UNITED STATES OF AMERICA
|In the Matter of
WILLIAM J. NORDVIK,
ORDER MAKING FINDINGS AND
IMPOSING REMEDIAL SANCTIONS
AGAINST JOHN G. WRIGHT, JR.
On February 22, 2000, the Securities and Exchange Commission ("Commission") instituted cease-and-desist and public administrative proceedings pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 ("Exchange Act") against respondent John G. Wright, Jr. ("Wright" or "Respondent") to determine whether he willfully violated Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and, if so, what remedial sanctions, if any, were appropriate.
In response to the institution of these proceedings, Wright has submitted an Offer of Settlement ("Offer"), which 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 in which the Commission is a party, and without admitting or denying the findings herein, except as to the jurisdiction of the Commission over him and the subject matter of the proceeding, which are admitted, Wright consents to the entry of the findings and remedial sanctions set forth below.
On the basis of this Order and the Offer, the Commission makes the following findings:
A. Nature of Proceeding
This matter involves the fraudulent use of matched trades to buy and sell stock in Orlando Super Card, Inc. ("Orlando"), an over-the-counter ("OTC") Bulletin Board stock, in a scheme similar to check kiting These matched trades created an appearance of active trading in Orlando stock and incrementally increased the price of the stock. Orlando was a small company that never had more than $20,000 in assets. Orlando sold phone cards and discount vacation packages. From May 1997 through the beginning of August 1997, Wright and respondent, Jon F. Williams ("Williams"), used Orlando stock to transfer debit balances in Canadian brokerage accounts by buying and selling Orlando stock through a series of matched trades. Because the Canadian firms allowed customers several weeks to pay for their stock purchases, Wright was able to "borrow" money by running significant debit balances in the accounts by taking advantage of this delay in settlement. At the time Wright and Williams obtained the Orlando stock, they already owed money to several Canadian brokerage firms for prior purchases. When one brokerage firm required payment, Wright would sell Orlando stock from that account to another account he controlled, and would then use the proceeds from the sales to pay off the first brokerage firm. When the second firm required payment, he would sell Orlando stock to a third account he controlled and would pay off the second firm. These matched trades created the appearance of active trading in Orlando stock. It also slowly pushed up the price of Orlando stock because the U.S. market makers, serving as intermediaries for these trades, sold the stock at higher prices than the price at which they they had bought it. By early August 1997, Orlando, with less than $20,000 in assets, had a market capitalization of $9.7 million. The price of Orlando stock plummeted in mid-August 1997 when Wright's trading activities ceased.
Wright, age 52, was a purported investment banker and during the relevant time period was self employed as a consultant.
C. Other Relevant Persons and Entities
D. Wright's "Debit Kiting" And Matched Trades
In view of the foregoing, the Commission finds that Wright willfully violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and further deems it appropriate and in the public interest to impose the sanctions specified by Wright in the Offer.
Accordingly, IT IS ORDERED THAT Wright:
(1) cease and desist 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;
(2) be, and hereby is, barred from participating in any offering of a penny stock, including: (a) acting as a promoter, finder, consultant, or other person who engages in actions with a broker, dealer or issuer for purposes of the issuance or trading in any penny stock; or (b) inducing or attempting to induce the purchase or sale of any penny stock; and
(3) pay, within sixty (60) days of the entry of this Order, a civil money penalty in the amount of $25,000. Such payment 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 Treasury; (c) mailed by certified mail to the Comptroller, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Alexandria, VA 22312-0003; and (d) submitted with a cover letter which identifies Wright as a respondent in these proceedings, with a copy of said cover letter and money order or check sent to the Securities and Exchange Commission, 44 Montgomery Street, Suite 1100, San Francisco, CA 94104, Attn.: District Administrator.
By the Commission.
Jonathan G. Katz
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