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U.S. Securities and Exchange Commission

Litigation Release No. 18244 / July 23, 2003

Securities and Exchange Commission v. Paul A. Spray, Thomas E. Loyd, Marc Barhonovich, et al., Case No. 8:02-CV-1613-T26EAJ (M.D. Fla., filed September 5, 2002)

Judge Grants Permanent Injunctions Against Tampa And Houston-Based Newsletters Writers To Halt Alleged Fraud; Denies SEC's Request For Preliminary Injunction Against Tampa Investor Relations Consultant

The Securities and Exchange Commission (SEC) announced that a federal district court judge in Tampa, Florida has granted the SEC's request for default permanent injunctions against two newsletter writers in connection with their stock touting scheme. The judge had previously denied the Commission's request for a preliminary injunction against a third defendant in the case and his company.

On September 5, 2002, the SEC filed a complaint against the newsletter writers, Paul A. Spray and Thomas Loyd, and companies in which they were principals, alleging that they violated Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder in connection with the preparation and distribution of several fraudulent newsletters touting thinly traded stocks of public companies whose shares are quoted on the Over-the-Counter Bulletin Board.

U.S. District Judge Richard A. Lazzara found that the actions of Spray and Loyd violated Section 10(b) of the Exchange Act and Rule 10b-5, which prohibit fraud in the purchase or sale of securities. He enjoined them from future violations, and also permanently barred Loyd and Spray from future participation in the offering of penny stocks.

The SEC also named Tampa investor relations consultant Marc Barhonovich and his company, Equity Advisors, Inc., as defendants in the complaint. On September 26, 2002, Judge Lazzara denied the SEC's request for a preliminary injunction against Barhonovich and Equity Advisors. The judge subsequently set trial against Barhonovich and Equity Advisors on the SEC's request for permanent injunctions for February 2004.

For previous releases on this case, see Litigation Release No. 17721, Sept. 11, 2002.



Modified: 07/23/2003