Litigation Release No. 23744 / February 7, 2017

SEC v. Zev Saltsman, et al., No. 07-CV- 4370 (NGG) (E.D.N.Y.)

SEC Obtains Final Judgment Against Edward G. Newman

On January 25, 2017, the Honorable Nicholas G. Garaufis of the U.S. District Court for the Eastern District of New York entered a final judgment against defendant Edward G. Newman. The final judgment imposes on Newman a permanent injunction against future violations of certain antifraud provisions of the federal securities laws and bars Newman from serving as an officer and director of a public company.

The SEC's complaint, filed on October 19, 2007 and amended on March 23, 2015, alleged, among other things, that Newman and other officers and directors of Xybernaut Corp., signed registration statements for private investment in public equity transactions (PIPE transactions) that were all false and misleading because those registration statements named nominee entities and nominee directors as the control persons and concealed the identify of an investor group that controlled large blocks of Xybernaut's shares. The complaint also alleged that Newman received $100,000 of the proceeds of a March 2002 PIPE transaction with this investor group and that Xybernaut's Form 10-Q, signed by Newman, falsely stated that this money was paid to a "financial advisor."

The final judgment permanently enjoins Newman from violating Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 13(a) of the Securities Exchange Act of 1934 and Rules 10b-5, 12b-20, 13a-1, 13a-13, and 13a-14 thereunder. In addition, the final judgment bars Newman from serving as an officer or director of a public company. Newman consented to the entry of the final judgment.

The SEC's action against the other remaining defendants continues.

For further information, see Litigation Release Nos. 20341 (Oct. 19, 2007) and 23462 (Feb. 8, 2016).