SEC v. Competitive Technologies, Inc.; Chauncey D. Steele; John R. Glushko; Thomas C. Kocherhans; Richard A. Kwak; Sheldon A. Strauss, et al., District of Connecticut (Aug. 11, 2004) — Complaint

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
____________________________________________
)
SECURITIES AND EXCHANGE COMMISSION,)
)
Plaintiff,)
)
v.)Civil Action No. 
)
COMPETITIVE TECHNOLOGIES, INC.,)August 11, 2004
CHAUNCEY D. STEELE,)
JOHN R. GLUSHKO, )
THOMAS C. KOCHERHANS,)
RICHARD A. KWAK,)
SHELDON A. STRAUSS,)
STEPHEN J. WILSON and)
FRANK R. McPIKE,)
)
Defendants.)
____________________________________________)
COMPLAINT
Plaintiff Securities and Exchange Commission (the “Commission”) alleges the following
against defendants Competitive Technologies, Inc. (“CTT”), Chauncey D. Steele, John R.
Glushko, Thomas C. Kocherhans, Richard A. Kwak, Sheldon A. Strauss, Stephen J. Wilson, and
Frank R. McPike:
SUMMARY
1.This case involves a prolonged, multi-faceted scheme to manipulate and inflate
the price of CTT stock.  CTT is based in Connecticut, and its stock is listed on the American
Stock Exchange (“AMEX”).  The ringleader of the scheme was a broker operating out of the
Hyannis, Massachusetts office of Prudential Securities, Inc. (“Prudential”).  He was assisted by

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several brokers and former brokers across the country and also by CTT’s own chief executive
officer (“CEO”).  From at least July 1998 to June 2001, the defendants artificially raised and
maintained the price of CTT’s stock and created a false or misleading appearance with respect to
the market for CTT stock through manipulative practices such as placing buy orders at or near
the close of the market in order to inflate the reported closing price (a practice known as
“marking the close”), placing successive buy orders in small amounts at increasing prices (a
practice known as “painting the tape”), and using accounts they controlled or serviced to place
pre-arranged buy and sell orders in virtually identical amounts (a practice known as “matched
trades”) and to place other buy orders intended to minimize the negative impact on CTT’s price
from sales of the stock.  The defendants also used CTT’s own stock purchase plan to offset
selling pressure, place late-day orders, and maintain the stock price.  The defendants carried out
their scheme in an attempt to enrich themselves and avoid losses, including margin calls, by
artificially inflating and maintaining the price of CTT stock. 
2.Steele, a broker at Prudential in Hyannis, Massachusetts until he resigned in April
2001, orchestrated the scheme.  Steele exchanged thousands of telephone calls with the other
defendants in which they discussed the timing, sequence and quantity of manipulative trades. 
Steele also directed CTT’s CEO to make trades that furthered the manipulative scheme through
CTT’s stock repurchase plan.  Steele’s own trading in CTT stock for his customers was so
extensive that Prudential prohibited him from soliciting further purchases, and that his late-day
purchases of CTT stock were so numerous that Prudential prohibited him from placing buy
orders after 3:30 p.m.  Nevertheless, Steele continued to place buy orders after 3:30 p.m., asked
certain customers to buy CTT stock using accounts with other brokers he knew (including

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Glushko and Kwak), and falsely told Prudential that his customers’ purchases were unsolicited
(when in fact he routinely induced his customers to buy CTT stock).  
3.The other defendants actively participated in the manipulative scheme.  Glushko,
Kwak and Wilson were brokers at other firms who traded in CTT stock for themselves, their
families, and their customers.  Kocherhans and Strauss were former brokers who traded in CTT
stock for themselves and their families.  McPike, the CEO of CTT, was responsible for
implementing the company’s stock repurchase plan.
4.To carry out their scheme, the defendants placed hundreds of buy orders for CTT
stock between July 1998 and June 2001, usually timed in an attempt to maximize the positive
effect on the price, particularly the closing price, of CTT’s stock.  On many days, the defendants
“painted the tape,” that is, made multiple small purchases at arranged times and prices in order to
give the misleading appearance of investor interest in the stock.  Their favored “painting”
technique was “marking the close,” placing numerous orders at or near the close of the market in
order to inflate the reported closing price.  Their transactions accounted for more than 10% of all
trading volume in CTT stock during this period, more than 20% of the volume during nine
different months, and more than 70% of the volume on certain days.  Forty percent of their
purchases were made during the last hour of trading, more than 20% were made during the last
thirty minutes, and on nearly 40% of the trading days, one of the defendants placed the day’s last
trade, thus setting the closing price.  In addition, the defendants arranged numerous matched
trades involving accounts they owned or serviced in order to minimize the downward effect of
sell orders on the stock price.  The defendants’ systematic efforts were intended to – and did –
raise or at least maintain the closing price of CTT stock and create a false or misleading

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appearance with respect to the market for CTT stock.  Indeed, one of the defendants’ trades
established the closing price for CTT stock, or the stock closed at a price greater than or equal to
the defendants’ last trade, on nearly 60% of all trading days during the relevant period, on more
than 80% of the days when the defendants traded after 3:15 p.m., and on more than 90% of the
days when the defendants placed the last trade.  The scheme did not collapse until mid-2001,
when the defendants became aware that the Commission was investigating their activities.   
5.Through the activities alleged in this Complaint, (a) each of the defendants
violated Sections 9(a) and 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and
Rule 10b-5 thereunder; (b) Steele, Glushko, Kocherhans, Kwak, Strauss and Wilson violated
Section 17(a) of the Securities Act of 1933 (“Securities Act”); and (c) Steele aided and abetted
Prudential’s uncharged violations of the record-keeping provisions in Section 17(a) of the
Exchange Act and Rule 17a-3 thereunder.  Alternatively as to these defendants, Glushko,
Kocherhans, Kwak, Strauss, Wilson and McPike aided and abetted Steele’s violations of
Sections 9(a) and 10(b) of the Exchange Act and Rule 10b-5.
6.Accordingly, the Commission seeks:  (a) the entry of a permanent injunction
prohibiting the defendants from further violations of the relevant provisions of the Exchange Act,
the Securities Act, and the rules thereunder; (b) disgorgement of all ill-gotten gains, plus pre-
judgment interest, from each defendant except CTT; (c) the imposition of a civil penalty against
each defendant due to the egregious nature of their violations; and (d) the entry of an order
barring McPike from serving as an officer or director of a public company.

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JURISDICTION
7.The Commission seeks a permanent injunction and disgorgement of ill-gotten
gains pursuant to Section 20(b) of the Securities Act [15 U.S.C. §77t(b)] and Section 21(d)(1) of
the Exchange Act [15 U.S.C. §78u(d)(1)].  The Commission seeks the imposition of civil
penalties pursuant to Section 20(d) of the Securities Act [15 U.S.C. §77t(d)] and Section 21(d)(3)
of the Exchange Act [15 U.S.C. §78u(d)(3)].  The Commission seeks an officer and director bar
pursuant to Section 21(d)(2) of the Exchange Act [15 U.S.C. §78u(d)(2)].
8.This Court has jurisdiction over this action pursuant to Sections 20(d) and 22(a) of
the Securities Act [15 U.S.C. §§77t(d), 77v(a)] and Sections 21 and 27 of the Exchange Act [15
U.S.C. §§78u, 78aa].  CTT is based in this District, McPike resides in this District, and many of
the acts and transactions alleged in this Complaint occurred in this District.
9.In connection with the conduct described in this Complaint, the defendants
directly or indirectly made use of the mails or the means or instruments of transportation or
communication in interstate commerce.
DEFENDANTS
10.CTT is a Delaware corporation with its headquarters in Fairfield, Connecticut. 
CTT, which was formerly known as University Patents, assists its customers in developing recent
inventions in science and technology.  Its stock (ticker symbol CTT) is listed on the AMEX and
is registered with the Commission pursuant to Section 12(b) of the Exchange Act.
11.Steele, age 60, lives in Cohasset, Massachusetts.  From 1988 until he resigned in
April 2001, he was a broker at Prudential in Massachusetts.  He is currently playing professional
tennis on the Senior Men’s Tour.

