U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20570 / May 13, 2008
Securities and Exchange Commission v. Marc T. Duchesne, Jeffrey A. Hayden, et al., Civil Action No. 07-CV-01475 (JDB) (D.D.C. filed August 16, 2007)
Court Enters Permanent Injunction and Penny Stock Bar Against Jeffrey Hayden in Market Manipulation Case
The Securities and Exchange Commission today announced that the Honorable John D. Bates of the United States District Court for the District of Columbia entered a Final Judgment of permanent injunction and other relief, including a bar against participating in offerings of penny stocks, against Jeffrey A. Hayden on May 7, 2008. Without admitting or denying the Commission's allegations, Hayden consented to the entry of the Final Judgment. The judgment settles the Commission's claims against Hayden in a civil action filed on August 16, 2007, in which the Commission alleged that Hayden had participated in a fraudulent scheme to manipulate the stock price of Nationwide Capital Corporation, a now-defunct company whose shares traded on the Over-the-Counter Bulletin Board.
The Commission's complaint alleged that, in August and September 2002, Hayden, Marc Duchesne, and others carried out a scheme to manipulate the price of Nationwide's stock. The scheme was orchestrated by Duchesne, and began with a matched trade between Duchesne and Hayden that artificially inflated Nationwide's stock price from pennies to $9.35 per share. The Complaint further alleged that, thereafter, Duchesne, Hayden, and others bought or sold Nationwide shares at inflated prices to increase the price of Nationwide stock, to generate volume, and to stimulate market demand for the manipulated shares. The scheme collapsed on October 1, 2002, when the Commission suspended trading in Nationwide securities.
The Final Judgment (i) permanently enjoins Hayden from future violations of the general antifraud provisions of the federal securities laws, Section 10(b) of the Securities Exchange Act of 1934, Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933, and (ii) bars him from participating in offerings of penny stocks. Hayden was liable for disgorgement of $290,798, together with prejudgment interest of $116,330, but payment of these amounts was waived based upon Hayden's sworn Statement of Financial Condition. A civil penalty was not imposed for the same reason.
The Commission acknowledges the assistance of the United States Attorney's Office for the District of Columbia and the Federal Bureau of Investigation, which conducted a separate, parallel criminal investigation.
For additional information, please see Litigation Release No. 20246 (August 16, 2007).