UNITED STATES OF AMERICA
BEFORE THE
SECURITIES AND EXCHANGE COMMISSION
SECURITIES ACT OF 1933
Release No. 7565 / August 18, 1998
SECURITIES EXCHANGE ACT OF 1934
Release No. 40333 / August 18, 1998
ADMINISTRATIVE PROCEEDING
File No. 3-9491
______________________________
:
In the Matter of :
:
ERIC S. BLUMEN :ORDER MAKING FINDINGS AND
JORDAN I. SHAMAH :IMPOSING REMEDIAL SANCTIONS
IRVING STITSKY :AND A CEASE-AND-DESIST
:ORDER
Respondents. :
______________________________:
I.
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), 19(h) and 21C of the Securities Exchange Act
of 1934 ("Exchange Act") against Respondents Eric S. Blumen
("Blumen"), Jordan I. Shamah ("Shamah") and Irving Stitsky
("Stitsky") on December 1, 1997.
II.
Respondents Blumen, Shamah and Stitsky have submitted Offers of
Settlement ("Offers") to the Commission, which the Commission has
determined to accept. Solely for the purpose of this proceeding
and any other proceeding 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 as to
the jurisdiction of the Commission over Respondents Blumen,
Shamah and Stitsky and over the subject matter of this
proceeding, which are admitted, Respondents Blumen, Shamah and
Stitsky by their Offers consent to the entry of findings,
remedial sanctions and cease-and-desist order set forth below.
III.
On the basis of this Order Making Findings and Imposing Remedial
Sanctions and a Cease-and-Desist Order ("Order") and the Offer
submitted by Respondent Blumen, the Commission finds that:
A.From November 1991 to October 1995, Respondent Blumen was a registered
representative ("RR") at the now defunct registered broker-dealer Stratton
Oakmont, Inc. ("Stratton"). In April 1995, Respondent Blumen became a
principal at Stratton. Respondent Blumen is 28 years old and resides in
Rosyln, New York.
B.On April 6, 1995, Andrew S. Friedman ("Friedman"), posing as Respondent
Blumen, sat for the Series 24 licensing exam administered by the National
Association of Securities Dealers, Inc. ("NASD") and obtained a passing
score on that exam on Respondent Blumen's behalf. As a result of
Friedman's obtaining a passing grade on the Series 24 exam on Respondent
Blumen's behalf, Respondent Blumen became a principal at Stratton and
supervised registered representatives and other employees effecting and
soliciting securities transactions.
C.During the period from March 1993 through October 1995 ("Relevant
Period"), Respondent Blumen made baseless price predictions in order to
induce at least four customers to purchase securities of companies for
which Stratton had underwritten the initial public offerings, including,
but not limited to, the securities of Dualstar Technologies, Inc.
("Dualstar"), Select Media Communications, Inc. ("Select Media") and/or
United Leisure Corporation.
D.During the Relevant Period, Respondent Blumen made unauthorized purchases
of securities, including, but not limited to, the securities of
Childrobics, Inc. ("Childrobics"), IDM Environmental Corporation, Master
Glaziers Karate International, Inc. ("Master Glaziers"), Octagon, Inc.
("Octagon") and Select Media, in the accounts of at least four customers.
E.As described in paragraph III. B. above, during the period April 1995
through October 1995, Stratton violated, and Respondent Blumen willfully
aided and abetted and caused the violations by Stratton of, Section
15(b)(7) of the Exchange Act and Rule 15b7-1 thereunder, in that Stratton
effected transactions in, or induced the purchase or sale of, securities
while the natural persons associated with Stratton who effected or were
involved in effecting such transactions were not registered or approved in
accordance with the standards of training, experience, competence, and
other qualification standards (including but not limited to submitting and
maintaining all required forms, paying all required fees, and passing any
required examinations) established by the rules of the NASD of which
Stratton was a member.