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12.Glushko, age 74, lives in Las Vegas, Nevada.  He has been a broker at various
firms for many years.  Since 1995, he has been employed by Finance 500, Inc. (“Finance 500”) in
Nevada.
13.Kocherhans, age 47, lives in Orem, Utah.  From 1982 to 1995, he was a broker at
several brokerage firms.  In 1995, the National Association of Securities Dealers suspended him
for one year and ordered him to pay a $50,500 fine for marking the close in Wicat Systems stock. 
He is currently the director of marketing for a real estate firm in Utah.
14.Kwak, age 67, lives in Escondido, California.  He has been a broker at various
firms for many years.  Since March 1998, he has been employed by Morgan Stanley Dean Witter
(“Morgan Stanley”) in California.
15.Strauss, age 59, lives in Cleveland, Ohio.  From 1984 to 1987, he was a broker at
Shearson Lehman.  Since 1993, he has been the treasurer of a physical therapy firm in Ohio.
16.Wilson, age 59, lives in Pompano Beach, Florida.  From 1997 to August 2001, he
was a broker at Shamrock Partners (“Shamrock”).  He is currently the director of investment
banking for a financial services firm based in Massachusetts.
17.McPike, age 54, lives in Ridgefield, Connecticut.  From 1983 to July 2003, he
was the CFO of CTT.  In addition, from August 1998 to November 2000, he was the interim
CEO of CTT, and from November 2000 to June 2002, he was the company’s CEO.   
STATEMENT OF FACTS
General Description of the Scheme
18.CTT began operating in the early 1980s.  Within ten years it went public and
began acquiring the right to market various technologies that appeared poised for large profit

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(e.g., a test for homocysteine, recognized as a marker for cardiovascular disease).  Steele,
Glushko, Kocherhans, Kwak, Strauss and Wilson each learned about CTT during the 1980s and
became enthusiastic about the company’s potential for future profitability.  Long before 1998,
Steele had become acquainted with Glushko, Kocherhans, Kwak, Strauss and Wilson through
their common interest in CTT.  Because of their enthusiasm for the company’s prospects, Steele,
Glushko, Kocherhans, Kwak, Strauss and Wilson each bought substantial amounts of CTT stock
for himself and his family, and Steele, Glushko, Kwak and Wilson also induced many of their
brokerage customers to buy substantial amounts of CTT stock.  
19.Contrary to the defendants’ belief in CTT’s potential for spectacular growth, CTT
did not achieve financial success, and the price of CTT stock drifted downward.  In fact, after
trading at $7 to $10 per share early in 1998, CTT stock had fallen to $3 per share by October
1998, when CTT’s Board of Directors adopted a stock repurchase plan authorizing the company
to buy up to 250,000 shares and put McPike, the CFO and interim CEO, in charge of
implementing the plan.
20.With the price of CTT stock at $3 per share, the defendants faced the very real
prospect of significant personal and professional losses.  As a result, they engaged in the
manipulative scheme described below in an attempt to maintain an artificially high price of CTT
stock until such time as CTT would finally generate substantial profits, the stock price would
soar, and current CTT shareholders, including the defendants, their families and their customers,
would strike it rich.  In part because of the defendants’ manipulation, the price of CTT stock
stabilized in the fall of 1998 and rose significantly during the next two years, reaching $23 per
share in early 2000.  However, CTT’s continued failure to achieve sustained profitability caused

8
the price to fall to $6 per share later in 2000.  The defendants kept up their efforts to maintain
and increase the price of CTT stock until mid-2001, when they learned of the Commission’s
investigation.  In late summer 2001, after the manipulation had ended, the price of CTT stock fell
back to $3 per share. 
The Defendants’ Incentive to Manipulate the Price of CTT Stock
21.Steele bought and sold CTT stock for himself, his wife, his children, and his
father.  During the relevant period, Steele’s personal and family accounts held between 10,000
and 15,000 shares.  In addition, more than one hundred of Steele’s customers at Prudential traded
in CTT stock, generating approximately $50,000 in commissions for Steele.  (Nearly one-half of
Steele’s stock purchases for his customers involved CTT; no other stock accounted for more than
3% of the total.)  Steele, his family, and his customers collectively held about 10% to 12% of all
CTT’s outstanding shares, and trading in Steele’s personal, family and customer accounts
represented a significant percentage of all trading in CTT stock.  In sixteen different months
between July 1998 and December 2000, Steele’s trading in CTT stock comprised more than 5%
of the total volume, and in five of those months, his trading comprised more than 10% of the
volume. 
22.Glushko bought and sold CTT stock for himself, his wife, his daughter, and his
son-in-law.  The amount held in their accounts fluctuated during the relevant period, rising as
high as 9,200 shares in May 2000.  In addition, more than forty of Glushko’s customers at
Finance 500 traded in CTT stock, generating approximately $10,000 in commissions for
Glushko.

9
23.Kocherhans bought and sold CTT stock for himself, his wife and his father. 
During the relevant period, his personal and family accounts held between 8,000 and 50,000
shares.
 24.Kwak bought and sold CTT stock for himself and his wife.  During the relevant
period, the holdings in their joint account rose from 16,000 to 53,000 shares.  In addition, more
than 75% of Kwak’s customers at Morgan Stanley traded in CTT stock, generating
approximately $47,000 in commissions for Kwak.  Trading in Kwak’s marital and customer
accounts represented a significant percentage of all trading in CTT stock.  In ten different months
between July 1998 and June 2001, Kwak’s trading in CTT stock comprised more than 5% of the
total volume, and in three of those months, his trading comprised more than 10% of the volume.   
25.Strauss bought and sold CTT stock for himself, his mother, and his girlfriend,
often through accounts for which Steele or Glushko was the broker.  The amount held in their
accounts fluctuated during the relevant period, rising as high as 56,000 shares in April 2000. 
26.Wilson bought and sold CTT stock for himself, his wife, and his son.  Between
July 1998 and June 2000, he bought more than 100,000 shares, which were retained through
September 2001.  In addition, about five of Wilson’s customers at Shamrock traded in CTT
stock, generating approximately $25,000 in commissions for Wilson.  Trading in Wilson’s family
and customer accounts represented a significant percentage of all trading in CTT stock.  In four
different months between April 1999 and February 2001, Wilson’s trading in CTT stock
comprised more than 5% of the total volume, and in one of those months, his trading comprised
almost 10% of the volume. 

10
27.Steele, Glushko, Kocherhans, Kwak, Strauss and Wilson had a significant
financial interest in the performance of CTT stock due to their substantial personal and family
holdings and, in the case of Steele, Glushko, Kwak and Wilson, the substantial holdings of their
brokerage customers.  Indeed, from July 1998 to June 2001, the defendants collectively
accounted for more than 10% of all trading in CTT stock, more than 20% of the volume during
nine different months, and more than 70% of the volume on certain days
28.McPike also had a strong financial interest in the performance of CTT stock. 
Prior to November 2000, he held the title of interim CEO and hoped to be named permanent
CEO, and he believed that increasing the price of CTT stock would help him to achieve that goal. 
Also, he received 100,000 stock options in December 1999, half of which would vest nine years
sooner if CTT’s stock price rose to specified levels.
The Defendants’ Use of Late-Day
Purchases to “Mark the Close”
Summary
29.The principal focus of the defendants’ manipulative scheme was an attempt to
“mark the close” – that is, the placing of buy orders at or near the close of trading in order to
raise or maintain the reported closing price.  (The movement of the closing price is a common
measure of a stock’s performance, and the closing price is used by brokerage firms to value the
securities in a customer’s account and to determine the need for margin calls.)  
30.More than 40% of the defendants’ purchases were placed after 3:00 p.m. – one
hour before the close of trading on AMEX.  More than 20% of their purchases were placed after
3:30 p.m. – the last thirty minutes of trading.  On many occasions, the defendants placed a series

11
of small late-day buy orders, often at incrementally rising prices.  Attached hereto as Exhibit A
is a table listing 25 examples of the defendants’ multiple late-day purchases.
31.The defendants placed so many late-day buy orders that one of them made the last
trade of the day – the trade which determined the closing price – on nearly 40% of the trading
days from July 1998 to June 2001 (about 300 days).  As a result, the defendants’ late-day trading
had the effect of raising the closing price or at least preventing it from dropping.  Indeed, one of
the defendants’ trades established the closing price for CTT stock, or the stock closed at a price
greater than or equal to the defendants’ last trade, on nearly 60% of all trading days during the
relevant period, on more than 80% of the days when the defendants traded after 3:15 p.m., and on
more than 90% of the days when the defendants placed the last trade. 
Steele
32.Steele placed more than 2,200 orders to buy CTT stock for himself, his family,
and his customers at Prudential between July 1998 and October 2000.  More than 45% of
Steele’s buy orders were placed after 3:00 p.m., more than 20% were placed after 3:30 p.m., and
Steele placed the last order of the day on more than 20% of the trading days between July 1998
and October 2000. 
33.To obtain orders to enter at the end of the day, Steele telephoned his customers
almost daily, urging them to buy CTT.  For example, he called one of his principal customers
more than 2,000 times during the period.  On some occasions, he placed buy orders without even
obtaining the customer’s authorization.  For example, Steele told one customer that he had made
an unauthorized purchase because the customer’s account contained cash that was not being
used.  

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34.Steele divided many of his late-day purchases into multiple orders in a single
customer’s account.  For example, on March 30, 2000, he placed four orders to buy CTT stock
for one customer during the last fourteen minutes of trading (at 3:45, 3:48, 3:49 and 3:55 p.m.). 
The next day, he placed orders for the same customer at 3:45 and 3:47 p.m.  Attached hereto as
Exhibit B is a table identifying twelve days on which Steele placed multiple small buy orders for
his customers late in the trading day, usually at steadily increasing prices.
35.Steele’s late-day purchases had a direct impact on the price of CTT stock.  More
than 90% of his purchases after 3:15 p.m. either raised the price – because they were executed on
an “uptick” (i.e., a price higher than that of the last previous purchase) – or at least maintained
the price – because they were executed on a “zero plus tick” (i.e., a price equal to a high set by
the last previous purchase).
36.Steele’s late-day purchases also helped his customers to avoid margin calls.  For
example, on October 18, 2000, two of Steele’s customers received margin calls.  Steele traded
heavily during the next two days, accounting for 41% of all CTT volume on October 19 and 33%
of the volume on October 20, and on both days, he placed the last trade of the day.  As a result of
Steele’s efforts, the closing price rose from $8.00 on October 18 to $8.25 on October 20, and the
value of the customers’ accounts rose so much that they no longer needed to make any sales to
meet the margin requirements.  Attached hereto as Exhibit C is a table listing 25 occasions when
one of Steele’s customers received a margin call and Steele’s subsequent late-day purchases
raised the closing price enough to avert the margin call. 

