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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 19033 / January 13, 2005

Securities and Exchange Commission v. Thomas E. Edgar, Civil Action No. 05-2009, (U.S.D.C. C.D.Ill., filed January 12, 2005)

The Securities and Exchange Commission today announced that it filed a civil injunctive action against Thomas E. Edgar, a resident of Urbana, Illinois, for perpetrating a fraudulent scheme to manipulate the closing price of nearly two dozen closed-end funds. The action, filed in the United States District Court for the Central District of Illinois, alleges that on 119 occasions between August 1999 and October 2003, Edgar placed buy and sell orders of 100 or 200 shares of the closed-end funds at or near the close of the trading day for the purpose of artificially increasing or decreasing the funds' closing price. This manipulative trading practice is known as "marking-the-close." The Commission's Complaint alleges that one way Edgar carried out his scheme was to mark-the-close in an attempt to increase his profit from the sale of closed-end funds that he owned. Specifically, when Edgar owned a large number of shares of a closed-end fund, typically 2,000 shares, he often placed an additional market order to buy approximately 100 or 200 shares of the same closed-end fund within a few minutes of the close of the market. The execution of these additional market buy orders resulted in an increase to the closing price of the fund. The Commission's Complaint alleges that Edgar's purpose in placing the additional market buy orders at the end of one trading day was to cause an increase to the price of the fund and then to profit from the higher sale price at the beginning of the next trading day. The Commission's Complaint alleges that in nearly every instance when he marked the close in this fashion, Edgar sold his shares the following day at a higher price. As a result, Edgar fraudulently manipulated the closing price of the closed-end funds that he owned.

Edgar consented, without admitting or denying the allegations of the Commission's Complaint, to the entry of an order of permanent injunction enjoining him from violations of Section 17(a) of the Securities Act of 1933 and Sections 9(a)(2) and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and the imposition of a $35,000 civil penalty. The Commission acknowledges the assistance of the New York Stock Exchange in the investigation of this matter.

SEC Complaint in this matter


http://www.sec.gov/litigation/litreleases/lr19033.htm


Modified: 01/13/2005