U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19819 / September 1, 2006
SEC v. Robert B. Kessler et al., Civil Action No. 99 CV 4807 (E.D.N.Y.)
In the Matter of Robert B. Kessler, Securities Exchange Act of 1934 Release No. 48139 / July 8, 2003
The Securities and Exchange Commission today announced that on June 3, 2003 it filed a settled civil action in federal district court against Robert B. Kessler, for violations of the antifraud provisions of the securities laws and Rule 101 of Regulation M.
The Commission filed its complaint in the Eastern District of New York on August 18, 1999 against Vincent Napolitano, Irving Stitsky, Jordan Shamah, StockPlayer.com, Inc. and Kessler, among others, concerning a scheme to manipulate the prices of certain microcap issuers. To implement the scheme, Shamah, Napolitano and Stitsky acquired large blocks of cheap stock, usually in private placements or through "consulting fees." They then created market demand by arranging to have the issuer profiled on internet newsletters operated by Napolitano or Stitsky. The group sold the stock they had already acquired at the inflated prices created by the internet promotion. The sales were affected and the price maintained within a desired trading range by Kessler, who was a registered representative at a registered broker-dealer that he owned.
Kessler, without admitting or denying the allegations in the complaint, consented to the entry of a final judgment: (1) permanently enjoining him from violating Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and Rule 101 of Regulation M; (2) dismissing the claim for disgorgement in the civil action; and (3) not imposing a civil penalty based on Kessler's Sworn Statement of Financial Condition and other documentation.
In a related settled administrative proceeding, Kessler consented, without admitting or denying the Commission's findings, to entry of a Commission order pursuant to Exchange Act Section 15(b), permanently barring him from participating in any offering of a penny stock, or from associating with a broker or dealer. The Commission's Order was issued upon entry of the permanent injunction by the federal district court.