UNITED STATES OF AMERICA
In the Matter of
|ORDER INSTITUTING ADMINISTRATIVE PROCEEDINGS PURSUANT TO SECTION 15(b)(6) OF THE SECURITIES EXCHANGE ACT OF 1934, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS|
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that administrative proceedings be, and hereby are, instituted pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934 ("Exchange Act") against Albert Terranova ("Terranova").
In anticipation of the institution of these administrative proceedings, Terranova has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. Solely for the purpose of these proceedings, and any other proceeding brought by or on behalf of the Commission, or in which the Commission is a party, and without admitting or denying the findings set forth below, except that Terranova admits the Commission's finding that a Final Judgment of Permanent Injunction and Other Equitable Relief has been entered against him as set forth in paragraph III.C., below, and admits the Commission's jurisdiction over him and over the subject matter of these proceedings, Terranova consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions ("Order").
On the basis of this Order and Terranova's Offer of Settlement, the Commission makes the following findings:
A. Terranova, age 65, resides in Scottsdale, Arizona. From January 1991 through June 1992, Terranova was associated as an undisclosed principal of First American Biltmore Securities, Inc. ("FABS"), a now defunct broker-dealer that was registered with the Commission pursuant to Section 15 of the Exchange Act and maintained its principal office in Phoenix, Arizona.
B. Scorpion Technologies, Inc. ("Scorpion") was incorporated in Colorado on July 2, 1986 and maintained its offices in Los Gatos, California. At all relevant times, Scorpion's common stock was registered with the Commission pursuant to Section 12(g) of the Exchange Act and was traded in the over-the-counter market and quoted on the National Association of Securities Dealers Automated Quotation System. Scorpion purported to be engaged primarily in the development and sale of image processing technology, and in the integration and marketing of workstations and personal computers.
C. On December 11, 2002, the United States District Court for the
Southern District of New York, in an action captioned SEC v. Scorpion Technologies, Inc., et al., 96 Civ. 1005 (BSJ), permanently enjoined Terranova from violating Section 17(a) of the Securities Act of 1933 ("Securities Act"), and Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, and Rules 101 and 102 of Regulation M promulgated under Section 10(b) of the Exchange Act, and as a controlling person within the meaning of Section 20(a) of the Exchange Act, from future violations of Sections 10(b) and 15(c)(1) of the Exchange Act and Rules 10b-3, 10b-5, 15c1-2 and 15c1-6 thereunder, and Rules 101 and 102 of Regulation M promulgated under Section 10(b) of the Exchange Act. The Court entered the order pursuant to Terranova's offer of settlement to the Commission in which Terranova neither admitted nor denied the allegations in the Commission's Amended Complaint, dated May 9, 1996 ("Amended Complaint").
D. The Amended Complaint alleges, among other things, that Terranova, through FABS, participated in a fraudulent scheme involving a registered offering of two million shares of Scorpion common stock. Scorpion's registration statement, which was filed with the Commission and was declared effective on February 11, 1991, covered two million shares of common stock and provided that the stock would be offered and sold to the public at $ .75 per share on a "best efforts" and "self-underwriting" basis. The Amended Complaint alleges that Terranova and the chief executive officer of Scorpion agreed that Terranova would purchase one million of these shares at the offering price of $ .75. Terranova then resold the stock to the public through FABS at prices materially greater than the $ .75 offering price. While these sales were taking place, Scorpion, Scorpion's chief executive officer, and others issued false and misleading statements concerning Scorpion's business and financial results in order to push the stock price higher.
E. By offering and selling Scorpion securities, Terranova participated in an offering of penny stock.
Based upon the foregoing, the Commission deems it appropriate and in the public interest to accept Terranova's Offer and impose the sanctions specified therein.
Accordingly, IT IS ORDERED, that:
A. Terranova be, and hereby is, barred from participating in any offering of a penny stock, including: acting as a promoter, finder, consultant, agent or other person who engages in activities with a broker, dealer or issuer for purposes of the issuance or trading in any penny stock; or inducing or attempting to induce the purchase or sale of any penny stock; and
B. Terranova be, and hereby is, barred from association with any broker or dealer.
For the Commission, by the Secretary, pursuant to delegated authority.
Jonathan G. Katz
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