U.S. Securities and Exchange Commission

Litigation Release No. 21718 / November 1, 2010

PARTIAL CONSENT JUDGMENTS TENDERED TO COURT, WHICH IF APPROVED, WILL PERMANENTLY ENJOIN DEFENDANTS COHMAD SECURITIES CORP., MAURICE J. COHN, MARCIA B. COHN, AND ROBERT M. JAFFE

Securities and Exchange Commission v. Cohmad Securities Corp., et al., Civil Action No. 09-CV-5680 (LLS) (S.D.N.Y.)

The Commission announced that on November 1, 2010, the Commission filed an amended complaint in its Madoff-related action, SEC v. Cohmad Securities Corp., et al.  On that same day, the parties submitted to the Honorable Louis L. Stanton, who is presiding over this action, partial judgments on consent, which if the Court approves, will permanently enjoin defendants Robert M. Jaffe, Maurice J. Cohn, Marcia B. Cohn and Cohmad Securities Corp. (“Cohmad”), from future violations of certain provisions of the federal securities laws, including, in the case of Jaffe, Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 (“Exchange Act”), and in the case of Cohmad and the Cohns, Section 17(a)(2) of the Securities Act of 1933 (“Securities Act”). 

The amended complaint alleges the defendants made material misrepresentations and omissions by referring hundreds of investors to Bernard L. Madoff and his firm, Bernard L. Madoff Investment Securities Corporation LLC (“BMIS”), while the defendants were aware of and failed to disclose facts that should have raised serious questions about the propriety of the Madoff investment.  The investors referred to BMIS by the Defendants provided BMIS with more than one billion dollars.  In consenting to partial judgments, each defendant neither admitted nor denied the allegations of the amended complaint, except that solely for purposes of the Court’s later determination of monetary relief, the allegations of the amended complaint are accepted as and deemed true by the Court.   Under the terms of the respective partial judgments:

  • Jaffe will be enjoined from from (1) violating Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; (2) aiding and abetting violations of Sections 15(b)(7) and 17(a) of the Exchange Act and Rules 15b7-1 and 17a-3 thereunder; and (3) violating, or aiding and abetting violations of, Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940 (“Advisers Act”) and Rule 206(4)-3 thereunder. 
  • Maurice J. Cohn and Marcia B. Cohn will be enjoined from (1) violating Section 17(a)(2) of the Securities Act; (2) aiding and abetting violations of Sections 15(b)(1) and 17(a) of the Exchange Act and Rules 15b3-1 and 17a-3 thereunder; and (3) violating, or aiding and abetting violations of, Section 206(4) of the Advisers Act and Rule 206(4)-3 thereunder. 
  • Cohmad will be enjoined from: (1) violating Section 17(a)(2) of the Securities Act; (2) violating Sections 15(b)(1) and 17(a) of the Exchange Act and Rules 15b3-1 and 17a-3 thereunder; and (3) violating, or aiding and abetting violations of, Section 206(4) of the Advisers Act and Rule 206(4)-3 thereunder. 

Each partial judgment provides that the issue of disgorgement, prejudgment interest and civil penalty relief against the defendants will be decided at a later time.

The Commission filed its original complaint against the defendants on June 22, 2009.  On February 1, 2010, Judge Stanton dismissed certain of the Commission’s claims against defendants, including the claims against all defendants under Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act, and the claims against the Cohns under Section 15(b)(7) of the Exchange Act and Rule 15b7-1 thereunder.  In issuing that decision, Judge Stanton granted the Commission leave to replead its claims in an amended complaint. 

For additional information, see LR-21095 (June 22, 2009).                    

See Also: SEC Complaint

 
http://www.sec.gov/litigation/litreleases/2010/lr21718.htm

Last modified: 11/01/2010