13
The Other Defendants
37.Glushko placed more than 260 orders to buy CTT stock for himself, his family, or
his customers between July 1998 and June 2001.  Glushko and Steele made more than 1,500
phone calls to each other during this period, and Glushko placed many of his orders shortly after
a call with Steele.  More than 30% of Glushko’s orders were entered after 3:00 p.m., more than
20% were entered after 3:30 p.m., and Glushko placed the last trade of the day on more than
twenty occasions.  Approximately 75% of Glushko’s purchases after 3:15 p.m. raised or
maintained the price.
38.Kocherhans placed more than 180 orders to buy CTT stock for himself and his
family between July 1998 and June 2001.  Kocherhans and Steele made more than 2,500 calls to
each other during this period, and Kocherhans placed many of his orders shortly after a call with
Steele.  More than 40% of Kocherhans’s orders were entered or executed after 3:00 p.m., 30%
were entered or executed after 3:30 p.m., and Kocherhans placed the last trade of the day on
nearly twenty occasions.  He sometimes placed several small orders in rapid succession.  For
example, on January 30, 2001, he placed buy orders that were executed at 3:48, 3:49 and
3:59 p.m.  Approximately 90% of Kocherhans’s purchases after 3:15 p.m. raised or maintained
the stock price.
39.Kwak placed more than 190 orders to buy CTT stock for himself, his family, and
his customers between July 1998 and June 2001.  Kwak and Steele made more than 2,500 calls
to each other during this period, and Kwak placed many of his orders shortly after a call with
Steele.  More than 40% of Kwak’s orders were entered after 3:00 p.m., more than 30% were
entered after 3:30 p.m., and Kwak placed the last trade of the day on 55 occasions.  He

14
sometimes placed several small orders in rapid succession.  For example, on June 16, 2002, he
placed orders for one customer at 3:54, 3:56 and 3:58 p.m.  Approximately 90% of Kwak’s
purchases after 3:15 p.m. raised or maintained the stock price.  In fact, Kwak placed so many
late-day purchases that in March 2001, Morgan Stanley prohibited him from buying CTT stock
during the last fifteen minutes of trading. 
40.Strauss placed more than 150 orders to buy CTT stock for himself, his mother,
and his girlfriend between January 1999 and May 2001.  Strauss and Steele called each other
more than 1,300 times during this period, and Strauss placed many of his orders shortly after a
call with Steele.  More than 25% of Strauss’s orders were entered after 3:15 p.m., and nearly
20% were entered after 3:30 p.m.
41.Wilson placed more than 150 orders to buy CTT stock for himself, his family, and
his customers between July 1998 and February 2001.  Wilson and Steele called each other more
than 1,100 times during this period, and Wilson placed many of his orders shortly after a call
with Steele.  More than 30% of Wilson’s orders were entered or executed after 3:00 p.m., more
than 20% were entered or executed after 3:30 p.m., and Wilson placed the last trade of the day on
twelve occasions.  He sometimes placed several small orders in rapid succession.  For example,
on March 8, 2000, he placed orders that were executed at 3:57 and 3:59 p.m.  Approximately
75% of Wilson’s purchases after 3:15 p.m. raised or maintained the stock price. 
42.McPike placed more than 250 orders to buy CTT stock for the repurchase plan
between October 1998 and March 2001.  McPike placed virtually no orders after 3:30 p.m.
because CTT wanted to invoke the safe harbor in Rule 10b-18 under the Exchange Act, which
limits an issuer’s potential liability for market manipulation if its stock repurchases are made

15
before the last thirty minutes of trading (and if certain other conditions are met).  However,
Steele repeatedly urged McPike to place an order shortly before the 3:30 p.m. deadline, and
McPike frequently did so.  More than 33% of CTT’s repurchases were executed after 3:00 p.m.,
more than 20% were executed at or after 3:15 p.m., and CTT placed the last trade of the day on
four occasions.
The Defendants’ Use of Offsetting Buy and Sell Orders
43.Another focus of the defendants’ manipulative scheme was an attempt to
minimize any negative impact on CTT’s price resulting from pending or anticipated sell orders
by arranging for offsetting purchases.  Sometimes the defendants made the purchases late in the
day after they had determined how many sales were pending or anticipated.  Sometimes the
defendants arranged matching purchases and sales beforehand and placed both sides of the
transaction at the same time.
44.Steele placed many of the offsetting trades by himself.  He routinely tried to
discourage his customers from selling their CTT stock, usually by claiming that some sort of
good news was just about to boost the stock price, and on a few occasions, he simply refused to
execute a customer’s sell order.  When those tactics failed, or when a customer was forced to sell
in order to meet a margin call, Steele often induced one of his other customers to place an
offsetting buy order.  In many instances, Steele then placed the matched buy and sell orders at the
same time.  Attached hereto as Exhibit D is a table listing 64 matched trades involving Steele’s
customers.  Glushko and Kwak also arranged matched trades involving their own customers. 
Attached hereto as Exhibit E is a table listing certain matched trades by Glushko and Kwak.

16
45.On other occasions involving pending or anticipated sell orders, Steele lined up
offsetting buy orders through the other defendants.  For example, on December 1, 2000, Steele
made more than 100 phone calls to the other defendants, and his efforts resulted in several
matched trades involving customers of Glushko, Kwak and Wilson, plus CTT through the
repurchase plan.  Attached hereto as Exhibit F is a table listing the phone calls and trading on
December 1, 2000. 
46.The largest matched trade was put together on late May 2000 because one of
Steele’s customers needed to sell 75,000 shares and several of his other customers also wanted to
sell.  To minimize the drop in price which such a large sale would almost certainly have caused,
Steele and several of the other defendants lined up offsetting buy orders.  One of Steele’s
customers bought 7,300 shares.  Several of Kwak’s customers bought 13,700 shares.  Wilson’s
firm (Shamrock) bought 25,000 shares in its own trading account, and one of the firm’s
customers bought 20,000 shares.  One of Steele’s acquaintances bought 20,000 shares.  The
transaction was executed on June 1, 2000, as 91,000 shares were traded at $10 1/16 per share. 
Since the price had previously been $11 per share, the defendants were very successful in
limiting the price impact of the large sale to less than $1 per share.
47.Overall, Steele arranged at least twenty matched trades between his customers and
customers of Glushko, Kwak and Wilson.  In each instance, the sell orders and the offsetting buy
orders were entered after a series of phone calls between Steele and the other brokers.  Attached
hereto as Exhibit G is a table listing thirteen of these matched trades and the phone calls which
preceded them.

17
48.Steele also arranged offsetting buy orders from CTT through the repurchase plan. 
Steele made almost 3,000 calls to McPike from October 1998 to March 2001, consistently urging
him to offset selling pressure by placing a buy order for CTT.  McPike’s secretary wrote more
than 500 message slips about Steele’s calls, and many of them identified the specific number of
shares he wanted CTT to buy and/or the specific price he wanted CTT to pay.  McPike frequently
complied with Steele’s requests.  For example, on October 11, 2000, Steele left a message asking
McPike to place an order at $8 3/4, and less than an hour later, CTT bought 300 shares at $8 3/4. 
Similarly, on November 15, 2000, Steele left a message asking McPike to buy 600 shares at
$7 3/4, and less than an hour later, CTT bought 600 shares at $7 3/4.  Less than ten minutes after
CTT’s order was executed, Steele left a second message asking McPike to buy 500 shares at
$7 7/8, and twenty minutes later, CTT bought 500 shares at $7 7/8.
49.Overall, McPike and Steele called each other on more than 100 of the 120 days on
which CTT repurchased its stock.  More than 75% of CTT’s repurchases were entered within one
hour after a call from Steele, and more than 50% were entered within ten minutes after such a
call.  Attached hereto as Exhibit H is a table listing sixteen occasions on which McPike placed
buy orders shortly after specific requests from Steele.
50.In addition, McPike caused CTT to place buy orders as part of matched trades
with other defendants.  The three occasions on which CTT bought more than 2,500 shares at one
time all involved matched trades with the other brokers.  Attached hereto as Exhibit I is a table
listing twelve matched trades involving the CTT repurchase plan.

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FIRST CLAIM FOR RELIEF
(Violations of Section 9(a) of the Exchange Act by All Defendants)
51.The Commission repeats and realleges paragraphs 1 through 50 above.
52.Section 9(a) of the Exchange Act [15 U.S.C. §78i(a)] makes it unlawful for any
person, directly or indirectly, by the use of the mails or any means or instrumentality of interstate
commerce, or of any facility of any national securities exchange:  (1) to enter an order or orders
for the purchase or sale of a security registered on a national securities exchange with the
knowledge that an order of substantially the same size, at substantially the same time and at
substantially the same price, for the sale or purchase of such security, has been or will be entered
by or for the same or different parties, for the purpose of creating a false or misleading
appearance of active trading in such security or a false or misleading appearance with respect to
the market for such security; or (2) to effect, alone or with one or more other persons, a series of
transactions in any security registered on a national securities exchange creating actual or
apparent active trading in such security, or raising or depressing the price of such security, for the
purpose of inducing the purchase or sale of such security by others.
53.As set forth above and in the attached Exhibits, defendants Steele, Glushko,
Kocherhans, Kwak, Strauss, Wilson and McPike each placed numerous late-day buy orders for
CTT stock, including multiple successive small orders, in order to raise or maintain the closing
price of CTT stock at an artificially high level.  In addition, Steele, Glushko, Kwak, Wilson and
McPike arranged numerous matching buy orders for CTT stock for the purpose of offsetting
pending or anticipated sell orders, creating a false or misleading appearance with respect to the
market for CTT stock, and inducing others to purchase CTT stock.  McPike’s conduct and intent
as CEO of CTT can be imputed to defendant CTT. 

