United States Securities and Exchange Commission
Securities Act of 1933
Release No. 8242 / June 18, 2003
Securities Exchange Act of 1934
Release No. 48054 / June18, 2003
File No. 3-11161
Proceedings Instituted against Mark Gilbert Platt, John Wayne Ezell and Richard M. Ohlhaber
On June 18, 2003, the Securities and Exchange Commission ("Commission") issued an Order Instituting Public Administrative and Cease-and-Desist Proceedings pursuant to Section 8A of the Securities Act of 1933 ("Securities Act") and Sections 15(b) and 21C of the Securities Exchange Act of 1934 ("Exchange Act") against Mark Gilbert Platt ("Platt") and John Wayne Ezell ("Ezell"), former registered representatives of Josephthal & Co., Inc. ("Josephthal"), a broker-dealer formerly registered with the Commission, and public administrative proceedings pursuant to Section 15(b) of the Exchange Act against Richard M. Ohlhaber ("Ohlhaber"), a former Josephthal branch office manager.
In the Order, the Division of Enforcement ("Division") alleges that, between October 1998 and May 2001, Platt and Ezell made unauthorized, unsuitable and excessive trades in certain of their customers' accounts. As a result, the Division alleges that Platt and Ezell willfully violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
The Division also alleges that Ohlhaber failed reasonably to supervise, within the meaning of Section 15(b) of the Exchange Act, the activities of Platt and Ezell, each of whom had a disciplinary history or a history of customer complaints. The Division alleges that, although Ohlhaber was directed to specially supervise Platt and Ezell, he failed to respond to "red flags" evidencing sales practices violations by Platt and Ezell. Among other things, the Division alleges that Ohlhaber failed to halt Platt's and Ezell's violations after reviewing monthly reports showing patterns of excessive and unsuitable trading. The Division further alleges that Ohlhaber took no action against Platt even after one of his customers complained that Platt executed unauthorized trades in his account. Additionally, the Division alleges that, in one of Ezell's accounts subject to Ohlhaber's special supervision, Ezell executed 19 unauthorized trades. During this period, Ohlhaber never contacted the customer to verify the trading activity.
A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide Platt, Ezell and Ohlhaber an opportunity to respond to the allegations against them, and to determine whether any remedial action should be ordered, or penalties imposed, by the Commission.