U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19506 / December 21, 2005
Securities And Exchange Commission v. Emission Controls Corporation and Syd Cooke, Case No. 04-14195-CIV-GRAHAM/LYNCH (S. D. Fla.)
Federal Court Orders Emission Controls Corporation and its Former President to Pay Disgorgement, Pre-Judgment Interest, and Penalties Exceeding $500,000
On December 5, 2005, the Honorable Judge Donald L. Graham of the United States District Court for the Southern District of Florida issued a Final Judgment against Emission Controls Corporation, permanently enjoining the company from future violations of the antifraud provisions of the federal securities laws. Emission Controls is a Florida corporation that claimed it developed a device to markedly improve automobile fuel efficiency while reducing harmful emissions. The Court ordered Emission Controls to pay disgorgement and pre-judgment interest totaling $343,333.
Earlier, on November 29, 2005, the Court also issued a Final Judgment against the company's former President and Chief Executive Officer, Syd Cooke, requiring him to pay disgorgement, pre-judgment interest, and penalties totaling $171,094. The Court had previously entered a judgment against Cooke, on September 15, 2005, permanently enjoining him from violating the antifraud provisions of the federal securities laws and prohibiting him from acting as an officer or director of a public company.
In its Complaint filed July 21, 2004, the Commission alleged that (1) in a December 2002 demonstration, Cooke used manipulated test results to convince a group of investors and stockbrokers that the device was capable of lowering vehicle emissions to near-zero levels, and (2) based on the test results, Cooke and Emission Controls issued a fraudulent January 3, 2003 press release falsely claiming the device could increase fuel efficiency while decreasing harmful emissions. The day that Emission Controls issued the false press release, the company's stock price rose by more than 13% and in the week following, the stock price reached an all-time high.