SEC v. John W. Surgent; and Victor Lessinger, No. LR-19390, Southern District of Florida (Sept. 23, 2005) — Press Release
raw: John W. Surgent, et al.
John W. Surgent, et al., No. LR-19390 (Sept. 23, 2005)
Victor Lessinger, former president of Preferred Securities Group, was fined $20,000 and permanently barred from penny stock activities after consenting to an SEC judgment for failing to supervise a boiler room operation that defrauded investors through false statements and undisclosed penny stock sales of Orex Gold Mines Corporation.
Victor Lessinger, former president of Preferred Securities Group, was charged by the SEC with violating Section 10(b) and Rule 10b-5 of the Securities Exchange Act, Section 15(g) and related penny stock disclosure rules, and NASD Rule 3010 for failing to supervise. The SEC alleged he approved illegal solicitation of Orex Gold Mines Corporation stock despite internal prohibitions, enabling a boiler room at the Pompano Beach branch that made false statements and omitted required disclosures to investors. Without admitting or denying the allegations, Lessinger consented to a final judgment imposing a $20,000 civil penalty, a permanent ban from participating in penny stock offerings, and a two-year bar from supervisory roles at broker-dealers.
Victor Lessinger, former president of Preferred Securities Group, was held accountable by the SEC for failing to supervise a fraudulent boiler room operation at the firm’s Pompano Beach branch, which he personally approved despite internal policies prohibiting penny stock solicitations. The branch engaged in widespread securities fraud by making false and misleading statements about Orex Gold Mines Corporation, failing to provide mandatory penny stock disclosures, and manipulating investors through unregulated sales practices. The SEC charged Lessinger under Section 20(a) of the Exchange Act as a control person for violations of Sections 10(b), 15(g), and Rules 10b-5, 15g-2, 15g-4, and 15g-5, as well as NASD Rule 3010 for inadequate supervision. Without admitting or denying the allegations, Lessinger consented to a final judgment that permanently enjoined him from future securities law violations and barred him from participating in any penny stock offerings. He was also ordered to pay a $20,000 civil penalty. In a related administrative proceeding, he was barred from holding any supervisory position at a broker-dealer for two years, with the right to reapply after that period. The case underscored the SEC’s focus on holding senior managers responsible for systemic fraud enabled by their failure to enforce compliance.
Extracted insights
- $20K $20,000 $10K–$100K
- organization The Commission
- The Commission announced final judgment against Victor Lessinger
- Honorable James I. Cohn entered final judgment by consent against Victor Lessinger
- Victor Lessinger was former president Preferred Securities Group
- SEC obtains final judgment against president of broker-dealer
- SEC v. John W. Surgent, et al.
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.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.