Litigation Release No. 19839 / September 20, 2006

Securities and Exchange Commission v. Fernando J. Espuelas et al., Civil Action No. 06 CV 2435 (RJH) (S.D.N.Y. filed March 29, 2006)

Peter Blacker Agrees to Settlement in SEC's Starmedia Litigation

The U.S. Securities and Exchange Commission (Commission) today announced that it had filed a Consent and proposed Final Judgment as to Defendant Peter E. Blacker, in Securities and Exchange Commission v. Fernando J. Espuelas et al., Civil Action No. 06 CV 2435 (RJH) (S.D.N.Y. filed March 29, 2006). The Commission's complaint in that action alleged that Blacker aided and abetted violations of the reporting and record-keeping provisions of the federal securities laws and violated the falsification of records provision, through his conduct while the Senior Vice President, Global Sales Strategy & Partnerships, at StarMedia Network, Inc. (StarMedia). StarMedia, a former Internet portal based in New York City, directed its business at Spanish- and Portuguese-speaking communities in the United States and Latin America. Blacker, without admitting or denying the allegations in the complaint, consented to the filing of the proposed Final Judgment permanently enjoining him from future violations of Securities Exchange Act of 1934 ("Exchange Act") Rule 13b2-1, and from aiding and abetting violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1, and 13a-13, and ordering him to pay a civil penalty in the amount of $20,000.

The Commission's complaint alleged that, in 2000 and the first two quarter of 2001, StarMedia utilized three types of transactions to inflate its revenue by over $18 million in order to meet its revenue projections and secure additional financing for its operations. StarMedia improperly recognized revenue from barter transactions, from round trip transactions, and from sales transactions that were subject to unrecorded contingencies or side agreements. The allegations against Blacker concerned only the sales transactions.

Blacker is the second defendant in this action to settle with the Commission. The Commission's complaint charged six former executives of StarMedia with securities fraud and Blacker and one additional former executive with other securities law violations. The Commission's litigation against the remaining six defendants continues.

See Litigation Release No.19627 (Mar. 29, 2006).