U.S. Securities and Exchange Commission
LITIGATION Release No. 17192 / October 16, 2001
Securities and Exchange Commission v. John Westergaard, et al., U.S. District Court for the Southern District of New York (Civil Action No. 00-9776) (DAB)
SEC SETTLES INTERNET TOUTING CASE AGAINST JOHN WESTERGAARD
On October 11, 2001, the Honorable Deborah A. Batts entered a Final Judgment by consent concluding the Securities and Exchange Commission's litigation against John Westergaard. The Commission's complaint, filed on December 27, 2000, alleged that Westergaard and his companies, Westergaard.com, Inc. and Westergaard Broadcasting Network.com, Inc., violated Section 17(b) of the Securities Act by failing to fully disclose the compensation they received to promote issuers. The complaint further alleged that John Westergaard violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder by falsely claiming his Internet site provided "independent" analysis.
According to the complaint, John Westergaard and his companies were promoting issuers on web pages called "cyberstations," in press releases describing the company's coverage of issuers on the web site, and in Internet radio-broadcast interviews of officers of issuers. The complaint alleged that the press releases and Internet radio broadcasts referenced the web site, but failed to disclose that issuers paid Westergaard.com to promote their securities. It also alleged that the web site itself failed to identify the amount of compensation issuers paid.
Without admitting or denying the Commission's allegations, Westergaard consented to the entry of a permanent injunction against future violations of Section 17(b) of the Securities Act. The Court did not impose a civil penalty on Westergaard based on his sworn Statement of Financial Condition. Westergaard.com, Inc. and Westergaard Broadcasting Network, Inc. previously settled the charges against them by consenting, without admitting or denying the Commission's allegations, to the entry of an order permanently enjoining them from violating Section 17(b) of the Securities Act. See Lit. Rel. 16842 (December 27, 2000).