19
54.As a result, the defendants violated Section 9(a) of the Exchange Act, and their
violations involved fraud, deceit, or deliberate or reckless disregard of regulatory requirements
and resulted in substantial losses or significant risk of substantial losses to other persons, within
the meaning of Section 21(d)(3) of the Exchange Act [15 U.S.C. §78u(d)(3)].
SECOND CLAIM FOR RELIEF
(Violations of Section 10(b) of the Exchange Act and Rule 10b-5 by All Defendants)
55.The Commission repeats and realleges paragraphs 1 through 54 above.
56.Section 10(b) of the Exchange Act [15 U.S.C. §78j(b)] and Rule 10b-5 thereunder
[17 C.F.R. §240.10b-5] make it unlawful for any person, directly or indirectly, acting
intentionally, knowingly or recklessly, by the use of the means or instrumentalities of interstate
commerce or of the mails, in connection with the purchase or sale of securities:  (1) to employ
any device, scheme or artifice to defraud; (2) to make any untrue statement of material fact or
omit to state a material fact necessary to make the statements made, in the light of the
circumstances under which they were made, not misleading; or (3) to engage in any act, practice
or course of business which operates as a fraud or deceit upon any person.
57.As set forth above and in the attached Exhibits, defendants Steele, Glushko,
Kocherhans, Kwak, Strauss, Wilson and McPike each placed numerous late-day buy orders for
CTT stock, including multiple successive small orders, in order to raise or maintain the closing
price of CTT stock at an artificially high level.  In addition, Steele, Glushko, Kwak, Wilson and
McPike placed numerous matching buy orders for CTT stock for the purpose of offsetting
pending or anticipated sell orders, creating a false or misleading appearance with respect to the

20
market for CTT stock, and inducing others to purchase CTT stock.  McPike’s conduct and intent
as CEO of CTT can be imputed to defendant CTT. 
58.As a result, the defendants violated Section 10(b) of the Exchange Act and Rule
10b-5 thereunder, and their violations involved fraud, deceit, or deliberate or reckless disregard
of regulatory requirements and resulted in substantial losses or significant risk of substantial
losses to other persons, within the meaning of Section 21(d)(3) of the Exchange Act [15 U.S.C.
§78u(d)(3)].
THIRD CLAIM FOR RELIEF
(Violations of Section 17(a) of the Securities Act by
Defendants Steele, Glushko, Kocherhans, Kwak, Strauss and Wilson)
59.The Commission repeats and realleges paragraphs 1 through 58 above.
60.Section 17(a) of the Securities Act [15 U.S.C. §77q(a)] makes it unlawful for any
person, in the offer or sale of any securities, by the use of any means or instruments of
transportation or communication in interstate commerce or by use of the mails, directly or
indirectly:  (1) to employ any device, scheme or artifice to defraud; (2) to obtain money or
property by means of any untrue statement of material fact or any omission to state a material fact
necessary to make the statements made, in light of the circumstances under which they were
made, not misleading; or (3) to engage in any transaction, practice, or course of business which
operates or would operate as a fraud or deceit upon the purchaser.
61.As set forth above and in the attached Exhibits, defendants Steele, Glushko,
Kocherhans, Kwak, Strauss and Wilson placed sell orders for themselves, their families and, in
the case of Steele, Glushko, Kwak and Wilson, their customers during the relevant period.  Some
of the sell orders were placed in connection with matching purchase orders which these

21
defendants arranged for the purpose of creating a false or misleading appearance with respect to
the market for CTT stock, and all of the sell orders were placed while the price of CTT stock was
artificially inflated due to the defendants’ ongoing pattern of placing late-day purchases in an
attempt to raise or maintain the closing price of CTT stock at an artificially high level. 
62.As a result, defendants Steele, Glushko, Kocherhans, Kwak, Strauss and Wilson
violated Section 17(a) of the Securities Act, and their violations involved fraud, deceit, or
deliberate or reckless disregard of regulatory requirements and resulted in substantial losses or
significant risk of substantial losses to other persons, within the meaning of Section 20(d) of the
Securities Act [15 U.S.C. §77t(d)].
FOURTH CLAIM FOR RELIEF
(Aiding and Abetting Violations of Section 17(a)
of the Exchange Act and Rule 17a-3 by Steele)
63.The Commission repeats and realleges paragraphs 1 through 62 above.
64.Section 17(a) of the Exchange Act [15 U.S.C. §78q(a)] and Rule 17a-3 thereunder
[17 C.F.R. §240.17a-3] require a registered brokerage firm to make and keep certain books and
records, including accurate records of the securities trades which they place for their customers.
65.As set forth above and in the attached Exhibits, while Steele was a broker at
Prudential, he marked almost every order ticket for his customers’ purchases of CTT stock as
“unsolicited”, when in fact he had solicited almost all of the purchases.  As a long-time broker,
Steele knew that Prudential was required to keep accurate books and records of his securities
trading for his customers, and he knew that by falsely indicating that his customers’ purchases of
CTT stock were “unsolicited”, he was causing Prudential’s books and records to be inaccurate.

22
66.As a result, Prudential violated Section 17(a) of the Exchange Act and Rule 17a-3,
and Steele aided and abetted Prudential’s violations of those provisions.
FIFTH CLAIM FOR RELIEF
(Aiding and Abetting Steele’s Violations of Sections 9(a) and 10(b)
of the Exchange Act and Rule 10b-5 by
Glushko, Kocherhans, Kwak, Strauss, Wilson and McPike)
67.The Commission repeats and realleges paragraphs 1 through 66 above.
68.As set forth above and in the attached Exhibits, Steele arranged numerous
matching buy orders for CTT stock for the purpose of offsetting pending or anticipated sell
orders, creating a false or misleading appearance with respect to the market for CTT stock, and
inducing others to purchase CTT stock, and Steele placed sell orders for his customers in
connection with certain of matching purchase orders and at a time when the price of CTT stock
was artificially inflated due to his pattern of placing numerous late-day buy orders for CTT stock. 
Through this conduct, Steele violated Sections 9(a) and 10(b) of the Exchange Act and Rule 10b-
5 thereunder.
69.As set forth above and in the attached Exhibits, Glushko, Kocherhans, Kwak,
Strauss, Wilson and McPike participated in many of the matched trades for CTT stock and
placed numerous late-day buy orders which raised or maintained the price of CTT stock at an
artificially high level.  Glushko, Kocherhans, Kwak, Strauss, Wilson and McPike knew from
their hundreds of phone calls with Steele that he was attempting to influence the price of CTT
stock, and they knew that by participating in the matched trades and placing the late-day buy
orders, they were substantially assisting Steele in his efforts to influence the stock price.

23
70.As a result, and as an alternative to the First, Second and Third Claims for Relief
with respect to these defendants, Glushko, Kocherhans, Kwak, Strauss, Wilson and McPike
aided and abetted Steele’s violations of Sections 9(a) and 10(b) of the Exchange Act and Rule
10b-5.
PRAYER FOR RELIEF
WHEREFORE, the Commission requests that this Court:
A.Enter a permanent injunction restraining CTT, Steele, Glushko, Kocherhans,
Kwak, Strauss, Wilson and McPike, and each of their respective agents, servants, employees and
attorneys and those persons in active concert or participation with them who receive actual notice
of the injunction by personal service or otherwise, including facsimile transmission or overnight
delivery service, from directly or indirectly engaging in violations of:
1.Section 9(a) of the Exchange Act [15 U.S.C. §78i(a)];
 2.Section 10(b) of the Exchange Act [15 U.S.C. §78j(b)] and Rule 10b-5
thereunder [17 C.F.R. §240.10b-5];
3.as to Steele, Glushko, Kocherhans, Kwak, Strauss and Wilson only,
Section 17(a) of the Securities Act [15 U.S.C. §77q(a)]; and
4.as to Steele only, Section 17(a) of the Exchange Act [15 U.S.C. §78q(a)]
and Rule 17a-3 thereunder;
B.Order Steele, Glushko, Kocherhans, Kwak, Strauss, Wilson and McPike to
disgorge their ill-gotten gains, plus pre-judgment interest;
C.Order each defendant to pay an appropriate civil penalty pursuant to Section
21(d)(3) of the Exchange Act [15 U.S.C. §78u(d)(3)] and, as to Steele, Glushko, Kocherhans,
Kwak, Strauss and Wilson only, Section 20(d) of the Securities Act [15 U.S.C. §77t(d)];

