Footwear Designer Steve Madden Settles SEC Fraud Charges
FOR IMMEDIATE RELEASE
Madden Barred for Seven Years From Serving as Officer or Director of Any Public Company; Will Pay $7.8 Million in Disgorgement, Interest and Penalties; Settlement Includes New Insider Trading Charges
Washington, D.C., May 23, 2001 The Securities and Exchange Commission today announced a multi-part settlement of securities fraud charges against Steven Madden, the Chief Executive Officer of Steven Madden, Ltd. ("SHOO"). The settlement encompasses market manipulation charges that the Commission filed against Madden in June 2000, as well as new insider trading charges filed today. The insider trading case is based upon Madden's sale of 100,000 shares of SHOO stock on May 31, 2000, when he was aware that he would be indicted or otherwise criminally charged in the manipulation case.
Under today's settlements, which Madden has entered without admitting or denying the Commission's allegations, Madden has agreed to the following relief:
June 2000 Manipulation Case
In its Complaint filed June 20, 2000, the Commission alleged as follows:
From 1991 through 1997, Madden was a key participant in a series of manipulations orchestrated by Stratton Oakmont, Inc. and Monroe Parker Securities, Inc. Both firms were quintessential "boiler rooms" and the manipulations followed a standard formula. Stratton and Monroe gained control over the float of each stock by issuing allocations of IPO stock to persons with whom Stratton and Monroe had entered into secret agreements to serve as "flippers." The flippers received their stock with the understanding that they would sell the stock back to Stratton or Monroe at pre-arranged prices once trading had commenced in the aftermarket. Stratton and Monroe would then reap huge profits by selling the stock to their own customers at artificially inflated prices created by the use of high-pressure sales tactics.
In each of 22 manipulations, Madden served as a "flipper," sold his stock back to Stratton and Monroe and retained an agreed-upon profit for the transaction. Stratton also conducted the IPO for SHOO in December 1993. Stratton, with Madden's knowledge and participation, manipulated this IPO as well.
Newly Filed Insider Trading Case
The Commission's new Complaint filed today alleges:
The Commission acknowledges the assistance of the United States Attorney's Offices for the Eastern District of New York and the Southern District of New York in this matter.
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