F.As described in paragraphs III.C. and III.D. above, during the Relevant
Period, Respondent Blumen willfully violated Section 17(a) of the
Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5
thereunder, by using any means or instruments of transportation or
communication in interstate commerce, or by use of the mails, or of any
facility of any national securities exchange or any means or
instrumentality of interstate commerce, in the offer or sale or in
connection with the purchase or sale of securities in that he, either
knowingly or with reckless disregard for the facts, directly or indirectly
employed devices, schemes or artifices to defraud; obtained money or
property by means of, or otherwise made, untrue statements of material
facts or omitted to state material facts necessary in order to make the
statements made, in the light of the circumstances under which they were
made, not misleading; or engaged in transactions, practices or courses of
business which operated as a fraud or deceit upon the purchasers or upon
other persons.
G.Respondent Blumen has submitted a sworn financial statement and other
evidence and has asserted his financial inability to pay disgorgement plus
interest. The Commission has reviewed the sworn financial statement and
other evidence provided by Respondent Blumen and has determined that
Respondent Blumen does not have the financial ability to pay disgorgement
of $89,000, plus prejudgment interest thereon from October 1995 to the date
of the Order in the amount of $17,881.42, for a total amount of
$106,881.42.
IV.
On the basis of this Order and the Offer submitted by Respondent
Shamah, the Commission finds that:
A.From June 1991 to December 1996, Respondent Shamah was an RR at Stratton.
In May 1994, Respondent Shamah became a principal at Stratton. Respondent
Shamah is 39 years old and resides in North Hills, New York.
B.During the Relevant Period, Respondent Shamah made unauthorized purchases
of securities, including, but not limited to, the securities of Aquanatural
Company, Childrobics, Dualstar, Master Glaziers, and Octagon, in the
accounts of at least five customers.
C.As described in paragraph IV.B. above, during the Relevant Period,
Respondent Shamah willfully violated Section 17(a) of the Securities Act
and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, by using
any means or instruments of transportation or communication in interstate
commerce, or by use of the mails, or of any facility of any national
securities exchange or any means or instrumentality of interstate commerce,
in the offer or sale or in connection with the purchase or sale of
securities in that he, either knowingly or with reckless disregard for the
facts, directly or indirectly employed devices, schemes or artifices to
defraud; obtained money or property by means of, or otherwise made, untrue
statements of material facts or omitted to state material facts necessary
in order to make the statements made, in the light of the circumstances
under which they were made, not misleading; or engaged in transactions,
practices or courses of business which operated as a fraud or deceit upon
the purchasers or upon other persons.
D.Respondent Shamah has submitted a sworn financial statement and other
evidence and has asserted his financial inability to pay disgorgement plus
interest, or to pay a civil penalty. The Commission has reviewed the sworn
financial statement and other evidence provided by Respondent Shamah and
has determined that Respondent Shamah does not have the financial ability
to pay disgorgement of $18,500, plus prejudgment interest thereon from
October 1995 to the date of the Order in the amount of $4,216, for a total
amount of $22,716, or to pay a civil penalty.
V.
On the basis of this Order and the Offer submitted by Respondent
Stitsky, the Commission finds that:
A.From October 1990 to August 1995, Respondent Stitsky was an RR at
Stratton. In January 1992, Respondent Stitsky became a principal at
Stratton. Respondent Stitsky is 43 years old and resides in Brookville,
New York.
B.During the Relevant Period, Respondent Stitsky made unauthorized
purchases of securities, including, but not limited to, the securities of
Aquanatural Company, Childrobics, Dualstar, Master Glaziers, Octagon and
Select Media, in the accounts of at least six customers.
C.As described in paragraph V. B. above, during the Relevant Period,
Respondent Stitsky willfully violated Section 17(a) of the Securities Act
and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, by using
any means or instruments of transportation or communication in interstate
commerce, or by use of the mails, or of any facility of any national
securities exchange or any means or instrumentality of interstate commerce,
in the offer or sale or in connection with the purchase or sale of
securities in that he, either knowingly or with reckless disregard for the
facts, directly or indirectly employed devices, schemes or artifices to
defraud; obtained money or property by means of, or otherwise made, untrue
statements of material facts or omitted to state material facts necessary
in order to make the statements made, in the light of the circumstances
under which they were made, not misleading; or engaged in transactions,
practices or courses of business which operated as a fraud or deceit upon
the purchasers or upon other persons.
VI.
In view of the foregoing, the Commission deems it appropriate and
in the public interest to accept the Offers submitted by
Respondents Blumen, Shamah and Stitsky and impose the remedial
sanctions and cease-and-desist order specified therein.
