U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19987 / February 1, 2007
Securities and Exchange Commission v. Allixon International Corp., et al., Civil Action No. 3:05-CV-2260-P, United States District Court for the Northern District of Texas (Dallas Division).
SEC Amends Complaint to Charge Houston Attorney with Violating Securities Registration Provisions
On February 1, 2007, the Securities and Exchange Commission filed to amend its complaint in a lawsuit against Allixon International Corp., a Delaware corporation based in South Korea, to name Houston attorney Hank A. Vanderkam as a defendant. Vanderkam is the former securities counsel to Allixon. The SEC filed the original lawsuit in November 2005 against Allixon and other defendants to halt an ongoing unregistered distribution of 1.3 million shares of Allixon’s common stock.
The amended complaint alleges that Vanderkam participated in the illegal distribution of the 1.3 million Allixon shares, which represented 94% of the company’s float. The 1.3 million shares were issued to two offshore entities without a restrictive legend based on Vanderkam’s opinion letter that the Allixon stock offering complied with “Section (sic) 504 of Regulation D and the laws of the State of Texas.” In fact, the offering failed to comply with the requirements of Rule 504 under Regulation D of the Securities Act of 1933, and the offering was never registered in, and had no connection to, the State of Texas. The two offshore entities, defendants Silver Lake Investments, Inc. and Crescendo Investments Inc., were control persons of Allixon who allegedly sold over 900,000 of the Allixon shares in the Pink Sheets for approximately $4.3 million.
In settlement of the SEC’s lawsuit against him and without admitting or denying the allegations in the complaint, Vanderkam has consented to the entry of an agreed final judgment, permanently enjoining him from future violations of the securities-registration provisions of Sections 5(a) and 5(c) of the Securities Act, ordering $26,964 in disgorgement and interest, and ordering a $25,000 civil penalty. In addition, the consent order bars Vanderkam from issuing opinion letters under Rule 504 of Regulation D.
In a related administrative enforcement action, the SEC, on February 1, 2007, instituted settled administrative and cease-and-desist proceedings against Temple Securities Ltd., a Turks and Cacios brokerage firm, and Gregory Greatrex, a Temple Securities employee. The Commission’s order finds that Temple Securities, which had previously been named as defendant in the SEC’s injunctive action against Allixon, and Greatrex, participated in the unregistered distribution of Allixon shares on behalf of brokerage customers, Silver Lake Investments and Crescendo Investments. The SEC’s order directs Temple Securities and Greatrex to cease and desist from committing or causing any violations of Sections 5(a) and 5(c) of the Securities Act of 1933, and Temple Securities to cease and desist from committing or causing any violations of Section 15(a)(1) of the Securities Exchange Act of 1934. Further, Temple Securities was ordered to pay disgorgement of $251,479 and prejudgment interest of $1,867, and a civil money penalty of $15,000. Temple Securities and its president, David C. Knipe, were also dismissed as defendants in the above referenced SEC injunctive action.
For further information, please see Litigation Release No. 19471, November 18, 2005.