UNITED STATES OF AMERICA
| ORDER INSTITUTING ADMINISTRATIVE PROCEEDINGS PURSUANT TO SECTION 15(b) OF THE SECURITIES EXCHANGE ACT OF 1934, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS|
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act") against Jerome E. Rosen ("Rosen" or "Respondent").
In anticipation of the institution of this administrative proceeding, Respondent has submitted an Offer of Settlement ("Offer") that 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 to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission's jurisdiction over him and the subject matter of this proceeding, and except as to the finding in paragraph III.B. and the entry of the injunction set forth in paragraph III. C. below, which are admitted, Respondent consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions ("Order") as set forth below.
On the basis of this Order and Respondent's Offer, the Commission finds that:
A. Respondent, age 49, is a resident of Miami, Florida, and has been registered with the National Association of Securities Dealers ("NASD") since 1975. From at least 1995 until May of 2002, Respondent was a trader working at the Aventura, Florida branch office of J. Alexander Securities, Inc. ("J. Alexander"), a registered broker-dealer.
B. On March 7, 2002, a jury found Respondent liable, after a seven-day trial, for multiple violations of Sections 5 and 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in the civil action entitled Securities and Exchange Commission v. Jerome E. Rosen, Diversified Corporate Consulting Group, Joseph D. Radcliffe, and William A. Calvo III, Civil Action Number 01-0369-CIV-Middlebrooks, in the United States District Court for the Southern District of Florida.
C. On April 24, 2002, the United States District Court for the Southern District of Florida entered a Final Judgment as to Jerome E. Rosen, permanently enjoining Respondent from violating Sections 5 and 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
D. The Commission's Complaint alleged that Rosen accepted a bribe, in the form of Systems of Excellence, Inc. ("SOE") stock from the president of SOE, to manipulate the price of SOE stock, and conspired with the president of SOE, among others, to obtain an exclusive supply of SOE stock to support his fraudulent and manipulative trading activity. Rosen, the trader at J. Alexander exclusively responsible for the firm's market making activity in SOE, sold stock short to other market makers, only to cover his sales with stock supplied at favorable prices by others involved in the fraudulent scheme. The complaint also alleged that Rosen traded in advance of SOE touts he directed or of which he was aware. Finally, the complaint alleged that Rosen resold unregistered SOE securities. In addition to enjoining Rosen from further violations of the antifraud and securities registration provisions, the Court required Rosen to disgorge $992,891.01, representing $615,966.50 in ill-gotten gains plus prejudgment interest of $376,925.01, and to pay a separate $100,000 civil penalty. The disgorgement figure represents Rosen's share of trading profits that J. Alexander paid Rosen for his fraudulent SOE market-making activity and profits Rosen earned on the resale of SOE stock that he received as a bribe from SOE's president and others. Further, the Court imposed a personal trading ban on Rosen, enjoining him from directly or indirectly buying or selling any security registered with the Commission pursuant to Section 12 of the Exchange Act or any security meeting the definition of "penny stock" set forth in Section 3(a)(51) of the Exchange Act and Exchange Act Rule 3a51-1.
E. At all relevant times, SOE securities met the definition of "penny stock" set forth in Section 3(a)(51) of the Exchange Act and Exchange Act Rule 3a51-1. Through his participation in the SOE scheme, Respondent participated in an offering of penny stock.
In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified in Respondent Rosen's Offer.
ACCORDINGLY, IT IS HEREBY ORDERED:
A. Pursuant to Section 15(b)(6) of the Exchange Act, that Respondent Rosen be, and hereby is, barred from association with any broker or dealer; and
B. Pursuant to Section 15(b)(6) of the Exchange Act, that Respondent Rosen be, and hereby is, barred from participating in any offering of a penny stock, including: acting as a promoter, finder, consultant, agent, or other person who engages in activities with a broker, dealer or issuer for purposes of the issuance or trading in any penny stock, or inducing or attempting to induce the purchase or sale of any penny stock.
By the Commission.
Jonathan G. Katz
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