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United States Securities and Exhange Commission

Litigation Release No. 16478 / March 21, 2000

SEC v. Nicholas A. Zahareas et al., 97-CV-2859 DSD/JMM (D. Minn.)

An Order of Permanent Injunction and other Equitable Relief (Order) was entered against Tuschner & Company, Inc. ("Tuschner & Company") in SEC v. Nicholas A. Zahareas, et al., 97-CV-2859 (District of Minnesota). Tuschner & Company consented to entry of the order of permanent injunction without admitting or denying the allegations in the complaint. The Complaint alleged that Tuschner & Company associated with Nicholas A. Zahareas ("Zahareas") from June 1996 to December 1997, without the consent of the Commission, when it knew, or reasonably should have known, that Zahareas was a person subject to an order barring him from association with a broker or dealer. In particular, the complaint alleged that Zahareas, operating in Greece, referred customers to Tuschner & Company, filled out new account documentation, serviced the Greek customers by directing transfers in and out of the accounts, and directed trading in the accounts by placing orders in those accounts with Tuschner & Company's trading department. Tuschner & Company provided Zahareas with internal reports on customer accounts and indirectly paid him commissions based on trading activity in the Greece customer accounts. The complaint alleged that Zahareas occupied a similar status and performed similar functions to a Tuschner & Company employee. The Complaint further alleged that, as a result of the wrongful association, Tuschner & Company earned approximately $210,000.00 in gross commissions from sales to customers obtained through its association with Zahareas. The order waived payment of disgorgement and did not impose a civil penalty based on the demonstrated inability of Tuschner & Company to pay such relief.

The Honorable David Doty of the U.S. District Court for the District of Minnesota entered the Order enjoining Tuschner & Company from future violations of Section 15(b)(6)(B)(ii) of the Securities Exchange Act of 1934.

http://www.sec.gov/litigation/litreleases/lr16478.htm


Modified:03/23/2000