Accordingly, IT IS ORDERED that:
A.Respondent Blumen cease and desist, pursuant to Section 21C of
the Exchange Act, from causing any violation and any future
violation of Section 15(b)(7) of the Exchange Act and Rule 15b7-1
thereunder.
B.Respondents Blumen, Shamah and Stitsky each cease and desist,
pursuant to Section 8A of the Securities Act and Section 21C of
the Exchange Act, from committing or causing any violation and
any future violation of Section 17(a) of the Securities Act and
Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder.
C.Effective immediately, Respondents Blumen, Shamah and Stitsky
each be, and hereby are, barred from association with any broker,
dealer, investment company, investment adviser or municipal
securities dealer.
D.Respondent Blumen pay, within three days of the entry of this
Order, disgorgement in the amount of $89,000, plus prejudgment
interest thereon from October 1995 to the date of the Order in
the amount of $17,881.42, for a total amount of $106,881.42, to
the Commission, but that payment by Respondent Blumen of such
amount be waived based upon Respondent Blumen's demonstrated
financial inability to pay and upon the condition that Respondent
Blumen's sworn financial statement and other evidence regarding
his financial condition fully and truthfully described his
financial condition. The Commission's Division of Enforcement
("Division") may, at any time following entry of the Order,
petition the Commission to: 1) reopen this matter to consider
whether Respondent Blumen provided accurate and complete
financial information at the time such representations were made;
and 2) seek any additional remedies that the Commission would be
authorized to impose against Respondent Blumen in this proceeding
if Respondent Blumen's Offer had not been accepted. No other
issues shall be considered in connection with such a petition by
the Division to the Commission other than whether the financial
information provided by Respondent Blumen was fraudulent,
misleading, inaccurate or incomplete in any material respect and
whether any additional remedies should be imposed. Respondent
Blumen may not, by way of defense to any such petition by the
Division, contest the findings in this Order or the Commission's
authority to impose any additional remedies that were available
in the original proceeding.E.Respondent Shamah pay, within three
days of the entry of this Order, disgorgement in the amount of
$18,500, plus prejudgment interest thereon from October 1995 to
the date of the Order in the amount of $4,216, for a total amount
of $22,716, to the Commission, but that payment by Respondent
Shamah of such amount be waived based upon Respondent Shamah's
demonstrated financial inability to pay and upon the condition
that Respondent Shamah's sworn financial statement and other
evidence regarding his financial condition fully and truthfully
described his financial condition. The Division may, at any time
following entry of the Order, petition the Commission to: 1)
reopen this matter to consider whether Respondent Shamah provided
accurate and complete financial information at the time such
representations were made; 2) determine the amount of the civil
penalty to be imposed against Respondent Shamah; and 3) seek any
additional remedies that the Commission would be authorized to
impose against Respondent Shamah in this proceeding if Respondent
Shamah's Offer had not been accepted. No other issues shall be
considered in connection with such a petition by the Division to
the Commission other than whether the financial information
provided by Respondent Shamah was fraudulent, misleading,
inaccurate or incomplete in any material respect, what the amount
of the civil penalty against Respondent Shamah should be, and
whether any additional remedies should be imposed. Respondent
Shamah may not, by way of defense to any such petition by the
Division, contest the findings in this Order or the Commission's
authority to impose any additional remedies that were available
in the original proceeding.
F.Respondent Stitsky pay disgorgement in the amount of $18,500,
plus prejudgment interest thereon from October 1995 to the date
of the Order in the amount of $4,216, for a total amount of
$22,716, to the United States Securities and Exchange Commission,
according to the following payments schedule: $3,500 within two
months of the issuance of the Order, $3,500 within four months of
the issuance of the Order, $3,500 within six months of the
issuance of the Order, $3,500 within eight months of the issuance
of the Order, $3,500 within ten months of the issuance of the
Order, and $5,216 within twelve months of the issuance of the
Order. Such payments shall be: (a) made by United States postal
money order, certified check, bank cashier's check or bank money
order; (b) made payable to the United States Securities and
Exchange Commission; (c) delivered by certified mail to the
Comptroller, Securities and Exchange Commission, 450 Fifth
Street, N.W., Mail Stop 0-3, Washington, D.C. 20549; and (d)
submitted under cover letter which identifies Respondent Stitsky
as a respondent in this proceeding, the file number of this
proceeding, and the Commission's case number (NY-6236), a copy of
which cover letter and money order or check shall be sent to
Alexander M. Vasilescu, Senior Trial Counsel, Northeast Regional
Office, Securities and Exchange Commission, 7 World Trade Center,
13th Floor, New York, New York 10048.
