Elliot Lavigne

LITIGATION RELEASE NO. LR- 17086 / August 2, 2001

SECURITIES AND EXCHANGE COMMISSION V. ELLIOT LAVIGNE, 00-CV-6024 (E.D.N.Y.)

The Securities and Exchange Commission announced today that it has reached a settlement with Elliot Lavigne, the former Chairman of the Perry Ellis Division at Salant Corp. Lavigne also served as Chief Operating Officer of Donna Karan Jeanswear and Chief Executive Officer of Jordache Enterprises, where he built the "FUBU" brand. Lavigne is currently the President of OOC Apparel, Inc.

The Commission filed a complaint against Lavigne on November 2, 2000, alleging that he violated the antifraud provisions of the federal securities laws by participating in the manipulation of twenty-three initial public offerings (IPOs) underwritten by Stratton Oakmont, Inc. (Stratton), over a five-year period.

Lavigne has now agreed to settle the Commission's action and has consented, without admitting or denying the allegations of the Complaint, to the entry of a judgment that: (1) permanently enjoins Lavigne from future violations of Section 17(a) of the Securities Act of 1933, 15 U.S.C. § 77q(a), Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5; (2) orders Lavigne to pay a civil penalty of $100,000; and (3) bars Lavigne from serving as an officer or director of a public company for a period of seven years. The case will remain open pending a determination of the amount of money Lavigne must pay as disgorgement of his ill-gotten gains.

The Commission's Complaint alleges as follows:

From 1991 through 1995, Lavigne was a key participant in a series of manipulations orchestrated by Stratton. Stratton was a quintessential "boiler room" and the manipulations followed a standard formula. Stratton gained control over the float of each stock by issuing allocations of IPO stock to persons with whom Stratton had entered into secret agreements to serve as "nominees." The nominees received their stock with the understanding that they would sell the stock back to Stratton at pre-arranged, below-market prices once trading had commenced in the aftermarket. Stratton would then earn huge profits by selling the stock to their own customers at artificially inflated prices created by the use of high-pressure sales tactics.

In at least one of the Stratton IPO manipulations, Lavigne played a second, similar role. In this IPO, Lavigne received "bridge" units as part of his compensation for making a bridge loan to the issuer. Although Lavigne signed a lock-up agreement precluding him from selling his bridge units for at least thirteen months after the IPO, he entered into a secret agreement with Stratton by which Stratton would release him from the lock-up agreement in order to sell his bridge units back to Stratton shortly after trading began in the aftermarket. Thus, Lavigne earned a quick profit on the bridge units while helping Stratton to control the outstanding float of the IPO. Also, by putting the bridge units back into the hands of Stratton, Lavigne gave the firm more IPO stock to later resell to its customers at artificially inflated prices.

Lavigne earned a stream of risk-free profits totaling over $7.7 million in return for his participation in the enterprises. A secret agreement between Lavigne and Stratton's principal provided that the two would evenly split the after-tax profits from Lavigne's trading.

The Commission acknowledges the assistance of the United States Attorney's Office for the Eastern District of New York in this matter.