UNITED STATES OF AMERICA
In the Matter of
|ORDER INSTITUTING PUBLIC PROCEEDINGS PURSUANT TO SECTION 8A OF THE SECURITIES ACT OF 1933, MAKING FINDINGS AND IMPOSING A CEASE-AND-DESIST ORDER|
The Securities and Exchange Commission ("Commission") deems it appropriate that public administrative proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act of 1933 ("Securities Act") against Delores Easthom ("Easthom").
In anticipation of the institution of these administrative proceedings, Easthom has submitted an Offer of Settlement ("Offer"), 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 to which the Commission is a party, Easthom, without admitting or denying the findings, except that she admits the jurisdiction of the Commission over her and over the subject matter of these proceedings, consents to the issuance of this Order Instituting Proceedings Pursuant to Section 8A of the Securities Act of 1933, Making Findings, and Issuing a Cease-and-Desist Order ("Order").
The Commission makes the following findings:1
Delores Easthom, 64, ("Easthom") resides in West Palm Beach, Florida. She is a self-employed investor relation's consultant. In December 1999, Easthom was hired to provide consulting services to Surgilight, Inc.
B. Relevant Entity And Person
Surgilight, Inc. ("Surgilight" or the "company") is a Delaware corporation headquartered in Orlando, Florida. Surgilight purports to be in the business of developing a laser capable of reversing "Presbyopia," a common eye disorder that causes humans to lose the ability to focus at close range as they age. Surgilight went public through a reverse merger with a public shell corporation in March 1999. The company's securities are registered with the Commission under Section 12(g) of the Securities Exchange Act of 1934 and trade on the OTC Bulletin Board under the ticker symbol "SRGL."
Dr. Jui-teng Lin ("Dr. Lin"), age 53, was the chairman, president, and chief executive officer of Surgilight until August 2001. He controls approximately 70% of the company's common stock. He lives in Oviedo, Florida with his wife Yuchin Lin. The Commission charged Dr. Lin in September 1998 with violations of the antifraud and registration provisions of the federal securities laws in connection with an unrelated matter. 2
C. Easthom's Conduct
Surgilight retained Delores Easthom in December 1999 to provide various consulting services. Pursuant to a written agreement, Easthom was to receive compensation from Surgilight for communicating with the brokerage community and contacting potential investors on behalf of the company.
Easthom contacted Raging Bull and other Internet bulletin boards to request that they create Surgilight discussion forums. After the forums were established, Easthom posted information, using a name other than her own, describing Surgilight and its securities on the Surgilight boards and boards reserved for the company's industry competitors. She posted specific information regarding the economics of the Presbyopia reversal market and how Surgilight was supposedly leading the competition in developing a successful reversal procedure. Easthom made approximately 140 bulletin board posts regarding Surgilight from December 1999 to March 2001. Easthom never disclosed to the bulletin board administrators, or in any of her numerous postings, that she was a paid consultant of Surgilight.
The written agreement obligated Surgilight to pay Easthom $4000 per month for her services plus provide her with the options to purchase 1000 shares of Surgilight common stock at a discounted price. Dr. Lin, however, arranged to have Easthom paid by selling some of his shares of Surgilight common stock in private transactions with three investors and instructing them to send Easthom the money. In this way, Easthom received $12,000 in compensation for her work on behalf of Surgilight.
Section 17(b) of the Securities Act makes it unlawful for any person to tout a stock for any consideration received, or to be received, directly or indirectly, from an issuer, underwriter or dealer, without fully disclosing the receipt and amount of such consideration. See, e.g., In the Matter of John Black, Securities Act Release No. 33-7885 (Sept. 6, 2000)(respondent violated Section 17(b) by touting issuer on Raging Bull without disclosing that he was promised compensation for such activities). Easthom touted Surgilight securities on Raging Bull and other Internet bulletin boards without disclosing her compensation arrangement with Surgilight.
Based on the foregoing, the Commission finds that Easthom committed or caused violations of Section 17(b) of the Securities Act.
Based on the foregoing, the Commission deems it appropriate to accept the Easthom's Offer of Settlement and to impose the sanction agreed to therein.
Accordingly, IT IS HEREBY ORDERED, pursuant to Section 8A of the Securities Act, that Easthom cease and desist from committing or causing any violation and any future violation of Section 17(b) of the Securities Act.
By the Commission.
Jonathan G. Katz
|1||The findings herein are made pursuant to Easthom's offer of settlement and are not binding on any other person in this or any other proceeding.|
|2||See SEC v. Jui-teng Lin and Yuchin Lin, Litigation Release No. 15870, September 3, 1998.|
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