U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19811 / August 23, 2006
SEC v. Paul A. Spray, Thomas E. Loyd, Marc Barhonovich, et al., Case No. 8:02-CV-1613-T26EAJ (M.D. Fla. filed September 5, 2002)
SEC Dismisses Civil Action and Enters Cease-and-Desist and Disgorgement Order Against Tampa Investor Relations Consultant
The Securities and Exchange Commission (SEC) announced that at its request, a federal judge dismissed its pending civil injunctive action against Marc Barhonovich and his company, Equity Advisors, on January 23, 2004. In connection with that dismissal, the SEC entered a cease-and-desist and disgorgement order against Barhonovich and Equity Advisors, to which they consented without admitting or denying the SEC's findings.
The cease-and-desist order finds that Barhonovich violated Sections 17(a)(2) and (a)(3) of the Securities Act of 1933 in connection with the preparation and distribution of misleading newsletters touting thinly traded stocks of two public companies whose shares are quoted on the Over-the-Counter Bulletin Board. The cease-and-desist order found that Barhonovich, acting as a consultant for the companies, hired the newsletter writers and paid for the mass faxing, but failed to review the newsletters before they were publicly disseminated. The SEC also ordered Barhonovich to pay disgorgement and prejudgment interest stemming from his sales of stock during the faxing periods.
The SEC had sued Barhonovich and Equity Advisors in United States District Court, alleging their actions violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The District Court Judge subsequently denied the SEC's request for a preliminary injunction against Barhonovich and Equity Advisors, but set trial on the SEC's request for a permanent injunction in September 2004.