24
D.Enter an order, pursuant to Section 21(d)(2) of the Exchange Act [15 U.S.C.
§78u(d)(2)], barring McPike from serving as an officer or director of any issuer required to file
reports with the Commission pursuant to Sections 12(b), 12(g) or 15(d) of the Exchange Act [15
U.S.C. §§78l(b), 78l(g), 78o(d)];
E.Retain jurisdiction over this action to implement and carry out the terms of all
orders and decrees that may be entered; and
F.Award such other and further relief as the Court deems just and proper.
Respectfully submitted,
/s/________________________________
Walter G. Ricciardi
District Administrator
Celia D. Moore (Mass. Bar No. 542136)
Deputy Assistant District Administrator
Frank C. Huntington (Fed. Bar No. CT-01850)
Senior Trial Counsel
Paul G. Block (Mass. Bar No. 551158)
Senior Enforcement Counsel
David H. London (Mass. Bar No. 638289)
Senior Enforcement Counsel
Attorneys for Plaintiff           
SECURITIES AND EXCHANGE COMMISSION
73 Tremont Street, 6th Floor      
Boston, MA  02108      
(617) 573-8960  direct (Huntington)
(617) 424-5940  fax

25
Local Counsel:
John B. Hughes (Fed. Bar No. CT-05289)
Assistant United States Attorney
Chief, Civil Division
United States Attorney=s Office
Connecticut Financial Center
157 Church Street, 23 Floor
rd
New Haven, CT  06510
(203) 821-3700
(203) 773-5373  fax
Dated:August 11, 2004

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT

____________________________________________
)

SECURITIES AND EXCHANGE COMMISSION, )
)

Plaintiff, )
)

v. ) Civil Action No. 
)

COMPETITIVE TECHNOLOGIES, INC., ) August 11, 2004
CHAUNCEY D. STEELE, )
JOHN R. GLUSHKO, )
THOMAS C. KOCHERHANS, )
RICHARD A. KWAK, )
SHELDON A. STRAUSS, )
STEPHEN J. WILSON and )
FRANK R. McPIKE, )

)
Defendants. )

____________________________________________ )

COMPLAINT

Plaintiff Securities and Exchange Commission (the “Commission”) alleges the following

against defendants Competitive Technologies, Inc. (“CTT”), Chauncey D. Steele, John R.

Glushko, Thomas C. Kocherhans, Richard A. Kwak, Sheldon A. Strauss, Stephen J. Wilson, and

Frank R. McPike:

SUMMARY

1. This case involves a prolonged, multi-faceted scheme to manipulate and inflate

the price of CTT stock.  CTT is based in Connecticut, and its stock is listed on the American

Stock Exchange (“AMEX”).  The ringleader of the scheme was a broker operating out of the

Hyannis, Massachusetts office of Prudential Securities, Inc. (“Prudential”).  He was assisted by



2

several brokers and former brokers across the country and also by CTT’s own chief executive

officer (“CEO”).  From at least July 1998 to June 2001, the defendants artificially raised and

maintained the price of CTT’s stock and created a false or misleading appearance with respect to

the market for CTT stock through manipulative practices such as placing buy orders at or near

the close of the market in order to inflate the reported closing price (a practice known as

“marking the close”), placing successive buy orders in small amounts at increasing prices (a

practice known as “painting the tape”), and using accounts they controlled or serviced to place

pre-arranged buy and sell orders in virtually identical amounts (a practice known as “matched

trades”) and to place other buy orders intended to minimize the negative impact on CTT’s price

from sales of the stock.  The defendants also used CTT’s own stock purchase plan to offset

selling pressure, place late-day orders, and maintain the stock price.  The defendants carried out

their scheme in an attempt to enrich themselves and avoid losses, including margin calls, by

artificially inflating and maintaining the price of CTT stock. 

2. Steele, a broker at Prudential in Hyannis, Massachusetts until he resigned in April

2001, orchestrated the scheme.  Steele exchanged thousands of telephone calls with the other

defendants in which they discussed the timing, sequence and quantity of manipulative trades. 

Steele also directed CTT’s CEO to make trades that furthered the manipulative scheme through

CTT’s stock repurchase plan.  Steele’s own trading in CTT stock for his customers was so

extensive that Prudential prohibited him from soliciting further purchases, and that his late-day

purchases of CTT stock were so numerous that Prudential prohibited him from placing buy

orders after 3:30 p.m.  Nevertheless, Steele continued to place buy orders after 3:30 p.m., asked

certain customers to buy CTT stock using accounts with other brokers he knew (including



3

Glushko and Kwak), and falsely told Prudential that his customers’ purchases were unsolicited

(when in fact he routinely induced his customers to buy CTT stock).  

3. The other defendants actively participated in the manipulative scheme.  Glushko,

Kwak and Wilson were brokers at other firms who traded in CTT stock for themselves, their

families, and their customers.  Kocherhans and Strauss were former brokers who traded in CTT

stock for themselves and their families.  McPike, the CEO of CTT, was responsible for

implementing the company’s stock repurchase plan.

4. To carry out their scheme, the defendants placed hundreds of buy orders for CTT

stock between July 1998 and June 2001, usually timed in an attempt to maximize the positive

effect on the price, particularly the closing price, of CTT’s stock.  On many days, the defendants

“painted the tape,” that is, made multiple small purchases at arranged times and prices in order to

give the misleading appearance of investor interest in the stock.  Their favored “painting”

technique was “marking the close,” placing numerous orders at or near the close of the market in

order to inflate the reported closing price.  Their transactions accounted for more than 10% of all

trading volume in CTT stock during this period, more than 20% of the volume during nine

different months, and more than 70% of the volume on certain days.  Forty percent of their

purchases were made during the last hour of trading, more than 20% were made during the last

thirty minutes, and on nearly 40% of the trading days, one of the defendants placed the day’s last

trade, thus setting the closing price.  In addition, the defendants arranged numerous matched

trades involving accounts they owned or serviced in order to minimize the downward effect of

sell orders on the stock price.  The defendants’ systematic efforts were intended to – and did –

raise or at least maintain the closing price of CTT stock and create a false or misleading



4

appearance with respect to the market for CTT stock.  Indeed, one of the defendants’ trades

established the closing price for CTT stock, or the stock closed at a price greater than or equal to

the defendants’ last trade, on nearly 60% of all trading days during the relevant period, on more

than 80% of the days when the defendants traded after 3:15 p.m., and on more than 90% of the

days when the defendants placed the last trade.  The scheme did not collapse until mid-2001,

when the defendants became aware that the Commission was investigating their activities.   

5. Through the activities alleged in this Complaint, (a) each of the defendants

violated Sections 9(a) and 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and

Rule 10b-5 thereunder; (b) Steele, Glushko, Kocherhans, Kwak, Strauss and Wilson violated

Section 17(a) of the Securities Act of 1933 (“Securities Act”); and (c) Steele aided and abetted

Prudential’s uncharged violations of the record-keeping provisions in Section 17(a) of the

Exchange Act and Rule 17a-3 thereunder.  Alternatively as to these defendants, Glushko,

Kocherhans, Kwak, Strauss, Wilson and McPike aided and abetted Steele’s violations of

Sections 9(a) and 10(b) of the Exchange Act and Rule 10b-5.

6. Accordingly, the Commission seeks:  (a) the entry of a permanent injunction

prohibiting the defendants from further violations of the relevant provisions of the Exchange Act,

the Securities Act, and the rules thereunder; (b) disgorgement of all ill-gotten gains, plus pre-

judgment interest, from each defendant except CTT; (c) the imposition of a civil penalty against

each defendant due to the egregious nature of their violations; and (d) the entry of an order

barring McPike from serving as an officer or director of a public company.



5

JURISDICTION

7. The Commission seeks a permanent injunction and disgorgement of ill-gotten

gains pursuant to Section 20(b) of the Securities Act [15 U.S.C. §77t(b)] and Section 21(d)(1) of

the Exchange Act [15 U.S.C. §78u(d)(1)].  The Commission seeks the imposition of civil

penalties pursuant to Section 20(d) of the Securities Act [15 U.S.C. §77t(d)] and Section 21(d)(3)

of the Exchange Act [15 U.S.C. §78u(d)(3)].  The Commission seeks an officer and director bar

pursuant to Section 21(d)(2) of the Exchange Act [15 U.S.C. §78u(d)(2)].

8. This Court has jurisdiction over this action pursuant to Sections 20(d) and 22(a) of

the Securities Act [15 U.S.C. §§77t(d), 77v(a)] and Sections 21 and 27 of the Exchange Act [15

U.S.C. §§78u, 78aa].  CTT is based in this District, McPike resides in this District, and many of

the acts and transactions alleged in this Complaint occurred in this District.

9. In connection with the conduct described in this Complaint, the defendants

directly or indirectly made use of the mails or the means or instruments of transportation or

communication in interstate commerce.

DEFENDANTS

10. CTT is a Delaware corporation with its headquarters in Fairfield, Connecticut. 

CTT, which was formerly known as University Patents, assists its customers in developing recent

inventions in science and technology.  Its stock (ticker symbol CTT) is listed on the AMEX and

is registered with the Commission pursuant to Section 12(b) of the Exchange Act.

11. Steele, age 60, lives in Cohasset, Massachusetts.  From 1988 until he resigned in

April 2001, he was a broker at Prudential in Massachusetts.  He is currently playing professional

tennis on the Senior Men’s Tour.



6

12. Glushko, age 74, lives in Las Vegas, Nevada.  He has been a broker at various

firms for many years.  Since 1995, he has been employed by Finance 500, Inc. (“Finance 500”) in

Nevada.

