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Litigation Release No. 19317 / July 29, 2005

Securities and Exchange Commission v. Lipkin, et al., Civil Action No. 99-7357 (U.S.D.C. E.D.N.Y.)


On July 25, 2005, a jury in Brooklyn, New York, found that defendants Michael V. Lipkin (Lipkin) and Joshua Shainberg (Shainberg), both associated with the broker-dealer Securities Planners, Inc., violated the antifraud provisions of the federal securities laws for receiving undisclosed stock kickbacks, and that Lipkin also violated the antifraud provisions by making material misrepresentations to brokerage customers. The jury reached its verdict after a two-week trial in the United States District Court for the Eastern District of New York before Magistrate Judge Viktor V. Pohorelsky. The jury found the third defendant, Robert Shatles (Shatles), not liable on a similar charge of receiving undisclosed kickback payments. Shatles was associated with another broker-dealer named S.D. Cohn.

The Commission's Amended Complaint, dated November 15, 2002, charged that all three defendants violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5, in connection with their receipt of undisclosed kickbacks, and that Lipkin violated the antifraud provisions by making material false representations to brokerage customers.

The evidence at trial demonstrated that Shainberg and Lipkin were branch office principals of Securities Planners, which is now defunct. The jury found that both Shainberg and Lipkin received undisclosed shares of stock issued by a company called Alter Sales (subsequently known as ICIS Management Group) in return for recommending that stock to customers of Securities Planners. The evidence at trial demonstrated that those undisclosed kickback shares were sold from accounts for Shainberg's and Lipkin's benefit, and the proceeds from those accounts were sent to a bank account in the Bahamas. Ultimately, those proceeds were returned to the United States to persons and entities associated with Shainberg and Lipkin. The jury also found Lipkin liable for participating in a scheme to defraud investors who purchased Alter Sales securities. The jury found that Lipkin (1) knew or recklessly disregarded that Alter Sales securities were not a sound investment, (2) knew that brokers under his supervision were making false and misleading statements to their customers to the effect that Alter Sales securities were a good or sound investment, and (3) participated in making those false statements to customers.

The Court will determine at a later date the appropriate relief and sanctions against Lipkin and Shainberg. The Commission is seeking orders imposing permanent injunctions, disgorgement plus prejudgment interest, civil monetary penalties, and such other relief as the Court deems appropriate against Lipkin and Shainberg.

For additional information, see Litigation Release numbers 16349, and 19053.


Modified: 08/01/2005