In the Matter of Value Line, Inc., et al. Admin. Proc. File No. 3-13675
Oct. 6, 2022
/media/207821On November 4, 2009, the Commission instituted and simultaneously settled administrative and cease-and-desist proceedings (the “Order”) against Value Line, Inc. (“VLI”), Value Line Securities, Inc. (“VLS”), Jean Bernhard Buttner (“Buttner”) and David Henigson (“Henigson”) (collectively, the “Respondents”). In the Order, the Commission found that, from 1986 to 2004, the Respondents violated federal securities laws by engaging in a fraudulent practice that misappropriated approximately $24 million in assets from the Value Line Family of Mutual Funds in the form of inflated brokerage commission payments to VLS, VLI’s affiliated broker-dealer. The Respondents also made materially false and misleading statements and omissions about VLS and the recapture program to the Independent Directors at Board meetings and to the Funds’ shareholders in public filings with the Commission, including in the Funds’ registration statements.
The Commission ordered, and VLI paid, a total of $43,705,765.00 in disgorgement, prejudgment interest and a civil money penalty to the Commission. The Commission also created a Fair Fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, as amended, so the penalty, along with the disgorgement and prejudgment interest, collected could be distributed to those harmed by the Respondents’ conduct described in the Order (the “Fair Fund”). VLI is responsible for all costs associated with distribution of the Fair Fund. The Commission also ordered Buttner and Henigson to pay a total of $1,250,000.00 in civil money penalties to the Commission for transfer to the United States Treasury. See the Commission’s Order: Release No. 33-9081.
On November 20, 2009, the Commission issued an order appointing Damasco & Associates LLP (“Damasco”) as the Tax Administrator of the Fair Fund. Damasco was acquired by Miller Kaplan Arase LLP and on June 30, 2017, the Commission issued a notice of name change for the Tax Administrator.
On September 2, 2010, the Commission issued an order appointing A.B. Data Ltd., as the Fund Administrator to oversee the administration and distribution of the Fair Fund. See the Commission’s Order: Release No. 34-62837.
On November 8, 2010 the Commission published a notice of the proposed plan of distribution and opportunity for comment and simultaneously published the proposed plan of distribution (“Proposed Plan”). The notice provided the public with 30 days to submit their comments on the Proposed Plan. See the Commission’s Notice: Release No. 34-63269 and the Proposed Plan.
On January 4, 2011, the Commission issued an order approving the plan of distribution and published the approved plan of distribution (“Plan”). See the Commission’s Order: Release No. 34-63640 and the Plan.
The Plan provides that the distribution of the Fair Fund shall be made based on the acceptable, timely claim forms submitted by Eligible Claimants, for their share of losses, plus interest, as calculated pursuant to the methodology described in the Plan.
On December 14, 2016, the Commission issued an order approving the disbursement of $19,657,089.13 from the Fair Fund for distribution to Eligible Claimants in accordance with the Plan. This order also vacated a prior order approving the same disbursement due to errors that were found in the submitted payment files. See the Commission’s Order: Release No. 34-79533.
On July 19, 2023, the Commission approved the Fund Administrator’s final accounting and issued an order transferring any remaining funds, and any funds returned in the future, to the U.S. Treasury; discharging the Fund Administrator, and terminating the Fair Fund. See the Commission’s Order: Release No. 34-96737.