UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 17943 / January 21, 2003
SECURITIES AND EXCHANGE COMMISSION v. ONLINE POWER SUPPLY INC., LARRY G. ARNOLD AND KRIS M. BUDINGER, Civ. No. 03-M-0121 (USDC Colo.)
The Commission announced today that it filed a civil injunctive action against OnLine Power Supply, Inc. ("OnLine"), headuartered in Englewood, Colorado, its former chief executive officer, Larry G. Arnold ("Arnold"), and its former president, Kris M. Budinger ("Budinger"). The Commission's complaint alleges that between June 1996 and May 2000, OnLine, Arnold and Budinger sold $17.7 million of OnLine stock through unregistered transactions. The complaint further alleges that in connection with these stock sales, OnLine, Budinger and Arnold made false and misleading statements or omitted to state material facts to investors concerning, among other things, compensation that OnLine paid to registered representatives, and Budinger and Arnold's misappropriation of some of the proceeds from the sale of 841,000 shares of OnLine treasury stock. According to the complaint, these false and misleading statements were contained in OnLine's periodic reports filed with the Commission and offering materials provided to investors. Moreover, the complaint alleges that OnLine, aided and abetted by Arnold and Budinger, failed to keep accurate books and records.
The Commission's complaint alleges that OnLine violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 ("Securities Act"), Sections 10(b), 13(a) and 13(b)(2)(A) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5, 12b-20, 13a-1 and 13a-13 thereunder. The complaint further alleges that Arnold and Budinger violated Sections 5(a), 5(c), and 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and aided and abetted Online's violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder. The Commission seeks an injunction against OnLine, Arnold and Budinger, as well as an order requiring Arnold and Budinger to pay disgorgement plus prejudgment interest and civil penalties, and imposing officer and director bars and penny stock bars against them.