UNITED STATES OF AMERICA
In the Matter of
TROY W. JUSTUS,
The Securities and Exchange Commission ("Commission") deems it appropriate in the public interest and for the protection of investors that public administrative proceedings be and they hereby are instituted against Troy W. Justus ("Respondent" or "Justus") pursuant to Sections 15(b) and 19(h) of the Securities Exchange Act of 1934.
In anticipation of the institution of these administrative proceedings, Justus has submitted an Offer of Settlement which the Commission has determined to accept. Solely for the purposes of these proceedings and any other proceedings brought by or on behalf of the Commission or to which the Commission is a party, Justus, without admitting or denying the findings herein, except as to the entry of the injunction set forth in paragraph III.B, which is admitted, consents to entry of this Order Instituting Proceedings Pursuant To Sections 15(b) and 19(h) of the Securities Exchange Act Of 1934, Making Findings, And Imposing Remedial Sanctions ("Order").
On the basis of this Order and the Respondent's Offer of Settlement, the Commission finds the following:
Troy W. Justus was a registered representative associated with Strategic Investments, Inc. ("Strategic Investments"), a registered broker-dealer, from March 8, 1995 through August 5, 1996. From March 1995 through November 1996, Justus was also an employee of Strategic Investment Advisory, Inc. ("SIA"), where he worked in the Financial Marketing Department.
B. The Permanent Injunction Against Respondent
On March 30, 2001, a Final Judgment of Permanent Injunction and other Equitable Relief (the "Final Judgment") was entered against Justus by the United States District Court for the Central District of Illinois, Springfield Division, in an action styled Securities and Exchange Commission v. Wayne F. Gorsek, Lyndell Parks, P. Brenden Gebben and Troy Justus, 99 CV 3072 (JES)((Judgment entered by Consent March 30, 2001), which permanently restrains and enjoins Respondent from directly or indirectly violating Sections 17(a) and 17(b) of the Securities Act of 1933 (the "Securities Act") [15 U.S.C. §§ 77q(a) and (b)], Section 10 (b) of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. § 78j(b)], and Rule 10b-5 [17 C.F.R. § 240.10b-5] promulgated thereunder.
The Commission's Complaint alleged that Justus participated in a fraudulent touting scheme to artificially inflate the prices of approximately twenty microcap companies through SIA, an Illinois-based stock promoter, and a related broker-dealer, Strategic Investments. The Complaint alleged that pursuant to this scheme Justus and others deceived investors into believing that SIA was an independent securities research firm that provided objective investment advice about "undiscovered" companies. In fact -- the Complaint alleged -- SIA was merely a paid stock promotion firm that publicly recommended securities in exchange for lucrative compensation agreements with the issuers of the subject securities.
The Complaint further alleged that, as a registered representative at Strategic Investments, Justus defrauded brokerage customers of Strategic Investments by recommending and selling highly-speculative microcap stocks of SIA's issuer-clients to them without disclosing that SIA received cash and securities from the issuers of those securities. The Complaint alleged that in furtherance of the scheme, Justus provided Strategic Investments' brokerage customers with SIA's mock research reports and other false and misleading information.
In view of the foregoing, the Commission deems it appropriate to accept Justus's Offer of Settlement and in the public interest and for the protection of investors to impose the sanctions specified in the Offer of Settlement submitted by Justus:
Accordingly, IT IS HEREBY ORDERED that Justus be, and he hereby is, barred from association with any broker or dealer, with a right to reapply for association after three years to the appropriate self-regulatory organization, or if there is none, to the Commission.
By the Commission.
Jonathan G. Katz
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