U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19320 / August 2, 2005
SEC v. Competitive Technologies, Inc. , Chauncey D. Steele, et. al., Civil Action No. 304 CV 1331 JCH (District of Connecticut)
SEC BARS MASSACHUSETTS BROKER FROM BROKERAGE INDUSTRY IN CONNECTION WITH MANIPULATIVE TRADING SCHEME
The Securities and Exchange Commission announced today that on July 11, 2005, the Honorable Janet Hall, United States District Court for the District of Connecticut, entered a permanent injunction, by consent, against Chauncey D. Steele, formerly a registered representative associated with Prudential Securities, Inc. in its Hyannis, Massachusetts branch office, and ordered him to pay over $150,000 in disgorgement, interest and penalty. Also, on August 2, 2005, the Commission instituted a settled administrative proceeding against Steele barring him from association with any broker, dealer or investment adviser.
The Commission's complaint in the civil injunctive action alleged that Steele, formerly of Cohasset, Massachusetts, orchestrated a scheme with five other current or former brokers and an executive of Competitive Technologies, Inc. ("CTT") to manipulate and inflate the price of CTT stock from at least July 1998 to June 2001. CTT is a technology development company located in Fairfield, Connecticut. The complaint alleged that Steele and other defendants artificially raised and maintained the price of CTT's stock and created a false or misleading appearance with respect to the market for CTT stock through manipulative practices such as placing buy orders at or near the close of the market in order to inflate the reported closing price ("marking the close"), placing successive buy orders in small amounts at increasing prices ("painting the tape"), and using accounts they controlled or serviced to place pre-arranged buy and sell orders in virtually identical amounts (placing "matched trades").
The judgment against Steele in the civil action, to which he consented without admitting or denying the Commission's allegations, enjoins Steele from violating Sections 9(a), 10(b) and 17(a) of the Exchange Act and Rules 10b-5 and 17a-3 thereunder and Section 17(a) of the Securities Act of 1933, and orders Steele to pay disgorgement of $47,439 and a civil penalty of $110,000, plus prejudgment interest. Further, in the Commission's administrative action, which was based on the entry of the injunction in the civil action, Steele consented to the entry of an order barring him from association with any broker, dealer or investment adviser.
See also: Litigation Release No. 18827 (August 11, 2004)