U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20561 / May 8, 2008
SEC v. Quogue Capital LLC and Wayne P. Rothbaum, Civ. Action No. 08-4339-JGK (SDNY)
SEC Files Settled Action Against Quogue Capital LLC and Wayne P. Rothbaum
The Securities and Exchange Commission announced today that it filed a settled civil action against Quogue Capital LLC, a private investment company, and Wayne P. Rothbaum, Quogue's managing member and owner. The Commission's complaint alleges that Quogue and Rothbaum committed multiple violations of Rule 105 of Regulation M. Rule 105 prohibits covering a short sale with securities obtained in certain public offerings when the short sale occurs during a specific period (usually within five business days) before the pricing of the offering. The Commission's complaint alleges that Quogue and Rothbaum violated Rule 105 of Regulation M in connection with purchases of securities in public offerings made by, respectively, Bioenvision, Inc., Geron Corporation, Cotherix, Inc. and Point Therapeutics, Inc. The complaint alleges that on each such occasion, Quogue, at Rothbaum's direction, sold securities short within five business days before the pricing of public offerings and then covered the short positions with securities purchased in the offering. The complaint alleges that Quogue's profits from the prohibited trading totaled $782,902. Without admitting or denying the allegations of the complaint, Quogue and Rothbaum agreed to jointly pay a civil money penalty in the amount of $390,000.
The Commission today also instituted settled cease-and-desist and administrative proceedings against Quogue and Rothbaum, concerning the same conduct. In connection with these proceedings, Quogue and Rothbaum agreed to an order requiring them to cease and desist from committing or causing any violations and any future violations of Rule 105 of Regulation M under the Securities Exchange Act of 1934 and jointly and severally to pay disgorgement of $782,902 and prejudgment interest of $161,154.
For further information, please see Securities Exchange Act Release No. 34-57804 (May 8, 2008).