U.S. SECURITIES & EXCHANGE COMMISSION
Litigation Release No. 17945 / January 22, 2003
SECURITIES AND EXCHANGE COMMISSION v. NED C. SNEIDERMAN, United States District Court for the Northern District of California, Civil Action No. C-02-0001
COURT ENTERS JUDGMENT, ORDERS PENALTIES AGAINST KENTUCKY MAN FOR INTERNET HOAX
On January 13, 2003, federal judge James Ware of the Northern District of California granted the Securities and Exchange Commission's motion for default judgment against Ned Sneiderman, enjoining the 25-year-old Louisville resident from committing securities fraud and ordering him to pay a $60,000 civil penalty.
The SEC sued Sneiderman, 25, in January 2002, alleging that Sneiderman had posted a phony press release on a Yahoo! Internet bulletin board. The press release purported to announce that Extreme Networks, Inc. ("Extreme Networks"), a Santa Clara technology company, was acquiring Viasource Communications, Inc. ("Viasource"), a small Florida technology company. The phony news caused Viasource's stock price and volume to surge. According to the SEC's complaint, Sneiderman had purchased Viasource stock earlier that morning, and had hoped to profit from the price spike caused by his fraud. However, within an hour after the false posting, Extreme Networks and Viasource denied the existence of a tender offer, and trading in both stocks was halted temporarily, preventing Sneiderman from capitalizing on his fraud.
Sneiderman repeatedly failed to appear before the court. In the January 13, 2003, order, the court found that the SEC's complaint and evidence submitted by the SEC established Sneiderman's liability for securities fraud. The court permanently enjoined Sneiderman from violating Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and ordered him to pay $60,000 in civil penalties.
For further information, see Litigation Release No. 17294 (January 3, 2002).