for the purpose of these proceedings and any
other proceedings brought by or on behalf of the Commission or in
which the Commission is a party, and without admitting or denying
the allegations contained in the Order Instituting Proceedings or
the findings contained in the Order Making Findings, Issuing
Cease-and-Desist Orders and Disgorgement Against Respondents
Peter Tosto and Investor Relations, Inc. ("Order"), except as to
the jurisdiction of the Commission, which is admitted, Tosto and
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IRI, by their Offers, consent to the entry of the findings,
sanctions, and cease-and-desist orders set forth below.
II.
On the basis of the Order Instituting Proceedings, this
Order and the Offers submitted by Tosto and IRI, the Commission
makes the following findings:-[1]-
A. The securities of San Diego Bancorp ("SDB") are
registered with the Commission pursuant to Section 12(g) of
the Exchange Act and its stock has traded since at least
1993 over-the-counter on the National Association of
Securities Dealers Inc.'s ("NASD") electronic bulletin board.
B. Tosto, who maintains a residence in New York, is a
former registered representative ("RR") who was suspended
from association with any member firm by the NASD in 1990.
C. IRI, a Utah corporation, is an entity solely owned,
operated and controlled by Tosto.
D. During the period from at least in or about September
1993 through April 1994, Tosto and IRI violated Section
17(a) of the Securities Act in that, in the offer or sale of
securities, by the use of the means or instruments of
transportation or communication in interstate commerce or by
the use of the mails, directly or indirectly, they employed
devices, schemes or artifices to defraud; obtained money or
property by means of untrue statements of material facts or
omitted to state material facts necessary in order to make
the statements made, in the light of the circumstances under
which they were made, not misleading; or engaged in
transactions, practices or courses of business which
operated or would operate as a fraud or deceit upon the
purchaser. For example, Tosto and IRI:
1. paid RRs to sell SDB stock to their customers or
to recruit others to sell SDB stock. This compensation
was not disclosed by the RRs to their customers. A
major shareholder of SDB paid Tosto compensation to
generate this market activity in SDB stock, which had
an otherwise relatively illiquid market. The market
activity allowed the major shareholder to sell his SDB
---------FOOTNOTES----------
-[1]- Any findings contained in this Order are made
pursuant to the Offers submitted by Tosto and IRI
and are not binding on any other person or entity
named as a respondent in this or any other
proceeding.
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stock. Tosto, individually and through IRI, received
payments from the major shareholder and transferred
some, but not all, of these payments to the RRs and
others. Tosto and IRI retained a substantial amount of
these payments for themselves; and
2. made material misrepresentations to a registered
broker-dealer in connection with transactions in SDB
stock. Tosto and IRI placed orders through a
registered broker-dealer in cash accounts held for
Tosto's and IRI's beneficial interest. In opening the
accounts and in placing the orders, Tosto and IRI
misrepresented, inter alia, their identity and
financial means. Tosto and IRI subsequently failed to
pay for shares which they purchased. Thus, Tosto and
IRI avoided substantial losses, which were incurred by
the broker-dealer on Tosto's and IRI's behalf.
E. During the period from at least in or about September
1993 through April 1994, Tosto and IRI violated Section
10(b) of the Exchange Act and Rule 10b-5 thereunder in that,
directly or indirectly, by use of the means or
instrumentalities of interstate commerce, or of the mails,
or of any facility of any national securities exchange, in
connection with the purchase or sale of securities, they
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, in the light of the circumstances under which they
were made, not misleading; or engaged in acts, practices or
courses of business which operated or would operate as a
fraud or deceit upon any person. For example, they engaged
in the conduct described in Section II.D., above.
III.
