UNITED STATES OF AMERICA
Order Instituting Proceedings, |
Making Findings and Imposing
Remedial Sanctions Pursuant to
Sections 15(b) and 19(h) of
The Securities Exchange Act of 1934
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest and for the protection of investors that public administrative proceedings be instituted against Scott A. Rude ("Rude") pursuant to Sections 15(b) and 19(h) of the Securities Exchange Act of 1934 ("Exchange Act").
In anticipation of the institution of these proceedings, Rude 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, and without admitting or denying the Commission's findings contained herein, except the Commission's findings set forth in Paragraphs III A and B, which are admitted, Rude consents to the entry of this Order Instituting Proceedings, Making Findings and Imposing Remedial Sanctions pursuant to Sections 15(b) and 19(h) of the Exchange Act ("Order").
Accordingly, it is hereby ordered that proceedings pursuant to Sections 15(b) and 19(h) of the Exchange Act be and hereby are instituted.
On the basis of this Order and Rude's Offer, the Commission finds that:
A.From in or around early 1994 through in or around February 1995, Rude was associated with a broker-dealer registered with the Commission pursuant to the Exchange Act. However, during this time, Rude used Optimum Capital Corp.("OCC"), now a defunct entity, and not the broker-dealer he was associated with, and Omni to effect transactions in, or induce or attempt to induce the purchase or sale of, certain Omni securities. At this time, neither Rude nor OCC were registered with the Commission as a broker or dealer pursuant to the Exchange Act.
B.On November 30, 1999, in the case of SEC v. Omni International Trading, Inc. et al., (Civil Action File No. 97 Civ. 2116), the United States District Court for the District of Minnesota, entered an Order of Permanent Injunction and Other Equitable Relief against Rude, pursuant to his consent and without admitting or denying the allegations contained in the Commission's Complaint, enjoining Rude from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Sections 10(b), 15(a)(1) and 15(c)(1) of the Exchange Act and Rules 10b-5 and 15c1-2 promulgated thereunder. The Complaint was based on the conduct alleged below.
From in or about January 1991 through in or about February 1995, Omni and the other defendants, including Rude, defrauded public investors through the offer and sale of over $4 million in Omni securities. These securities were not registered with the Commission. As part of that fraud, the Complaint alleged that from in or about early 1994 through February 1995, Rude and others raised funds through the offer and sale of Omni stock to investors in several states. In connection with the offer and sale of these Omni shares, the Complaint alleged that Rude and the other defendants made numerous misrepresentations and omitted to state material facts regarding, among other things, a purported tender offer, the expected profit to be made on the tender offer and the commissions to be earned. In addition, the Complaint alleged that during these sales, Rude was a representative with a registered broker-dealer, however, he did not sell the Omni shares through his brokerage firm. Therefore, the Complaint alleged that Rude acted as an unregistered broker or dealer.
In light of the foregoing, it is in the public interest and for the protection of investors to impose the sanctions specified in the Offer submitted by Rude.
Accordingly, it is hereby ordered that Scott A. Rude be, and hereby is, barred from association with any broker or dealer.
By the Commission.
Jonathan G. Katz
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