Robert Olins, et al.
U.S. Securities and Exchange Commission
Litigation Release No. 21845 / February 9, 2011
Securities and Exchange Commission v. Robert Olins, et al., Civil Action No. 07-6423 (MMC) (N.D. Cal.)
Court Orders $3.4 Million Judgment Against Robert Olins, Former CEO of SpatiaLight, and Argyle Capital Management
On January 21, 2011, a Northern District of California court ordered Defendants Robert Olins ("Olins"), former CEO of SpatiaLight, Inc. ("SpatiaLight"), and his wholly-owned company Argyle Capital Management Corporation ("Argyle") to pay nearly $3.4 million and permanently enjoined the defendants from violating Sections 5(a) and (c) of the Securities Act of 1933 ("Securities Act"). The judgment includes more than $2.4 million in disgorgement of proceeds from illegal stock sales, nearly $900,000 in prejudgment interest and a $5,000 civil penalty. This final remedies judgment follows the Court's November 2009 order granting in part the Securities and Exchange Commission's ("Commission") motion for partial summary judgment against the defendants, finding that the defendants were liable for the unlawful sale of SpatiaLight stock and Olins' subsequent failure to report those sales. In March 2010, the Court denied the defendants' motion for reconsideration of that ruling.
The Commission's complaint alleged that, in 2005, Olins and Argyle illegally sold over 400,000 shares of SpatiaLight stock, and that Olins failed to disclose those sales and also made misrepresentations about the stock in a SpatiaLight Form 8-K. In finding the defendants liable for violations of Section 5, the Court found that Olins was an affiliate of SpatiaLight, and that the defendants were not eligible for an exemption from registering their sales under Exchange Act Section 4(1) because they were underwriters. Moreover, the Court found that the defendants did not qualify for the Rule 144 safe harbor because they did not file notice of their sales, or hold the stock for the required length of time. The Court specifically rejected defendants' argument that they should not be deemed underwriters because they met some, but not all, of the Rule 144 requirements. The Court further found that the amount of disgorgement should include all proceeds obtained from the unlawful sale of the securities, and refused the defendants' request to offset the disgorgement amount in recognition of legitimate services provided by Olins to SpatiaLight. The Court also ordered the full amount of prejudgment interest sought by the Commission because the defendants had use of their ill-gotten gains since the time of the illegal sales.
In conduct unrelated to Olins' illegal stock sales, the Commission also alleged in its complaint that Olins forged auditor consents on two sets of SpatiaLight registration statements in July 2005, and that he engaged in insider trading in August 2005 and February 2006. In November 2009 and June 2010, Olins, without admitting or denying the Commission's allegations, consented to judgments enjoining him from violating the antifraud provisions of Section 17(a) of the Securities Act, Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Exchange Act Rule 10b-5. In addition, Olins was enjoined from violating the books and records, internal controls and beneficial ownership reporting provisions of the securities laws, including Sections 13(a), 13(b), 13(b)(5), 13(d), 14(a) and 16(a) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1, 13a-11, 13a-14, 13d-2(a), 14a-9 and 16a-3. Finally, Olins also consented to a permanent officer and director bar and $180,000 civil penalty.
The Commission's complaint also sought injunctive relief against SpatiaLight for violations of Sections 5(a), 5(c), and 17(a) of the Securities Act, Sections 10(b), 17(a), 13(a), 13(b) and 14(a) of the Exchange Act, and Rules 10b-5, 12b-20, 13a-1, 13a-11 and 14a-9 thereunder. The Court entered a default judgment against the company, now in bankruptcy, in July 2008. The litigation against all parties is now complete.
For further information, see Litigation Release No. 20411 (Dec. 20, 2007).