In view of the foregoing, the Commission deems it
appropriate and in the public interest to accept the Offers,
issue cease-and-desist orders and order disgorgement and
compliance with Respondents Tosto's and IRI's undertakings, as
specified in the Offers. ACCORDINGLY, IT IS HEREBY ORDERED, that:
A. Tosto cease and desist, pursuant to Section 8A of the
Securities Act and Section 21C of the Exchange Act,
from committing or causing any violation and any future
violation of Section 17(a) of the Securities Act and
Section 10(b) of the Exchange Act, and Rule 10b-5
promulgated thereunder;
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B. Tosto, within three days of the entry of this Order,
pay disgorgement, for which he is jointly and severally
liable with IRI, in the amount of $857,000 and
reasonable interest from September 1993 to the date of
the Order in the amount of $243,241.92, for a total
amount of $1,100,241.92, to the United States
Securities and Exchange Commission. Such payment shall
be: (a) made by United States postal money order,
certified check, bank cashier's check or bank money
order; (b) made payable to the United States Securities
and Exchange Commission; (c) delivered by certified
mail to the Office of the Secretary, Securities and
Exchange Commission, 450 Fifth Street, N.W., Stop 6-9,
Washington, D.C. 20549; and (d) submitted under cover
letter which identifies Tosto as a Respondent in this
proceeding, the file number of this proceeding, a copy
of which cover letter and money order or check shall be
sent to Ellen N. Hersh, Assistant Regional Director,
Northeast Regional Office, Securities and Exchange
Commission, 7 World Trade Center, 13th Floor, New York,
New York 10048;
C. Tosto shall comply with his undertakings, upon
reasonable notice and payment of statutory witness and
travel fees, to appear without the service of a
subpoena at reasonable times and places to testify as a
witness at the hearing or other related proceedings in
this matter; and
D. Tosto and IRI shall comply with their undertakings that
both Tosto and IRI shall cooperate with the staff of
the Commission in such further investigations and
inspections as the Commission shall determine to pursue
relating to the marketing, offer, purchase or sale of
securities, arising out of or relating to conduct which
occurred before the date of this Offer. Furthermore,
Tosto and IRI shall actively induce the cooperation of
all employees, agents and representatives of Tosto and
IRI in any such investigation or inspection. At the
request of the Commission's staff, Tosto and IRI shall
appear and testify, and shall use their best efforts to
obtain the appearance and testimony of their employees,
agents and representatives, at any investigative
testimony, deposition, hearing or trial.
IT IS FURTHER ORDERED, that:
A. IRI cease and desist, pursuant to Section 8A of the
Securities Act and Section 21C of the Exchange Act,
from committing or causing any violation and any future
violation of Section 17(a) of the Securities Act and
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Section 10(b) of the Exchange Act, and Rule 10b-5
promulgated thereunder;
B. IRI, within three days of the entry of this Order, pay
disgorgement, for which it is jointly and severally
liable with Tosto, in the amount of $857,000 and
reasonable interest from September 1993 to the date of
the Order in the amount of $243,241.92, for a total
amount of $1,100,241.92, to the United States
Securities and Exchange Commission. Such payment shall
be: (a) made by United States postal money order,
certified check, bank cashier's check or bank money
order; (b) made payable to the United States Securities
and Exchange Commission; (c) delivered by certified
mail to the Office of the Secretary, Securities and
Exchange Commission, 450 Fifth Street, N.W., Stop 6-9,
Washington, D.C. 20549; and (d) submitted under cover
letter which identifies IRI as a Respondent in this
proceeding, the file number of this proceeding, a copy
of which cover letter and money order or check shall be
sent to Ellen N. Hersh, Assistant Regional Director,
Northeast Regional Office, Securities and Exchange
Commission, 7 World Trade Center, 13th Floor, New York,
New York 10048;
C. IRI shall comply with its undertakings, upon reasonable
notice and payment of statutory witness and travel
fees, to appear without the service of a subpoena at
reasonable times and places to testify as a witness at
the hearing or other related proceedings in this matter; and
D. IRI shall comply with its undertakings that both IRI
and Tosto shall cooperate with the staff of the
Commission in such further investigations and
inspections as the Commission shall determine to pursue
relating to the marketing, offer, purchase or sale of
securities, arising out of or relating to conduct which
occurred before the date of this Offer. Furthermore,
IRI and Tosto shall actively induce the cooperation of
all employees, agents and representatives of IRI and
Tosto in any such investigation or inspection. At the
request of the Commission's staff, Tosto and IRI shall
appear and testify, and shall use their best efforts to
obtain the appearance and testimony of their employees,
agents and representatives, at any investigative
testimony, deposition, hearing or trial. By the Commission.
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Jonathan G. Katz
Secretary |
