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U.S. Securities and Exchange Commission


Litigation Release No. 16266 / August 30, 1999


Civil Action No. 99-04262 (LBG) (Ex)(C.D. Cal.)

The Securities and Exchange Commission ("Commission") today announced that Gary D. Hoke, Jr. ("Hoke") of Raleigh, North Carolina, has consented to the entry of a final judgment against him by the United States District Court for the Central District of California. Under the terms of his consent, Hoke, without admitting or denying the allegations in the Commission's complaint, agreed to be permanently enjoined from future violations of the antifraud provisions of the Securities Exchange Act of 1934, Section 10(b) and Rule 10b-5 thereunder. Based upon Hoke's sworn statement of financial condition, which demonstrates an inability to pay, the proposed final judgment does not provide for the imposition of a monetary penalty,

The Commission instituted a civil action against Hoke on April 21, 1999, by filing a complaint in federal district court in Los Angeles, California. The Commission's complaint charged that Hoke manipulated the price of publicly traded securities in violation of Section 10(b) and Rule 10b-5. According to the allegations in the complaint:

  • Hoke disseminated to the investing public fraudulent statements concerning PairGain Technologies, Inc. ("PairGain"), a public company whose shares are traded on the National Association of Securities Dealers Automatic Quotation System. Specifically, on the morning of April 7, 1999, Hoke, under an assumed name, posted a message on a World Wide Web page that falsely reported that PairGain was being bought by an Israeli company.

  • That posting provided a direct internet link to another World Wide Web page, which appeared to be a Bloomberg News Service page containing an announcement of the acquisition. In fact, this page was a fabrication, also created by Hoke.

  • The publication of this false Bloomberg report created significant trading activity PairGain securities and caused the market price of PairGain securities to increase substantially. After the report was exposed as a hoax, the price of PairGain securities declined precipitously.

The Commission wishes to acknowledge the assistance of the Office of the United States Attorney for the Central Distract of California and the Federal Bureau of Investigation during the investigation of this matter.