U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22070 / August 19, 2011
Securities and Exchange Commission v. Andreas Badian, et al., Civ. Action. No.06 CV 2621 (LTS) (S.D.N.Y. filed Apr. 4, 2006)
Commission Settles with Two Defendants in Sedona Corporation Market Manipulation Fraud
The Securities and Exchange Commission announced today that on August 8, 2011, the U.S. District Court for the Southern District of New York entered final judgments against defendants Mottes Drillman and Jacob Spinner in a Commission injunctive action arising from fraudulent manipulative trading in the securities of Sedona Corporation. Without admitting or denying the allegations in the Commission's complaint, Drillman and Spinner consented to the entry of judgments enjoining them from future violations of Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act), Section 17(a) of the Securities Act of 1933, and Exchange Act Rule 10b-5, and from aiding and abetting violations of Section 17(a) of the Exchange Act and Exchange Act Rule 17a-3, and ordering each of them to pay disgorgement of $4,000, representing ill-gotten gains received as a result of the conduct alleged in the complaint, together with prejudgment interest thereon in the amount of $3,107.25, and a civil penalty of $25,000.
The Commission's complaint alleges that, from February to April 2001, Drillman, Spinner, and others participated in a scheme with Andreas Badian, an official of Rhino Advisors, an unregistered investment adviser firm, to manipulate Sedona’s stock price. The complaint also alleges that Drillman and Spinner aided and abetted violations of the broker-dealer record-keeping requirements through the creation of trade tickets which falsely reported short sales of Sedona stock as “long” sales. Four individuals and one entity remain as defendants in the litigation.
In related administrative proceedings, the Commission issued Orders suspending each of Drillman and Spinner from associating with any broker or dealer for a period of six months. Without admitting the Orders’ findings, except as to jurisdiction and as to the entry of the injunctions against them, Drillman and Spinner each consented to issuance of the Order suspending him. See In the Matter of Mottes Drillman, A.P. File No. 3-14511 (Aug. 19, 2011); In the Matter of Jacob Spinner, A.P. File No. 3-14510 (Aug. 19, 2011).
For further information, see Litigation Release No. 19639 (April 4, 2006).