13. Kocherhans, age 47, lives in Orem, Utah.  From 1982 to 1995, he was a broker at

several brokerage firms.  In 1995, the National Association of Securities Dealers suspended him

for one year and ordered him to pay a $50,500 fine for marking the close in Wicat Systems stock. 

He is currently the director of marketing for a real estate firm in Utah.

14. Kwak, age 67, lives in Escondido, California.  He has been a broker at various

firms for many years.  Since March 1998, he has been employed by Morgan Stanley Dean Witter

(“Morgan Stanley”) in California.

15. Strauss, age 59, lives in Cleveland, Ohio.  From 1984 to 1987, he was a broker at

Shearson Lehman.  Since 1993, he has been the treasurer of a physical therapy firm in Ohio.

16. Wilson, age 59, lives in Pompano Beach, Florida.  From 1997 to August 2001, he

was a broker at Shamrock Partners (“Shamrock”).  He is currently the director of investment

banking for a financial services firm based in Massachusetts.

17. McPike, age 54, lives in Ridgefield, Connecticut.  From 1983 to July 2003, he

was the CFO of CTT.  In addition, from August 1998 to November 2000, he was the interim

CEO of CTT, and from November 2000 to June 2002, he was the company’s CEO.   

STATEMENT OF FACTS

General Description of the Scheme

18. CTT began operating in the early 1980s.  Within ten years it went public and

began acquiring the right to market various technologies that appeared poised for large profit



7

(e.g., a test for homocysteine, recognized as a marker for cardiovascular disease).  Steele,

Glushko, Kocherhans, Kwak, Strauss and Wilson each learned about CTT during the 1980s and

became enthusiastic about the company’s potential for future profitability.  Long before 1998,

Steele had become acquainted with Glushko, Kocherhans, Kwak, Strauss and Wilson through

their common interest in CTT.  Because of their enthusiasm for the company’s prospects, Steele,

Glushko, Kocherhans, Kwak, Strauss and Wilson each bought substantial amounts of CTT stock

for himself and his family, and Steele, Glushko, Kwak and Wilson also induced many of their

brokerage customers to buy substantial amounts of CTT stock.  

19. Contrary to the defendants’ belief in CTT’s potential for spectacular growth, CTT

did not achieve financial success, and the price of CTT stock drifted downward.  In fact, after

trading at $7 to $10 per share early in 1998, CTT stock had fallen to $3 per share by October

1998, when CTT’s Board of Directors adopted a stock repurchase plan authorizing the company

to buy up to 250,000 shares and put McPike, the CFO and interim CEO, in charge of

implementing the plan.

20. With the price of CTT stock at $3 per share, the defendants faced the very real

prospect of significant personal and professional losses.  As a result, they engaged in the

manipulative scheme described below in an attempt to maintain an artificially high price of CTT

stock until such time as CTT would finally generate substantial profits, the stock price would

soar, and current CTT shareholders, including the defendants, their families and their customers,

would strike it rich.  In part because of the defendants’ manipulation, the price of CTT stock

stabilized in the fall of 1998 and rose significantly during the next two years, reaching $23 per

share in early 2000.  However, CTT’s continued failure to achieve sustained profitability caused



8

the price to fall to $6 per share later in 2000.  The defendants kept up their efforts to maintain

and increase the price of CTT stock until mid-2001, when they learned of the Commission’s

investigation.  In late summer 2001, after the manipulation had ended, the price of CTT stock fell

back to $3 per share. 

The Defendants’ Incentive to Manipulate the Price of CTT Stock

21. Steele bought and sold CTT stock for himself, his wife, his children, and his

father.  During the relevant period, Steele’s personal and family accounts held between 10,000

and 15,000 shares.  In addition, more than one hundred of Steele’s customers at Prudential traded

in CTT stock, generating approximately $50,000 in commissions for Steele.  (Nearly one-half of

Steele’s stock purchases for his customers involved CTT; no other stock accounted for more than

3% of the total.)  Steele, his family, and his customers collectively held about 10% to 12% of all

CTT’s outstanding shares, and trading in Steele’s personal, family and customer accounts

represented a significant percentage of all trading in CTT stock.  In sixteen different months

between July 1998 and December 2000, Steele’s trading in CTT stock comprised more than 5%

of the total volume, and in five of those months, his trading comprised more than 10% of the

volume. 

22. Glushko bought and sold CTT stock for himself, his wife, his daughter, and his

son-in-law.  The amount held in their accounts fluctuated during the relevant period, rising as

high as 9,200 shares in May 2000.  In addition, more than forty of Glushko’s customers at

Finance 500 traded in CTT stock, generating approximately $10,000 in commissions for

Glushko.



9

23. Kocherhans bought and sold CTT stock for himself, his wife and his father. 

During the relevant period, his personal and family accounts held between 8,000 and 50,000

shares.

 24. Kwak bought and sold CTT stock for himself and his wife.  During the relevant

period, the holdings in their joint account rose from 16,000 to 53,000 shares.  In addition, more

than 75% of Kwak’s customers at Morgan Stanley traded in CTT stock, generating

approximately $47,000 in commissions for Kwak.  Trading in Kwak’s marital and customer

accounts represented a significant percentage of all trading in CTT stock.  In ten different months

between July 1998 and June 2001, Kwak’s trading in CTT stock comprised more than 5% of the

total volume, and in three of those months, his trading comprised more than 10% of the volume.   

25. Strauss bought and sold CTT stock for himself, his mother, and his girlfriend,

often through accounts for which Steele or Glushko was the broker.  The amount held in their

accounts fluctuated during the relevant period, rising as high as 56,000 shares in April 2000. 

26. Wilson bought and sold CTT stock for himself, his wife, and his son.  Between

July 1998 and June 2000, he bought more than 100,000 shares, which were retained through

September 2001.  In addition, about five of Wilson’s customers at Shamrock traded in CTT

stock, generating approximately $25,000 in commissions for Wilson.  Trading in Wilson’s family

and customer accounts represented a significant percentage of all trading in CTT stock.  In four

different months between April 1999 and February 2001, Wilson’s trading in CTT stock

comprised more than 5% of the total volume, and in one of those months, his trading comprised

almost 10% of the volume. 



10

27. Steele, Glushko, Kocherhans, Kwak, Strauss and Wilson had a significant

financial interest in the performance of CTT stock due to their substantial personal and family

holdings and, in the case of Steele, Glushko, Kwak and Wilson, the substantial holdings of their

brokerage customers.  Indeed, from July 1998 to June 2001, the defendants collectively

accounted for more than 10% of all trading in CTT stock, more than 20% of the volume during

nine different months, and more than 70% of the volume on certain days

28. McPike also had a strong financial interest in the performance of CTT stock. 

Prior to November 2000, he held the title of interim CEO and hoped to be named permanent

CEO, and he believed that increasing the price of CTT stock would help him to achieve that goal. 

Also, he received 100,000 stock options in December 1999, half of which would vest nine years

sooner if CTT’s stock price rose to specified levels.

The Defendants’ Use of Late-Day
Purchases to “Mark the Close”

Summary

29. The principal focus of the defendants’ manipulative scheme was an attempt to

“mark the close” – that is, the placing of buy orders at or near the close of trading in order to

raise or maintain the reported closing price.  (The movement of the closing price is a common

measure of a stock’s performance, and the closing price is used by brokerage firms to value the

securities in a customer’s account and to determine the need for margin calls.)  

30. More than 40% of the defendants’ purchases were placed after 3:00 p.m. – one

hour before the close of trading on AMEX.  More than 20% of their purchases were placed after

3:30 p.m. – the last thirty minutes of trading.  On many occasions, the defendants placed a series



11

of small late-day buy orders, often at incrementally rising prices.  Attached hereto as Exhibit A

is a table listing 25 examples of the defendants’ multiple late-day purchases.

31. The defendants placed so many late-day buy orders that one of them made the last

trade of the day – the trade which determined the closing price – on nearly 40% of the trading

days from July 1998 to June 2001 (about 300 days).  As a result, the defendants’ late-day trading

had the effect of raising the closing price or at least preventing it from dropping.  Indeed, one of

the defendants’ trades established the closing price for CTT stock, or the stock closed at a price

greater than or equal to the defendants’ last trade, on nearly 60% of all trading days during the

relevant period, on more than 80% of the days when the defendants traded after 3:15 p.m., and on

more than 90% of the days when the defendants placed the last trade. 

Steele

32. Steele placed more than 2,200 orders to buy CTT stock for himself, his family,

and his customers at Prudential between July 1998 and October 2000.  More than 45% of

Steele’s buy orders were placed after 3:00 p.m., more than 20% were placed after 3:30 p.m., and

Steele placed the last order of the day on more than 20% of the trading days between July 1998

and October 2000. 

33. To obtain orders to enter at the end of the day, Steele telephoned his customers

almost daily, urging them to buy CTT.  For example, he called one of his principal customers

more than 2,000 times during the period.  On some occasions, he placed buy orders without even

obtaining the customer’s authorization.  For example, Steele told one customer that he had made

an unauthorized purchase because the customer’s account contained cash that was not being

used.  



12

34. Steele divided many of his late-day purchases into multiple orders in a single

customer’s account.  For example, on March 30, 2000, he placed four orders to buy CTT stock

for one customer during the last fourteen minutes of trading (at 3:45, 3:48, 3:49 and 3:55 p.m.). 