G.Respondent Stitsky pay a civil penalty in the amount of $18,500
to the United States Securities and Exchange Commission,
according to the following payments schedule: $3,000 within three
months of the issuance of the Order, $3,000 within five months of
the issuance of the Order, $3,000 within seven months of the
issuance of the Order, $3,000 within nine months of the issuance
of the Order, $3,000 within eleven months of the issuance of the
Order, and $3,500 within thirteen months of the issuance of the
Order. Such payments shall
be: (a) made by United States postal money order, certified
check, bank cashier's check or bank money order; (b) made payable
to the United States Securities and Exchange Commission; (c)
delivered by certified mail to the Comptroller, Securities and
Exchange Commission, 450 Fifth Street, N.W., Mail Stop 0-3,
Washington, D.C. 20549; and (d) submitted under cover letter
which identifies Respondent Stitsky as a respondent in this
proceeding, the file number of this proceeding, and the
Commission's case number (NY-6236), a copy of which cover letter
and money order or check shall be sent to Alexander M. Vasilescu,
Senior Trial Counsel, Northeast Regional Office, Securities and
Exchange Commission, 7 World Trade Center, 13th Floor, New York,
New York 10048.
By the Commission.
Jonathan G. Katz
Secretary
NEWS DIGEST
COMMISSION BARS ERIC S. BLUMEN, JORDAN I. SHAMAH AND IRVING
STITSKY, FORMER PRINCIPALS AT STRATTON OAKMONT, INC., AND ORDERS
OTHER REMEDIAL RELIEF
The Commission settled public administrative and cease-and-desist
proceedings pursuant to Section 8A of the Securities Act of 1933
and Sections 15(b), 19(h) and 21(C) of the Securities Exchange
Act of 1934 ("Exchange Act"), against Eric S. Blumen, Jordan I.
Shamah and Irving Stitsky, former principals at Stratton Oakmont,
Inc., the now defunct former registered broker-dealer. Without
admitting or denying the Commission's findings, Blumen, Shamah
and Stitsky consented to the entry of an Order finding that
Blumen, Shamah and Stitsky willfully violated Section 17(a) of
the Securities Act of 1933 and Section 10(b) of the Exchange Act
and Rule 10b-5 thereunder, by making unauthorized trades in
customer accounts, and, as to Blumen, by also making baseless
price predictions to customers. The Order further finds that
Blumen participated in a scheme to fraudulently pass the Series
24 licensing exam administered by the NASD, and, as a result,
Blumen willfully aided-and-abetted and caused violations by
Stratton of Section 15(b)(7) of the Exchange Act and Rule 15b7-1
thereunder. The Order bars Blumen, Shamah and Stitsky from
associating with any broker, dealer, investment company,
investment adviser or municipal securities dealer, directs them
to cease and desist from committing or causing any violations and
future violations of the above provisions that they respectively
violated or caused to be violated, directs Blumen and Shamah to
each pay disgorgement and interest, but waives payment based on
their demonstrated inability to pay, and directs Stitsky to pay
disgorgement and interest in the total amount of $22,716, and a
civil penalty of $18,500.
Alexander M. Vasilescu
NERO
(212) 748-8158
SERVICE LIST
Rule 141 of the Commission's Rules of Practice provides that
the Secretary, or another duly authorized officer of the
Commission, shall serve a copy of Order Making Findings And
Imposing Remedial Sanctions And A Cease-And-Desist Order on
each person named as a party in the order and their legal
agent. The attached Order Making Findings And Imposing
Remedial Sanctions And A Cease-And-Desist Order has been
sent to the following parties and other persons entitled to
notice:
The Honorable Brenda P. Murray
Chief Administrative Law Judge
Securities and Exchange Commission
Mail Stop 11-6
450 Fifth Street, N.W.
Washington, D.C. 20549
Securities and Exchange Commission
Northeast Regional Office
7 World Trade Center
13th Floor
New York, New York 10048
Attn:Alexander M. Vasilescu
Senior Trial Counsel
Securities and Exchange Commission
Branch of Regional Office Assistance
Mail Stop 8-9
450 Fifth Street, N.W.
Washington, D.C. 20549
Attn: Jill M. Peterson
Senior Counsel
Lawrence Leibowitz, Esq.
