U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19390 / September 23, 2005
SECURITIES AND EXCHANGE COMMISSION v. JOHN W. SURGENT, ET AL., Civil Action No. 04-60493 -CIV (S.D. Fla.) (JIC)
SEC OBTAINS FINAL JUDGMENT AGAINST PRESIDENT OF BROKER-DEALER
The Commission announced that on September 7, 2005, the Honorable James I. Cohn, United States District Judge for the Southern District of Florida, entered a final judgment by consent against Victor Lessinger, former president of Preferred Securities Group, in SEC v. John Surgent, et al., Civil Action No. 04-60493 -CIV (S.D. Fla.) (JIC). The judgment enjoins Lessinger from future violations of the antifraud provisions of the federal securities laws and the failure to supervise provisions of NASD Inc. ("NASD"), and from aiding and abetting future violations of the penny stock disclosure provisions of the federal securities laws. The judgment also orders Lessinger to pay a civil penalty of $20,000 and permanently bars him from participating in any penny stock offerings. Lessinger consented to entry of the final judgment without admitting or denying the allegations in the Commission's complaint.
In its complaint, filed on April 16, 2004, the Commission alleged, among other things, that in March 1999, Lessinger opened Preferred's Pompano Beach branch office and -- despite Preferred's prohibition against soliciting transactions in penny stocks -- approved the Pompano Beach branch office's request to solicit transactions in the securities of Orex Gold Mines Corporation. The complaint alleged that Preferred's Pompano Beach branch office operated as a classic boiler room with no meaningful supervision or controls imposed by Lessinger. The Commission's complaint further alleged that Preferred's brokers engaged in various sales practice abuses while selling Orex stock, made false and misleading statements about Orex, failed to make the required penny stock disclosures to customers concerning Orex, and otherwise engaged in a variety of conduct which operated as a fraud and deceit on investors. See Litigation Release No. 18669 (April 19, 2004).
As a result of the conduct described in the complaint, the Commission charged Lessinger with violating NASD Conduct Rule 3010, and, based on his liability as a control person pursuant to Section 20(a) of the Securities Exchange Act of 1934 ("Exchange Act"), for violations by certain co-defendants of Exchange Act Sections 10(b) and 15(g) and Exchange Act Rules 10b-5, 15g-2, 15g-4 and 15g-5.
The final judgment permanently enjoins Lessinger from violating the foregoing provisions of the federal securities laws and NASD Conduct Rules and permanently bars him from participating in any penny stock offerings. The final judgment also orders Lessinger to pay $20,000 in civil penalties. In a related administrative proceeding, Lessinger consented to the institution of a Commission Order-without admitting or denying the findings therein-barring him from association in a supervisory capacity with any broker or dealer, with the right to reapply for association after two years.