SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16798 / November 14, 2000
SEC v. Jerry A. Womack, Civil Action No. 00-1105 GLT (EEx) (C.D. Cal.).
The Securities and Exchange Commission ("Commission") announced today that it filed an injunctive action in federal district court in Los Angeles against Jerry A. Womack. The Commission alleges that Womack committed securities fraud in offering and selling $19 million in securities to about 400 investors nationwide between August 1997 and June 1999.
The complaint alleges that Womack represented to investors that he would invest their money in the stock market pursuant to an investment strategy that he had developed and used successfully called the "Womack Dow Principle." He also represented to investors that, to implement his Womack Dow Principle, he had retained traders on the floor of the New York Stock Exchange. Additionally, Womack represented to investors that the trading activity was yielding profitable results.
In fact, the complaint alleges, Womack utilized only about a quarter of the investors' money for securities trading and suffered a net loss on that trading. The complaint further alleges that Womack misused the majority of investor funds for personal and unrelated expenses and to pay some investors their purported profits and principal. Among other things, the complaint alleges, Womack used the funds to purchase homes, real property, artwork, jewelry and cars and to pay for his honeymoon, for cosmetic surgery for his wife and for his divorce settlement.
The complaint seeks an injunction against Womack and the payment of disgorgement, prejudgment interest and civil penalties, in amounts to be determined, for violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and (2) of the Investment Advisers Act.