Wexler & Burkhart, P.C.
50 Charles Lindbergh Boulevard
Mitchell Field, New York 11553
Attorney for Jordan I. Shamah
Irving Stitsky
1985 Cedar Swamp Road
Brookville, New York 11545
Eric S. Blumen
335 Baltustrol Circle
Roslyn, New York 11576
Jordan I. Shamah
141 Firestone Circle
North Hills, New York 11030
Mr. Eric S. Blumen
335 Baltustrol Circle
Roslyn, New York 11576
Re:In the Matter of Eric S. Blumen, Jordan I. Shamah &
IrvingStitsky, Admin. Proc., File No. 3-9491
Dear Mr. Blumen:
Please find enclosed an Order Making Findings And Imposing
Remedial Sanctions And A Cease-And-Desist Order ("The
Order") against you in the above-captioned matter.
If you have any questions, or wish to discuss any aspect of
the proceedings, you may communicate with Alexander M.
Vasilescu, Senior Trial Counsel, at the Commission's
Northeast Regional Office, (212) 748-8158, 7 World Trade
Center, New York, New York 10048.
Sincerely,
Jonathan G. Katz
Secretary
Enclosure
Lawrence Leibowitz, Esq.
Wexler & Burkhart, P.C.
50 Charles Lindbergh Boulevard
Mitchell Field, New York 11553
Attorney for Jordan I. Shamah
Re:In the Matter of Eric S. Blumen, Jordan I. Shamah &
IrvingStitsky, Admin. Proc., File No. 3-9491
Dear Mr. Leibowitz:
Please find enclosed an Order Making Findings And Imposing
Remedial Sanctions And A Cease-And-Desist Order ("The
Order") against your client, Jordan I. Shamah ("Shamah"), in
the above-captioned matter.
If you have any questions, or wish to discuss any aspect of
the proceedings, you may communicate with Alexander M.
Vasilescu, Senior Trial Counsel, at the Commission's
Northeast Regional Office, (212) 748-8158, 7 World Trade
Center, New York, New York 10048.
Sincerely,
Jonathan G. Katz
Secretary
Enclosure
Mr. Jordan I. Shamah
141 Firestone Circle
North Hills, New York 11030
Re:In the Matter of Eric S. Blumen, Jordan I. Shamah &
IrvingStitsky, Admin. Proc., File No. 3-9491
Dear Mr. Shamah:
Please find enclosed an Order Making Findings And Imposing
Remedial Sanctions And A Cease-And-Desist Order ("The
Order") against you in the above-captioned matter.
If you have any questions, or wish to discuss any aspect of
the proceedings, you may communicate with Alexander M.
Vasilescu, Senior Trial Counsel, at the Commission's
Northeast Regional Office, (212) 748-8158, 7 World Trade
Center, New York, New York 10048.
Sincerely,
Jonathan G. Katz
Secretary
Enclosure
Mr. Irving Stitsky
1985 Cedar Swamp Road
Brookville, New York 11545
Re:In the Matter of Eric S. Blumen, Jordan I. Shamah &
Irving StitskyAdmin. Proc., File No. 3-9491
Dear Mr. Stitsky:
Please find enclosed an Order Making Findings And Imposing
Remedial Sanctions And A Cease-And-Desist Order ("The
Order") against you in the above-captioned matter.
If you have any questions, or wish to discuss any aspect of
the proceedings, you may communicate with Alexander M.
Vasilescu, Senior Trial Counsel, at the Commission's
Northeast Regional Office, (212) 748-8158, 7 World Trade
Center, New York, New York 10048.
Sincerely,
Jonathan G. Katz
Secretary
Enclosure