UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 47789 / May 2, 2003
File No. 3-11103
In the Matter of
ARON O. BRONSTEIN,
| ORDER INSTITUTING PUBLIC
PROCEEDINGS PURSUANT TO
SECTION 15(b) OF THE
SECURITIES EXCHANGE ACT
OF 1934, MAKING FINDINGS,
AND IMPOSING REMEDIAL
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be instituted against Aron O. Bronstein ("Bronstein") pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act").
In anticipation of the institution of these administrative proceedings, Bronstein 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 in which the Commission is a party, and without admitting or denying the findings, except that Bronstein admits the entry of the permanent injunction against him as set forth in paragraph III.C. below, his criminal conviction for securities fraud and conspiracy to commit securities fraud as set forth in paragraph III.E. below, and the Commission's jurisdiction over him and over the subject matter of these proceedings, Bronstein consents to the issuance of this Order Instituting Public Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions ("Order").
Accordingly, IT IS ORDERED that administrative proceedings pursuant to Section 15(b) of the Exchange Act be, and hereby are, instituted against Bronstein.
On the basis of this Order and the Offer, the Commission makes the following findings:
- At all relevant times J.P. Gibbons & Co., Inc., f/k/a The Golden, Lender Financial Group, Inc. ("Golden Lender"), was registered with the Commission as a broker-dealer. On or about July 20, 1999, Golden Lender's name was changed to J.P. Gibbons & Co., Inc.
- At all relevant times, Bronstein was a registered representative of Golden Lender.
- On March 27, 2002, Bronstein was permanently enjoined by the United States District Court for the Southern District of New York in SEC v. Aron O. Bronstein, et al., from violating Sections 5(a) and (c) and 17(a) of the Securities Act of 1933, and Sections 10(b) and 15(c) of the Exchange Act, and Rules 10b-3, 10b-5, and 15c1-2 thereunder.
- The Commission's complaint in the above-referenced action alleged, among other things, that:
- From at least January 1998 through November 1999, Golden Lender and the other defendants conducted a fraudulent offering of Golden Lender stock. Golden Lender was controlled by defendants Aron O. Bronstein and Tomer M. Yuzary, who together beneficially owned a majority of its stock. Acting at the direction of Bronstein and Yuzary, defendants Roman Sakharovich, a/k/a Roman Sakh, and Iosif Pak, a/k/a Joseph Pak, sold Golden Lender stock to retail customers - including many elderly and infirm customers of modest means - by means of a high pressure sales pitch that included numerous material misrepresentations and omissions. The defendants also recommended and sold Golden Lender stock to numerous customers for whom it was not a suitable investment.
- Among other things, the defendants falsely represented that Golden Lender would soon conduct an initial public offering ("IPO") of its common stock and that investors would reap a significant profit once the firm went public. Defendants also failed to inform the investors of the risks associated with investing in Golden Lender, including those relating to Golden Lender's precarious financial condition. Golden Lender had suffered losses from the start and was in such weak financial condition that its auditors had expressed doubts about its ability to continue as a going concern. Contributing to the firm's poor financial condition was the exorbitant compensation paid to Bronstein and Yuzary.
- As a result of the defendants' fraudulent conduct, from January 1998 through November 1999, Golden Lender raised at least $5,270,000 from approximately 160 investors. From 1997 through 1999, Bronstein and Yuzary gave themselves compensation and other payments totaling at least $6,600,000.
- On March 16, 2001, on the basis of his guilty plea, Bronstein was convicted of one count of conspiracy to commit securities fraud and thirteen counts of securities fraud, in violation of 15 U.S.C. §§ 77q(a) and 77x, and 18 U.S.C. §§ 2 and 371. United States v. Aron Oleg Bronstein, et al., 00 Cr. 100 (S.D.N.Y.) (MBM).
- The indictment underlying Bronstein's conviction alleged, among other things, that in 1998 and 1999 Bronstein, Yuzary, Sakh, and Pak engaged in a fraudulent offering of Golden Lender stock in which they falsely represented that an IPO of Golden Lender stock was imminent and concealed Golden Lender's precarious financial condition and the exorbitant compensation paid to Bronstein and Yuzary.
- Bronstein was sentenced to forty-six months in prison and ordered to pay $3,209,000 in restitution. Among other things, he was also sentenced to three years of supervised release following his release from prison, during which time he is required to pay 15% of his gross income in restitution and is prohibited from any participation in the securities industry.
Based upon the foregoing, the Commission deems it appropriate and in the public interest to accept Respondent's Offer, and, accordingly:
IT IS ORDERED that Respondent Bronstein be, and hereby is, barred from association with any broker or dealer.
For the Commission, by its Secretary, pursuant to delegated authority.
Jonathan G. Katz