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U.S. Securities and Exchange Commission

Litigation Release No. 18200 / June 24, 2003

Securities and Exchange Commission v. Harris Dempsey Ballow, Christopher Harless, Murry Shepherd and Diane L. Johnson, Civil Action No. H-01-2579 (Southern District of Texas)

On June 2, 2003, Judge Nancy F. Atlas of the United States District Court for the Southern District of Texas found Harris Dempsey "Butch" Ballow liable for manipulating the market for the stock of Evans Systems, Inc., a Texas corporation. See Securities and Exchange Commission v. Harris Dempsey Ballow, Christopher Harless, Murry Shepherd and Diane L. Johnson, Civil Action No. H-01-2579 (S.D. Texas). Judge Atlas granted the Securities and Exchange Commission's motion for summary judgment against Ballow, specifically finding that Ballow violated 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, by executing at least eight fraudulent "wash sales" and "matched orders" in Evans Systems stock between August 1998 and April 1999. Wash sales are securities transactions involving no change in the beneficial ownership of a security. Matched orders are orders placed for the purchase or sale of a security that are entered with the knowledge that corresponding orders of substantially the same size, at substantially the same time and price, have been or will be entered by the same or different persons for the sale/purchase of a security. Ballow's execution of these transactions, Judge Atlas further found, had no purpose other than to deceive the market about the true trading activity of, and constituted a knowing and intentional scheme to manipulate the market for, Evans Systems, Inc., stock. As a consequence of Ballow's fraudulent acts, Judge Atlas ordered him to pay a civil fine of $880,000. Judge Atlas also issued a permanent injunction against Ballow preventing him from violating the securities laws in the future, specifically 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. The Commission's case against defendants Christopher Harless and Murry "Max" Shepherd is still pending.

 

http://www.sec.gov/litigation/litreleases/lr18200.htm


Modified: 06/24/2003