SECURITIES AND EXCHANGE COMMISSION
SECURITIES ACT OF 1933
Release No. 8281 / September 5, 2003
SECURITIES EXCHANGE ACT OF 1934
Release No. 48451 / September 5, 2003
File No. 3-11247
In the Matter of Steven Wise and Larry Vindman
The Securities and Exchange Commission today instituted public administrative and cease-and-desist proceedings, pursuant to Section 8A of the Securities Act of 1933 ("Securities Act") and Sections 15(b) and 21C of the Securities Exchange Act of 1934 ("Exchange Act"), against:
- Steven Wise ("Wise"), age 42, is a resident of Englishtown, New Jersey. He is the Chief Executive Officer and sole director of Marx Toys & Entertainment Corp. ("MRXT"), a Sebring, Ohio, penny stock issuer that purports to be in the business of selling collectible action figures and play sets through the Internet and via telemarketing. Of the approximately 26 million shares of MRXT common stock outstanding, Wise owns individually, or controls through undisclosed nominees, approximately 15 million shares.
- Larry Vindman ("Vindman"), age 24, is a resident of Marlboro, New Jersey, and is a stock promoter.
In the Order Instituting Proceedings, the Division of Enforcement alleges that Respondents engaged in the following unlawful conduct:
From in or about August 2003 through the present, Respondents Wise and Vindman have engaged in fraudulent and manipulative practices to inflate artificially the demand for, and the share price of, MRXT common stock. They have engaged in this misconduct so that they, as well as associates of them who hold MRXT common stock, can profit by selling their own shares of MRXT stock at inflated prices.
As part of this conduct, Wise and Vindman offered to pay-and in fact did pay-two registered representatives of a New York registered broker-dealer a kickback, consisting of 100,000 purportedly free trading shares of MRXT common stock, to make a market in MRXT common stock and induce the registered representatives to solicit their brokerage clients to purchase and hold shares of MRXT common stock at inflated prices. Wise and Vindman offered further kickbacks to the two registered representatives dependent upon the registered representatives selling certain specified quantities of MRXT shares to their brokerage customers. Wise and Vindman knew or recklessly disregarded the fact that the kickbacks that they paid to the two registered representatives would not be disclosed to the registered representatives' brokerage customers.
Wise and Vindman also engaged in other conduct to manipulate the demand for, and share price of, MRXT common stock, including paying undisclosed kickbacks to registered representatives of at least one other registered broker-dealer as compensation for those registered representatives selling shares of MRXT common stock to their retail customers. While Vindman and Wise were engaged in this conduct, MRXT filed, on August 29, 2003, a Form S-8, registering 8,000,000 shares of common stock issuable under its 1998 Incentive and Non-qualified Stock Option Plan.
The Order alleges that Respondents willfully violated, and committed or caused the violation of, Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder.
A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order Instituting Proceedings are true, to provide Respondents an opportunity to dispute these allegations, and to determine what, if any, remedial sanctions should be imposed against Respondents.