U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19561 / February 9, 2006
Securities And Exchange Commission v. MSTG Solutions, Inc. and Gil Kim, Civil Action No. ED CV 06-0156 SGL (C.D. Cal.)
Commission Files Settled Action Against MSTG Solutions, Inc. and Gil Kim
The Securities and Exchange Commission announced the filing of a settled civil injunctive action against MSTG Solutions, Inc. (MSTG) and its principal, Gil Kim (Kim), both of Riverside County. MSTG provides products and services for small businesses, such as incorporation services, bookkeeping, company formalities, mail forwarding, voicemail, and website design. The Commission's complaint alleges that MSTG and Kim violated the antifraud provisions of Section 17(a) of the Securities Act of 1933 when MSTG sought to become a public company. MSTG filed a securities registration statement with the Commission, and, during an extensive comment process, filed seven amended registration statements. The complaint alleges that MSTG's last amended registration statement misrepresented three material facts about MSTG's business: (a) the nature of the distribution network for its products and services; (b) the background and role of its Chief Financial Officer; and (c) the compensation of its Chief Executive Officer. In addition, the complaint alleges that MSTG raised $731,838 from its sales agents in an unregistered stock option program, thereby violating the registration provisions of Section 5 of the Securities Act. MSTG and Kim consented to the entry of permanent injunctions. MSTG agreed to pay full disgorgement of $731,838, prejudgment interest, and the costs of distributing the disgorgement to investors. As a result of the Commission's action, MSTG investors who exercised options in the unregistered stock option program will receive back their entire investment. MSTG investors who have recently moved should provide their new mailing address to MSTG to facilitate participation in the distribution plan that the Commission intends to file with the court. In addition to consenting to the permanent injunction, Kim consented to pay a $35,000 civil penalty and to be barred from serving as an officer or director of a public company for five years. Both MSTG and Kim settled without admitting or denying liability.