SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17026 \ June 5, 2001
SEC v. Leonard B. Greer and Judah Wernick, Civil Action No. 97 Civ. 7267 (MP) (S.D.N.Y.)
The Securities and Exchange Commission ("SEC") announced that, on June 5, 2001, the Honorable Milton Pollack, U.S. Senior District Judge for the Southern District of New York, entered Final Judgments and Orders of Permanent Injunction and Other Equitable Relief ("Final Judgments") against Leonard B. Greer ("Greer"), of Rye, New York, and Judah Wernick ("Wernick"), of Woodmere, New York, in a market manipulation case. The Final Judgments enjoin Greer and Wernick from violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, the principal antifraud provisions of the federal securities laws. Greer was also enjoined from violating Section 13(d) of the Exchange Act and Rules 13d-1 and 13d-2 thereunder, which require the reporting of certain securities holdings. Greer was ordered to disgorge $257,800, plus prejudgment interest of $203,986 and post judgment interest, and to pay a civil penalty of $100,000. Wernick was ordered to disgorge $218,149.71, plus prejudgment interest of $172,936.58 and post judgment interest. Greer and Wernick consented to the entry of the Final Judgments without admitting or denying the allegations of the Complaint.
In its Complaint, filed on September 30, 1997, the SEC alleged that, from January 1994 through April 1994, Wernick and Greer fraudulently manipulated the market price of the stock of AFGL International, Inc. from $1 to $7 per share. The SEC alleged that Wernick and Greer accomplished the manipulation by controlling the supply of AFGL stock that was available to the market; by accumulating over two-thirds of the freely-tradable AFGL stock in the proprietary account of Greer's firm, L.C. Wegard & Co., Inc.; by exerting price leadership to increase the market price of AFGL stock; and by generating retail demand for AFGL stock.
The SEC further alleged in the Complaint that, during an intensive nine-day selling effort that began on April 20, 1994, Greer's firm, Wegard, sold over 1 million shares of AFGL stock to its customers, at artificially inflated prices, netting a profit of approximately $3.5 million. The SEC also alleged that Wernick profited by selling AFGL securities to Greer.
The Complaint alleges that, during the relevant period, although Wegard acquired over 5% of the outstanding shares of AFGL stock, and thereafter made further acquisitions in excess of 1% of Wegard's holdings, Greer and Wegard failed to file a Schedule 13D with the Commission, or any amendments thereto, as required by Section 13(d) of the Exchange Act and Rules 13d-1 and 13d-2 thereunder.
The SEC thanks the New Jersey Bureau of Securities and the National Association of Securities Dealers, Inc. for their assistance in this matter.