The next day, he placed orders for the same customer at 3:45 and 3:47 p.m.  Attached hereto as

Exhibit B is a table identifying twelve days on which Steele placed multiple small buy orders for

his customers late in the trading day, usually at steadily increasing prices.

35. Steele’s late-day purchases had a direct impact on the price of CTT stock.  More

than 90% of his purchases after 3:15 p.m. either raised the price – because they were executed on

an “uptick” (i.e., a price higher than that of the last previous purchase) – or at least maintained

the price – because they were executed on a “zero plus tick” (i.e., a price equal to a high set by

the last previous purchase).

36. Steele’s late-day purchases also helped his customers to avoid margin calls.  For

example, on October 18, 2000, two of Steele’s customers received margin calls.  Steele traded

heavily during the next two days, accounting for 41% of all CTT volume on October 19 and 33%

of the volume on October 20, and on both days, he placed the last trade of the day.  As a result of

Steele’s efforts, the closing price rose from $8.00 on October 18 to $8.25 on October 20, and the

value of the customers’ accounts rose so much that they no longer needed to make any sales to

meet the margin requirements.  Attached hereto as Exhibit C is a table listing 25 occasions when

one of Steele’s customers received a margin call and Steele’s subsequent late-day purchases

raised the closing price enough to avert the margin call. 



13

The Other Defendants

37. Glushko placed more than 260 orders to buy CTT stock for himself, his family, or

his customers between July 1998 and June 2001.  Glushko and Steele made more than 1,500

phone calls to each other during this period, and Glushko placed many of his orders shortly after

a call with Steele.  More than 30% of Glushko’s orders were entered after 3:00 p.m., more than

20% were entered after 3:30 p.m., and Glushko placed the last trade of the day on more than

twenty occasions.  Approximately 75% of Glushko’s purchases after 3:15 p.m. raised or

maintained the price.

38. Kocherhans placed more than 180 orders to buy CTT stock for himself and his

family between July 1998 and June 2001.  Kocherhans and Steele made more than 2,500 calls to

each other during this period, and Kocherhans placed many of his orders shortly after a call with

Steele.  More than 40% of Kocherhans’s orders were entered or executed after 3:00 p.m., 30%

were entered or executed after 3:30 p.m., and Kocherhans placed the last trade of the day on

nearly twenty occasions.  He sometimes placed several small orders in rapid succession.  For

example, on January 30, 2001, he placed buy orders that were executed at 3:48, 3:49 and

3:59 p.m.  Approximately 90% of Kocherhans’s purchases after 3:15 p.m. raised or maintained

the stock price.

39. Kwak placed more than 190 orders to buy CTT stock for himself, his family, and

his customers between July 1998 and June 2001.  Kwak and Steele made more than 2,500 calls

to each other during this period, and Kwak placed many of his orders shortly after a call with

Steele.  More than 40% of Kwak’s orders were entered after 3:00 p.m., more than 30% were

entered after 3:30 p.m., and Kwak placed the last trade of the day on 55 occasions.  He



14

sometimes placed several small orders in rapid succession.  For example, on June 16, 2002, he

placed orders for one customer at 3:54, 3:56 and 3:58 p.m.  Approximately 90% of Kwak’s

purchases after 3:15 p.m. raised or maintained the stock price.  In fact, Kwak placed so many

late-day purchases that in March 2001, Morgan Stanley prohibited him from buying CTT stock

during the last fifteen minutes of trading. 

40. Strauss placed more than 150 orders to buy CTT stock for himself, his mother,

and his girlfriend between January 1999 and May 2001.  Strauss and Steele called each other

more than 1,300 times during this period, and Strauss placed many of his orders shortly after a

call with Steele.  More than 25% of Strauss’s orders were entered after 3:15 p.m., and nearly

20% were entered after 3:30 p.m.

41. Wilson placed more than 150 orders to buy CTT stock for himself, his family, and

his customers between July 1998 and February 2001.  Wilson and Steele called each other more

than 1,100 times during this period, and Wilson placed many of his orders shortly after a call

with Steele.  More than 30% of Wilson’s orders were entered or executed after 3:00 p.m., more

than 20% were entered or executed after 3:30 p.m., and Wilson placed the last trade of the day on

twelve occasions.  He sometimes placed several small orders in rapid succession.  For example,

on March 8, 2000, he placed orders that were executed at 3:57 and 3:59 p.m.  Approximately

75% of Wilson’s purchases after 3:15 p.m. raised or maintained the stock price. 

42. McPike placed more than 250 orders to buy CTT stock for the repurchase plan

between October 1998 and March 2001.  McPike placed virtually no orders after 3:30 p.m.

because CTT wanted to invoke the safe harbor in Rule 10b-18 under the Exchange Act, which

limits an issuer’s potential liability for market manipulation if its stock repurchases are made



15

before the last thirty minutes of trading (and if certain other conditions are met).  However,

Steele repeatedly urged McPike to place an order shortly before the 3:30 p.m. deadline, and

McPike frequently did so.  More than 33% of CTT’s repurchases were executed after 3:00 p.m.,

more than 20% were executed at or after 3:15 p.m., and CTT placed the last trade of the day on

four occasions.

The Defendants’ Use of Offsetting Buy and Sell Orders

43. Another focus of the defendants’ manipulative scheme was an attempt to

minimize any negative impact on CTT’s price resulting from pending or anticipated sell orders

by arranging for offsetting purchases.  Sometimes the defendants made the purchases late in the

day after they had determined how many sales were pending or anticipated.  Sometimes the

defendants arranged matching purchases and sales beforehand and placed both sides of the

transaction at the same time.

44. Steele placed many of the offsetting trades by himself.  He routinely tried to

discourage his customers from selling their CTT stock, usually by claiming that some sort of

good news was just about to boost the stock price, and on a few occasions, he simply refused to

execute a customer’s sell order.  When those tactics failed, or when a customer was forced to sell

in order to meet a margin call, Steele often induced one of his other customers to place an

offsetting buy order.  In many instances, Steele then placed the matched buy and sell orders at the

same time.  Attached hereto as Exhibit D is a table listing 64 matched trades involving Steele’s

customers.  Glushko and Kwak also arranged matched trades involving their own customers. 

Attached hereto as Exhibit E is a table listing certain matched trades by Glushko and Kwak.



16

45. On other occasions involving pending or anticipated sell orders, Steele lined up

offsetting buy orders through the other defendants.  For example, on December 1, 2000, Steele

made more than 100 phone calls to the other defendants, and his efforts resulted in several

matched trades involving customers of Glushko, Kwak and Wilson, plus CTT through the

repurchase plan.  Attached hereto as Exhibit F is a table listing the phone calls and trading on

December 1, 2000. 

46. The largest matched trade was put together on late May 2000 because one of

Steele’s customers needed to sell 75,000 shares and several of his other customers also wanted to

sell.  To minimize the drop in price which such a large sale would almost certainly have caused,

Steele and several of the other defendants lined up offsetting buy orders.  One of Steele’s

customers bought 7,300 shares.  Several of Kwak’s customers bought 13,700 shares.  Wilson’s

firm (Shamrock) bought 25,000 shares in its own trading account, and one of the firm’s

customers bought 20,000 shares.  One of Steele’s acquaintances bought 20,000 shares.  The

transaction was executed on June 1, 2000, as 91,000 shares were traded at $10 1/16 per share. 

Since the price had previously been $11 per share, the defendants were very successful in

limiting the price impact of the large sale to less than $1 per share.

47. Overall, Steele arranged at least twenty matched trades between his customers and

customers of Glushko, Kwak and Wilson.  In each instance, the sell orders and the offsetting buy

orders were entered after a series of phone calls between Steele and the other brokers.  Attached

hereto as Exhibit G is a table listing thirteen of these matched trades and the phone calls which

preceded them.



17

48. Steele also arranged offsetting buy orders from CTT through the repurchase plan. 

Steele made almost 3,000 calls to McPike from October 1998 to March 2001, consistently urging

him to offset selling pressure by placing a buy order for CTT.  McPike’s secretary wrote more

than 500 message slips about Steele’s calls, and many of them identified the specific number of

shares he wanted CTT to buy and/or the specific price he wanted CTT to pay.  McPike frequently

complied with Steele’s requests.  For example, on October 11, 2000, Steele left a message asking

McPike to place an order at $8 3/4, and less than an hour later, CTT bought 300 shares at $8 3/4. 

Similarly, on November 15, 2000, Steele left a message asking McPike to buy 600 shares at

$7 3/4, and less than an hour later, CTT bought 600 shares at $7 3/4.  Less than ten minutes after

CTT’s order was executed, Steele left a second message asking McPike to buy 500 shares at

$7 7/8, and twenty minutes later, CTT bought 500 shares at $7 7/8.

49. Overall, McPike and Steele called each other on more than 100 of the 120 days on

which CTT repurchased its stock.  More than 75% of CTT’s repurchases were entered within one

hour after a call from Steele, and more than 50% were entered within ten minutes after such a

call.  Attached hereto as Exhibit H is a table listing sixteen occasions on which McPike placed

buy orders shortly after specific requests from Steele.

50. In addition, McPike caused CTT to place buy orders as part of matched trades

with other defendants.  The three occasions on which CTT bought more than 2,500 shares at one

time all involved matched trades with the other brokers.  Attached hereto as Exhibit I is a table

listing twelve matched trades involving the CTT repurchase plan.



