U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19233 / May 20, 2005
Accounting and Auditing Enforcement
Release No. 2248 / May 20, 2005
Securities and Exchange Commission v. M&A West, Inc., et al., Civil Action No. 01-3376 VRW (Northern District of California)
On April 27, 2005, United States District Judge Vaughn R. Walker granted the Securities and Exchange Commission's motion for summary judgment against F. Thomas Eck, III, and ordered Eck to pay $550,000 in civil monetary penalties for his role in a case involving a "pump and dump" scheme. According to the Court's order, Eck and others devised a scheme to distribute to the public securities issued by companies controlled by M&A West. Through a series of transactions, Eck and others initially sold the companies' securities to various nominees that Eck and others controlled. Then, after creating artificial investor demand by trading among the nominees, the nominees sold the securities to the public. Eck and the others thereby effected unregistered distributions of the securities to the public. As a further result of their scheme, M&A West's financial statements were falsified.
Based on the Commission's unopposed motion, which relied upon Eck's plea agreement in the related criminal securities fraud case, United States v. Eck, No. CR-01-325 VRW (N.D. Cal.), the Court found Eck liable for: aiding and abetting securities fraud in violation of Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"), and Rule 10b-5; the unregistered sale and distribution of securities in violation of Section 5(a) and 5(c) of the Securities Act of 1933 ("Securities Act"); aiding and abetting the filing of false reports in violation of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13; falsifying books and records in violation of Section 13(b)(5) of the Exchange Act and Rule 13b2-1; aiding and abetting the failure to keep accurate books, records and accounts, and internal accounting controls, in violation Section 13(b)(2) of the Exchange Act; and aiding and abetting the making of false representations to auditors, in violation of Rule 13b2-2 under the Exchange Act. The Court also enjoined Eck against future violations of each of these provisions.
The Commission filed this action in 2001 against M&A West, Eck, and four other individuals, alleging fraud against the company, Eck, and three other defendants, and the unregistered sale of securities against the company, Eck, and three other defendants. The Commission continues to litigate its case against each of the other defendants.
Related Litigation Release No. 17118