SECURITIES AND EXCHANGE COMMISSION
SECURITIES ACT OF 1933
Release No. 8113 / July 24, 2002
SECURITIES EXCHANGE ACT OF 1934
Release. No. 46246 / July 24, 2002
File No. 3-10843
CEASE-AND-DESIST PROCEEDINGS INSTITUTED AGAINST RODONA GARST
The Commission announced that it has instituted cease-and-desist proceedings against Rodona Garst ("Garst"), a resident of Clarksville, Tennessee. In the Order Instituting Proceedings ("Order"), the Division of Enforcement ("Division") alleges, among other things, that between September 1999 and May 2000, Garst disseminated a large number of unsolicited "spam" e-mail messages touting four issuers. The Division further alleges that Garst was retained by Mark E. Rice ("Rice"), who has since been sued by the Commission and enjoined by a U.S. District Court. Moreover, the Division alleges that the spams contained false and misleading statements concerning the product, revenue sources and business relationships of one of the touted issuers, as well as Rice's stock-picking track record and the trading intentions of the persons responsible for the e-mail messages. According to the Division, Garst knew, or was reckless in not knowing, that these statements were false. Finally, the spams did not disclose cash compensation paid to Garst by Rice, who was acting as a statutory underwriter. As a result, the Division alleges that Garst was a cause of Rice's violations of Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and violated Section 17(b) of the Securities Act of 1933 ("Securities Act"). The Division requests that Garst pay disgorgement plus reasonable interest. The proceedings were instituted under Section 8A of the Securities Act and Section 21C of the Exchange Act.
A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide Garst an opportunity to dispute these allegations, and to determine what sanctions, if any, are appropriate.