UNITED STATES OF AMERICA
SECURITIES EXCHANGE ACT OF 1934
The Commission deems it appropriate and in the public interest that administrative proceedings be instituted pursuant to Section 15(b) and 19(h) of the Securities Exchange Act of 1934 ("Exchange Act") with respect to Douglas E. Mallach ("Mallach").
In anticipation of these proceedings, Mallach 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 to which the Commission is a party, and without admitting or denying the findings contained herein, except that Mallach admits the jurisdiction of the Commission over him and the subject matter of this proceeding and the matters described in paragraphs III.A., B. and H. of this Order Instituting Proceedings Pursuant to Section 15(b) and 19(h) of the Securities Exchange Act of 1934, Making Findings and Imposing Remedial Sanctions ("Order"), Mallach has consented to the findings and sanctions set forth below.
Accordingly, IT IS ORDERED that the proceedings pursuant to Section 15(b) and 19(h) of the Exchange Act be, and they hereby are, instituted.
On the basis of this Order and the Offer submitted by the Respondent, the Commission finds that:
A. From 1987 through 1993, Mallach was a registered representative associated with broker-dealers registered with the Commission.
B. On April 27, 1997, the Commission filed a Complaint ("Complaint") against Mallach, among others, in SEC v. Technigen Corporation et al., Civ. No. 98-S-933 (D. Colo.). The complaint alleged that, while associated with a registered broker-dealer, Mallach violated Sections 5(a), 5(c) and 17(b) of the Securities Act of 1933 ("Securities Act") and Sections 10(b), 13(d) and 13(g) of the of the Exchange Act and Rules l0b-5, 10b-6, 13d-1 and 13d-2 thereunder.
C. The Complaint alleges that from in or about January 1992 through May 1993, Mallach, directly and indirectly, offered and sold shares of Technigen Corporation ("Technigen") at a time when no registration statement was filed or in effect as to such sales and no exemption from registration was available.
D. The Complaint further alleges that in connection with the offer, purchase and sale of Technigen securities, Mallach, directly and indirectly, published communications which described Technigen securities, without disclosing the receipt and amount of consideration received from Technigen for such publicity.
E. The Complaint further alleges that, between January 1992 and May 1993, Mallach distributed promotional materials concerning Technigen which misrepresented the company's business operations.
F. The Complaint further alleges that, during the same period, Mallach, directly or indirectly, engaged in a distribution of Technigen securities and bid for or purchased, or induced others to purchase, Technigen securities before he had completed his participation in the distribution.
G. The Complaint further alleges that Mallach, directly or indirectly, after acquiring at various times the beneficial ownership of more than 5 percent of Technigen's outstanding stock, failed to File a Schedule 13D, or any amendments thereto, with the Commission.
H. On July 24, 2000, the United States District Court for the District of Colorado entered a final judgment against Mallach, permanently enjoining him from further violations of Sections 5(a), 5(c) and 17(b) of the Securities Act and Sections 10(b), 13(d) and 13(g) of the of the Exchange Act, Rules l0b-5, 13d-1, and 13d-2 thereunder, and Regulation M, and requiring him to pay a penalty of $125,000.
In view of the foregoing, it is in the public interest to impose the sanctions specified in the Offer submitted by Mallach. Accordingly, IT IS ORDERED that:
The Respondent, Douglas E. Mallach, be and hereby is barred from association with any broker or dealer.
The sanctions ordered herein shall become effective immediately.
By the Commission.