UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
SECURITIES ACT OF 1933
Release No. 8169 / December 19, 2002
SECURITIES EXCHANGE ACT OF 1934
Release No. 47041 / December 19, 2002
File No. 3-9933
In the Matter of
A.S. GOLDMEN & CO., INC.,
ANTHONY J. MARCHIANO,
STUART E. WINKLER,
JOHN T. DIASABEYAGUNAWARDENA,
(a.k.a. JOHN ABBEY)
JOHN P. DELCIOPPO,
CHRISTOPHER M. DELCIOPPO,
VINCENT J. LIA,
DUANE P. TAYLOR, AND
ORDER MAKING FINDINGS,
ORDERING RESPONDENT TO
CEASE AND DESIST, AND
IMPOSING REMEDIAL SANCTIONS
AS TO VINCENT J. LIA
On July 7, 1999, the Securities and Exchange Commission ("Commission") instituted public administrative and cease-and-desist proceedings, pursuant to Section 8A of the Securities Act of 1933 ("Securities Act") and Sections 15(b)(4), 15(b)(6), and 21C of the Securities Exchange Act of 1934 ("Exchange Act").
Respondent Vincent J. Lia ("Lia") has submitted an Offer of Settlement ("Offer") that the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission's jurisdiction over him and the subject matter of these proceedings, Lia consents to the entry of this Order Making Findings, Ordering Respondent to Cease and Desist and Imposing Remedial Sanctions as to Vincent J. Lia ("Order"), as set forth below.
On the basis of this Order and Lia's Offer, the Commission finds that: 1
- Lia, age 25, was a registered representative from July 1995 to August 1996 and from October 1996 to October 1998 at A.S. Goldmen & Co. Inc. ("A.S. Goldmen"), a broker-dealer registered with the Commission. From August 1996 to November 1996, Lia was a registered representative at Meyers Pollock Robbins, Inc., and in November 1998 Lia was a registered representative at Ashtin Kelly & Co., both broker-dealers registered with the Commission. Lia is not currently employed in the securities industry. Lia is a resident of New York.
- On December 20, 2000, Lia was criminally convicted of attempted enterprise corruption and violations of the state equivalents of the antifraud provision of the federal securities laws upon the entry of his plea of guilty by the Supreme Court of the State of New York. He was sentenced on March 9, 2001, to imprisonment of 6 months, probation of 4 years, and ordered to pay a fine of $1,000.
- During the period from at least July 1997 to at least June 1998, while a registered representative at A.S. Goldmen, Lia knowingly or recklessly and willfully participated in a scheme to sell the stock of Millennium Sports Management, Inc. ("Millennium") through fraudulent and deceptive means. In connection with the offer, purchase or sale of Millennium stock to A.S. Goldmen retail clients, Lia engaged in certain fraudulent activities, including, but not limited to the following: (1) making untrue statements of material facts or omitting to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, and failing to disclose material adverse information; (2) making unfounded predictions about the future price of Millennium securities and misrepresenting or omitting to state the basis of recommendations to purchase Millennium securities; (3) engaging in and/or enforcing a no net-selling practice whereby Lia (acting on his own or at the direction or others) refused to take client sell orders, delayed taking client sell orders, and/or failed to process or delayed processing client sell orders unless the client sell orders could be crossed with buy orders from other clients, without disclosing the fact of this practice to his clients; (4) placing unauthorized trades in Millennium securities in client accounts; and (5) engaging in other acts, practices or courses of business which operated as a fraud or deceit upon his customers, including but not limited to: (a) aggressive and high pressured selling tactics; and (b) representing to clients that his buy recommendations for Millennium rested in part upon unspecified confidential, inside information.
Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder prohibit material misstatements or omissions in the offer or sale, or in connection with the purchase or sale of securities. SEC v. Texas Gulf Sulphur Co., 401 F.2d 833, 860-62 (2d Cir. 1968), cert. denied, 394 U.S. 976 (1969). Information is material if there is a substantial likelihood that a reasonable investor would consider the information to be important or to have significantly altered the total mix of information made available about the investment. Basic v. Levinson, 485 U.S. 224, 231-32 & 235 n.13 (1988). A broker must disclose material adverse information to a client when recommending the purchase or sale of a security. Hanly v. SEC, 415 F.2d 589, 597 (2d Cir. 1969). A showing of scienter -- "a mental state embracing intent to deceive, manipulate, or defraud" -- is required to establish a violation of Sections 17(a)(1), 10(b), and Rule 10b-5. Aaron v. SEC, 446 U.S. 680, 691 & 697 (1980); Ernst & Ernst v. Hochfelder, 425 U.S. 185, 194 n.12 (1976). Recklessness or willful disregard for the truth generally satisfies the scienter requirement. See e.g. SEC v. Falstaff Brewing Corp., 629 F.2d 62, 77 (D.C. Cir. 1980); Rolf v. Blyth Eastman Dillon & Co., 570 F.2d 38, 46 (2d Cir. 1978), cert. denied, 439 U.S. 1039 (1978). By engaging in the conduct described above, Lia knowingly or recklessly made false or misleading statements, omitted to disclose material adverse information, and made baseless price predictions. Lia knowingly conducted unauthorized trades in client accounts, and knowingly engaged in an undisclosed no net-selling practice.
Based on the foregoing, Lia willfully violated Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10(b)-5 thereunder.
Lia has submitted a sworn Statement of Financial Condition dated May 1, 2002, and other evidence and has asserted his inability to pay disgorgement plus prejudgment interest and a civil penalty.
Based on the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified in Lia's Offer.
ACCORDINGLY, IT IS ORDERED that:
- Pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, Lia shall cease and desist from committing or causing any violations and any future violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder;
- Pursuant to Section 15(b)(6) of the Exchange Act, Lia be, and hereby is, barred from association with any broker or dealer; and
- Pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, Lia shall pay disgorgement of $8,000 plus prejudgment interest, but that payment of such amount is waived, and that no civil penalty be imposed, based upon Lia's sworn representations in his Statement of Financial Condition and other documents submitted to the Commission.
- The Division of Enforcement ("Division") may, at any time following the entry of this Order, petition the Commission to: (1) reopen this matter to consider whether Lia provided accurate and complete financial information at the time such representations were made; (2) seek an order directing payment of disgorgement and prejudgment interest; and (3) seek an order directing payment of the maximum civil penalty allowable under the law. No other issue shall be considered in connection with this petition other than whether the financial information provided by Lia was fraudulent, misleading, inaccurate or incomplete in any material respect. Lia may not, by way of defense to any such petition: (1) contest the findings in this Order; (2) assert that payment of disgorgement and interest should not be ordered; (3) contest the amount of disgorgement and interest to be ordered; (4) assert that payment of a penalty should not be ordered; (5) contest the imposition of the maximum penalty allowable under the law; or (6) assert any defense to liability or remedy, including, but not limited to, any statute of limitations defense.
By the Commission.
Jonathan G. Katz
|1 || The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding on any other person or entity in this or any other proceeding.