U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21496 / April 21, 2010
DISTRICT COURT ENTERS FINAL JUDGMENT OF PERMANENT INJUNCTION AND OTHER RELIEF AGAINST DEFENDANT RICHARD KARP.
Securities and Exchange Commission v. Richard Karp, Case No. 02-09-cv-332-FtM-29DNF (M.D. Fla.)
The Commission announced that on April 20, 2010, the United States District Court for the Middle District of Florida entered a Final Judgment of Permanent Injunction and Other Relief against Defendant Richard Karp. The final judgment enjoins Karp from violating Section 17(a) of the Securities Act of 1933 and Sections 9(a)(4) and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition to injunctive relief, the Court ordered Karp to pay disgorgement of $27,966, representing profits gained as a result of the conduct alleged in the Complaint, together with prejudgment interest in the amount of $1,991, and a civil penalty in the amount of $27,966. Karp consented to the entry of the final judgment without admitting or denying any of the allegations in the Commission's complaint.
The Commission filed a complaint against Karp on May 20, 2009, alleging violations of the anti- fraud and anti manipulation provisions of the federal securities laws in connection with offering and selling the stock of WCI Communities, Inc. ("WCI"), a Southwest Florida homebuilder. The Commission alleged that Karp wrote and disseminated a fake press release that, when reported in the media, caused WCI's stock price to soar and allowed Karp to reap thousands of dollars in illicit profits. Karp allegedly created the phony press release as an announcement from WCI and faxed it to media outlets in an effort to manipulate the stock price of WCI, whose stock was traded on the New York Stock Exchange. The bogus press release falsely stated that WCI's board of directors had received a buyout offer potentially worth $220 million.
For more information on earlier actions in this case, see Litigation Release No. 21054 (May 21, 2009).