U.S. Securities and Exchange Commission
Litigation Release No. 21831 / January 31, 2011
Securities and Exchange Commission v. Eugene C. Geiger, Civil Action No. 10-CV-00128 (consolidated with Civil Action No. 10-CV-00129), United States District Court, District of Nevada
Securities and Exchange Commission v. AbsoluteFuture.com, et al., Civil Action No. 01 Civ. 9058 United States District Court, Southern District of New York
Securities and Exchange Commission v. Wamex Holdings, Inc., et al., Civil Action No. 01 Civ. 9056 United States District Court, Southern District of New York
SETTLEMENT OF SEC ENFORCEMENT ACTION BY FORMER BROKER EUGENE C. GEIGER CONCLUDES MARKET MANIPULATION CASES
The Securities and Exchange Commission announced that a federal district court in Colorado has entered a final judgment, by consent, against Eugene C. Geiger of Parker, Colorado, in connection with two related stock manipulation schemes. The final judgment against Geiger, a former registered representative, was entered on January 28, 2011. It permanently enjoins him from violating the antifraud provisions of the federal securities laws and orders him pay disgorgement of $261,110 plus prejudgment interest thereon in the amount of $221,466 and civil monetary penalty of $220,000. Separately, Geiger also consented to an administrative order barring him from participating in any offering of penny stock and barring him from association with regulated entities engaged in various parts of the securities industry. The litigation originally was filed in federal district court in New York, in 2001, as two separate enforcement actions. In 2010, the cases against Geiger were transferred to the court in Colorado and consolidated for trial.
In the Commission's consolidated case, the complaints allege that, between December 1999 and June 2000, Geiger knowingly participated in a scheme with others to manipulate the stock price and trading volume of Absolutefuture.com (AFTI) and Wamex Holdings, Inc. (WAMX). According to the complaints, AFTI and WAMX were penny stocks that traded over-the-counter. As a part of the scheme, Geiger, then a registered representative of a broker-dealer, purchased blocks of these stocks for a brokerage customer who, also, was a defendant in this litigation at then-prevailing market prices in exchange for a secret discount of 50% or higher through the privately-arranged transfer of additional shares from the seller at no cost. In addition, the complaints allege that Geiger further agreed to manipulate the trading volume of the stocks by interposing a straw market-maker into the market portion of the block transaction, which doubled the reported volume of the trades. The complaints also allege that, at the same time as he knowingly arranged these manipulative trades, Geiger sold his customer's holdings back into the public markets at ever-increasing, manipulated prices, reaping millions of dollars in gains for his customer and hundreds of thousands of dollars in commissions for his brokerage firm and himself.
The complaint in SEC v. Absolutefuture.com, et al. was filed in October 2001 and named 12 defendants and four relief defendants. The complaint in SEC v. Wamex Holdings, Inc., et al. also was filed in October 2001 and named 22 defendants and four relief defendants. The judgment against Geiger concludes the litigation. The cases against all other parties have been previously resolved.
Without admitting or denying the allegations in the Commission's complaints, Geiger consented to the entry of a final judgment against him. The final judgment against Geiger enjoins him from violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and orders him to pay disgorgement of $261,110 plus prejudgment interest thereon in the amount of $221,466 and civil monetary penalty of $220,000.
Geiger also consented to the entry of an administrative order barring him from association with any investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization and from participating in an offering of penny stock, including engaging in activities with a broker, dealer, or issuer for purposes of issuing, trading, or inducing or attempting to induce the purchase or sale of any penny stock. Geiger already was permanently barred from association with any broker or dealer in prior, unrelated administrative proceedings.
For additional information, see Litigation Release Numbers 17178 (October 11, 2001), 17180 (October 11, 2001), 18004 (February 27, 2003), 19129 (March 9, 2005) and 20560 (May 8, 2008), and Release Numbers 34-47149 (January 9, 2003) and 34-57246 (January 31, 2008).