Release No. 7758 / October 20, 1999

File No. 3-10082

In the Matter of




The Securities and Exchange Commission ("Commission") deems it appropriate that a public cease-and-desist proceeding be, and hereby is, instituted pursuant to Section 8A of the Securities Act of 1933 ("Securities Act") to determine whether Louis Sitaras ("Sitaras" or "Respondent") violated Section 5(c) of the Securities Act.


In anticipation of the institution of this proceeding, Sitaras has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. Solely for the purpose of this proceeding and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings contained herein, except that Respondent admits the jurisdiction of the Commission over him and over the subject matter of this proceeding, Sitaras consents to the issuance of this Order Instituting Public Proceedings, Making Findings, and Imposing a Cease-and-Desist Order ("Order") and to the entry of the findings and the imposition of the relief set forth below.


On the basis of this Order and Respondent's Offer, the Commission finds the following:


A. Sitaras, age 37, resides in Jupiter, Florida.

Other Relevant Entity

B. Metropolitan Health Networks, Inc. ("MHN") is a Florida-based provider of health care services. Its common stock is registered with the Commission pursuant to Section 12(g) of the Exchange Act and trades on the NASDAQ SmallCap Stock Market.


C. Sitaras violated the registration provisions of the securities laws, set forth in Section 5(c) of the Securities Act, by offering MHN restricted stock over an Internet auction site run by eBay, Inc. ("eBay"). The restricted MHN stock Sitaras offered was not registered with the Commission, and there were no applicable exemptions from registration.

Sitaras' Offer of Metropolitan Health Networks Securities

D. eBay runs an Internet auction site ( that permits users to buy and sell items 24 hours a day, seven days a week, through on-line auctions. Sellers post descriptions of items they wish to sell on the site. Potential buyers may, in turn, access these descriptions. Over the course of the next several hours or days, potential buyers may bid on the items on-line. At the close of each auction, the highest bidder wins and must purchase the item. eBay receives a flat fee from the seller for posting the item on its site and a percentage of the final sale price.

E. On May 5, 1999, Sitaras posted an offer to sell 2,000 restricted shares in MHN on the eBay Internet site. The posting stated that the stock certificate was dated September 11, 1998 and that the stock could not "be sold publicly until 9-11-99."

F. In response to the postings, several bids were made. No sale of the MHN shares was consummated.

Sitaras' Violation of Section 5(c) of the Securities Act

G. Sitaras violated Section 5(c) of the Securities Act. Section 5(c), in part, prohibits any offer to sell securities through the mails or by making use of the means or instruments of transportation or communication in interstate commerce, unless a registration statement for the securities has been filed with the Commission.

H. In this case, at the time of Sitaras offer, no registration statement for the MHN restricted stock had been filed with the Commission. By offering the securities over the Internet, Sitaras made use of the means or instruments of communication in interstate commerce.

I. There is no exemption from the registration requirements of Section 5 available for the offer of the restricted MHN securities. Because Sitaras offered the restricted MHN securities over the Internet, Sitaras engaged in a general solicitation. As a result, Section 4(2) of the Securities Act and the exemptions under Rules 505 and 506 of Regulation D are inapplicable.

J. Rule 144 exempts certain sales of restricted stock where: (1) adequate information about the issuer is available to the public at the time of sale (17 C.F.R. § 230.144(c)); (2) a one year holding period is met for all restricted securities (17 C.F.R. §230.144(d)); (3) the amount of securities sold by a control person in each three month period does not exceed the greater of 1% of the outstanding volume of trading during the month prior to the sale (17 C.F.R. § 230.144(e)); (4) sales are made in transactions directly with a "market maker" (as defined in Section 3(a)(38) of the Exchange Act) or in "brokers' transactions" (within the meaning of Section 4(4) of the Securities Act) (17 C.F.R. § 230.144 (f)-(g)); and (5) where the seller intends to sell more than 500 shares, or any number of shares for an amount greater than $10,000, he files a notice of intention to sell with the Commission (17 C.F.R. § 230.144(h)).

K. Sitaras did not satisfy Rule 144's one year holding period. Also, in offering the restricted stock directly to investors, Sitaras did not employ a market maker or engage in a brokers' transaction to sell the MHN securities. Finally, Sitaras failed to file the required notice of intention to sell securities with the Commission. As a result, Sitaras' offer fails to qualify for exemption from registration under Rule 144.

L. Accordingly, Sitaras violated Section 5(c) of the Securities Act by offering to sell MHN securities over the Internet.


On the basis of this Order and the Offer submitted by Respondent, the Commission finds that Sitaras violated Section 5(c) of the Securities Act.


Accordingly, it is hereby ordered, pursuant to Section 8A of the Exchange Act, that Sitaras cease and desist from committing or causing any violation, and any future violation, of Section 5(c) of the Securities Act.

By the Commission.

Jonathan G. Katz