U.S. Securities and Exchange Commission
Litigation Release No. 21317 / December 1, 2009
Securities and Exchange Commission v. Whitney D. Lund, Sr. and Standard Transfer & Trust Co., Civil Action No. 2:09-CV-1050 (D. Utah.)(Nov. 30, 2009)
SEC Charges Whitney Lund with Securities Fraud, Unregistered Stock Distribution and Aiding and Abetting Transfer Agent Regulations
On November 30, 2009, the Securities and Exchange Commission filed a civil injunctive action in the U.S. District Court for the District of Utah against Whitney D. Lund, Sr. and Standard Transfer & Trust, a registered transfer agent. In its Complaint, the SEC charges Lund with abusing the gate-keeping responsibility he had as president of Standard Transfer & Trust by improperly distributing restricted stock certificates of Mosaic Nutraceuticals Corp. after fraudulently issuing the certificates without the proper restrictive legends. He did this as part of a scheme to profit from the sale of Mosaic shares he owned and controlled, and, as a result of his actions, market participants were misled into treating these restricted securities as free trading. To cover his scheme and reap more than $700,000 in illicit profits, according to the Complaint, Lund falsified transfer agent records and obtained a materially false and misleading attorney opinion letter that was backdated at Lund’s direction in an effort to make his distribution of Mosaic stock appear legitimate. In addition, according to the Complaint, Lund testified falsely during the SEC’s investigation, claiming that he relied on this opinion letter when he made the distribution. The Complaint further charges Standard Transfer & Trust from violating multiple regulations governing the conduct of transfer agents and Lund with aiding and abetting those violations.
The Complaint alleges that Lund violated Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 (Exchange Act), and Sections 17(a), 5(a), and 5(c) of Securities Act of 1933 (Securities Act). The Complaint also alleges that Standard Transfer & Trust violated Sections 17(a)(3), 17A(c)(2) and 17A(d)(1) of the Exchange Act and Rules 17Ac2-1, 17Ac2-2, 17Ad-2, 17Ad-3, 17Ad-6, 17Ad-10, 17Ad-12, 17Ad-13, 17Ad-17, 17Ad-19 and 17f-1 thereunder and that, through his actions, Lund aided and abetted these violations. The Complaint requests that the court permanently enjoin the defendants from future violations of the federal securities laws, order the defendants to pay financial penalties, and order Lund to disgorge ill-gotten gains, plus prejudgment interest. The complaint also asks the court to bar Lund from participating in an offering of penny stock.