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U.S. Securities and Exchange Commission

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 20047 / March 16, 2007

SEC v. Blue Bottle Limited and Matthew C. Stokes, 07 Civ. 01-CV-1380 (CSH) (KNF) (S.D.N.Y.)

Court Orders Preliminary Injunction and Asset Freeze in SEC Fraud Action Involving Trading in Advance of Press Releases of 12 U.S. Companies

On March 7, 2007, in a fraud action filed last month by the Securities and Exchange Commission, the United States District Court for the Southern District of New York entered a preliminary injunction order against defendants Blue Bottle Limited and Matthew Charles Stokes. In that order, the Honorable Charles S. Haight, Jr., among other things, enjoined Stokes, a citizen of Guernsey, and Blue Bottle, a Hong Kong chartered company, from violations of the antifraud provisions of the federal securities laws. In addition, the Court, which had previously entered a temporary restraining order and asset freeze on February 26, 2007, continued the freeze of the defendants' assets.

The Commission's complaint alleges that Blue Bottle and Stokes fraudulently gained access to material nonpublic information and, with that information, traded in the securities of 12 different U.S. public companies immediately prior to the publication of news releases concerning those companies, realizing profits of $2,707,177. The Commission also alleges that Blue Bottle and Stokes provided false information and used fake documents to open an account at the U.S. broker-dealer through which they executed the illegal trades. As a result of the illegal trading in the 12 companies, the Commission alleges that Blue Bottle and Stokes violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act), and Exchange Act Rule 10b-5.

The Commission acknowledges the assistance of the Options Regulatory Surveillance Authority.

For further information, please see Litigation Release No. 20018 (February 26, 2007).

 

http://www.sec.gov/litigation/litreleases/2007/lr20047.htm


Modified: 03/16/2007