18

FIRST CLAIM FOR RELIEF
(Violations of Section 9(a) of the Exchange Act by All Defendants)

51. The Commission repeats and realleges paragraphs 1 through 50 above.

52. Section 9(a) of the Exchange Act [15 U.S.C. §78i(a)] makes it unlawful for any

person, directly or indirectly, by the use of the mails or any means or instrumentality of interstate

commerce, or of any facility of any national securities exchange:  (1) to enter an order or orders

for the purchase or sale of a security registered on a national securities exchange with the

knowledge that an order of substantially the same size, at substantially the same time and at

substantially the same price, for the sale or purchase of such security, has been or will be entered

by or for the same or different parties, for the purpose of creating a false or misleading

appearance of active trading in such security or a false or misleading appearance with respect to

the market for such security; or (2) to effect, alone or with one or more other persons, a series of

transactions in any security registered on a national securities exchange creating actual or

apparent active trading in such security, or raising or depressing the price of such security, for the

purpose of inducing the purchase or sale of such security by others.

53. As set forth above and in the attached Exhibits, defendants Steele, Glushko,

Kocherhans, Kwak, Strauss, Wilson and McPike each placed numerous late-day buy orders for

CTT stock, including multiple successive small orders, in order to raise or maintain the closing

price of CTT stock at an artificially high level.  In addition, Steele, Glushko, Kwak, Wilson and

McPike arranged numerous matching buy orders for CTT stock for the purpose of offsetting

pending or anticipated sell orders, creating a false or misleading appearance with respect to the

market for CTT stock, and inducing others to purchase CTT stock.  McPike’s conduct and intent

as CEO of CTT can be imputed to defendant CTT. 



19

54. As a result, the defendants violated Section 9(a) of the Exchange Act, and their

violations involved fraud, deceit, or deliberate or reckless disregard of regulatory requirements

and resulted in substantial losses or significant risk of substantial losses to other persons, within

the meaning of Section 21(d)(3) of the Exchange Act [15 U.S.C. §78u(d)(3)].

SECOND CLAIM FOR RELIEF
(Violations of Section 10(b) of the Exchange Act and Rule 10b-5 by All Defendants)

55. The Commission repeats and realleges paragraphs 1 through 54 above.

56. Section 10(b) of the Exchange Act [15 U.S.C. §78j(b)] and Rule 10b-5 thereunder

[17 C.F.R. §240.10b-5] make it unlawful for any person, directly or indirectly, acting

intentionally, knowingly or recklessly, by the use of the means or instrumentalities of interstate

commerce or of the mails, in connection with the purchase or sale of securities:  (1) to employ

any device, scheme or artifice to defraud; (2) to make any untrue statement of material fact or

omit to state a material fact necessary to make the statements made, in the light of the

circumstances under which they were made, not misleading; or (3) to engage in any act, practice

or course of business which operates as a fraud or deceit upon any person.

57. As set forth above and in the attached Exhibits, defendants Steele, Glushko,

Kocherhans, Kwak, Strauss, Wilson and McPike each placed numerous late-day buy orders for

CTT stock, including multiple successive small orders, in order to raise or maintain the closing

price of CTT stock at an artificially high level.  In addition, Steele, Glushko, Kwak, Wilson and

McPike placed numerous matching buy orders for CTT stock for the purpose of offsetting

pending or anticipated sell orders, creating a false or misleading appearance with respect to the



20

market for CTT stock, and inducing others to purchase CTT stock.  McPike’s conduct and intent

as CEO of CTT can be imputed to defendant CTT. 

58. As a result, the defendants violated Section 10(b) of the Exchange Act and Rule

10b-5 thereunder, and their violations involved fraud, deceit, or deliberate or reckless disregard

of regulatory requirements and resulted in substantial losses or significant risk of substantial

losses to other persons, within the meaning of Section 21(d)(3) of the Exchange Act [15 U.S.C.

§78u(d)(3)].

THIRD CLAIM FOR RELIEF
(Violations of Section 17(a) of the Securities Act by

Defendants Steele, Glushko, Kocherhans, Kwak, Strauss and Wilson)

59. The Commission repeats and realleges paragraphs 1 through 58 above.

60. Section 17(a) of the Securities Act [15 U.S.C. §77q(a)] makes it unlawful for any

person, in the offer or sale of any securities, by the use of any means or instruments of

transportation or communication in interstate commerce or by use of the mails, directly or

indirectly:  (1) to employ any device, scheme or artifice to defraud; (2) to obtain money or

property by means of any untrue statement of material fact or any omission to state a material fact

necessary to make the statements made, in light of the circumstances under which they were

made, not misleading; or (3) to engage in any transaction, practice, or course of business which

operates or would operate as a fraud or deceit upon the purchaser.

61. As set forth above and in the attached Exhibits, defendants Steele, Glushko,

Kocherhans, Kwak, Strauss and Wilson placed sell orders for themselves, their families and, in

the case of Steele, Glushko, Kwak and Wilson, their customers during the relevant period.  Some

of the sell orders were placed in connection with matching purchase orders which these21

defendants arranged for the purpose of creating a false or misleading appearance with respect to

the market for CTT stock, and all of the sell orders were placed while the price of CTT stock was

artificially inflated due to the defendants’ ongoing pattern of placing late-day purchases in an

attempt to raise or maintain the closing price of CTT stock at an artificially high level. 

62. As a result, defendants Steele, Glushko, Kocherhans, Kwak, Strauss and Wilson

violated Section 17(a) of the Securities Act, and their violations involved fraud, deceit, or

deliberate or reckless disregard of regulatory requirements and resulted in substantial losses or

significant risk of substantial losses to other persons, within the meaning of Section 20(d) of the

Securities Act [15 U.S.C. §77t(d)].

FOURTH CLAIM FOR RELIEF
(Aiding and Abetting Violations of Section 17(a)
of the Exchange Act and Rule 17a-3 by Steele)

63. The Commission repeats and realleges paragraphs 1 through 62 above.

64. Section 17(a) of the Exchange Act [15 U.S.C. §78q(a)] and Rule 17a-3 thereunder

[17 C.F.R. §240.17a-3] require a registered brokerage firm to make and keep certain books and

records, including accurate records of the securities trades which they place for their customers.

65. As set forth above and in the attached Exhibits, while Steele was a broker at

Prudential, he marked almost every order ticket for his customers’ purchases of CTT stock as

“unsolicited”, when in fact he had solicited almost all of the purchases.  As a long-time broker,

Steele knew that Prudential was required to keep accurate books and records of his securities

trading for his customers, and he knew that by falsely indicating that his customers’ purchases of

CTT stock were “unsolicited”, he was causing Prudential’s books and records to be inaccurate.



22

66. As a result, Prudential violated Section 17(a) of the Exchange Act and Rule 17a-3,

and Steele aided and abetted Prudential’s violations of those provisions.

FIFTH CLAIM FOR RELIEF
(Aiding and Abetting Steele’s Violations of Sections 9(a) and 10(b)

of the Exchange Act and Rule 10b-5 by
Glushko, Kocherhans, Kwak, Strauss, Wilson and McPike)

67. The Commission repeats and realleges paragraphs 1 through 66 above.

68. As set forth above and in the attached Exhibits, Steele arranged numerous

matching buy orders for CTT stock for the purpose of offsetting pending or anticipated sell

orders, creating a false or misleading appearance with respect to the market for CTT stock, and

inducing others to purchase CTT stock, and Steele placed sell orders for his customers in

connection with certain of matching purchase orders and at a time when the price of CTT stock

was artificially inflated due to his pattern of placing numerous late-day buy orders for CTT stock. 

Through this conduct, Steele violated Sections 9(a) and 10(b) of the Exchange Act and Rule 10b-

5 thereunder.

69. As set forth above and in the attached Exhibits, Glushko, Kocherhans, Kwak,

Strauss, Wilson and McPike participated in many of the matched trades for CTT stock and

placed numerous late-day buy orders which raised or maintained the price of CTT stock at an

artificially high level.  Glushko, Kocherhans, Kwak, Strauss, Wilson and McPike knew from

their hundreds of phone calls with Steele that he was attempting to influence the price of CTT

stock, and they knew that by participating in the matched trades and placing the late-day buy

orders, they were substantially assisting Steele in his efforts to influence the stock price.



23

70. As a result, and as an alternative to the First, Second and Third Claims for Relief

with respect to these defendants, Glushko, Kocherhans, Kwak, Strauss, Wilson and McPike

aided and abetted Steele’s violations of Sections 9(a) and 10(b) of the Exchange Act and Rule

10b-5.

PRAYER FOR RELIEF

WHEREFORE, the Commission requests that this Court:

A. Enter a permanent injunction restraining CTT, Steele, Glushko, Kocherhans,

Kwak, Strauss, Wilson and McPike, and each of their respective agents, servants, employees and

attorneys and those persons in active concert or participation with them who receive actual notice

of the injunction by personal service or otherwise, including facsimile transmission or overnight

delivery service, from directly or indirectly engaging in violations of:

1. Section 9(a) of the Exchange Act [15 U.S.C. §78i(a)];

 2. Section 10(b) of the Exchange Act [15 U.S.C. §78j(b)] and Rule 10b-5
thereunder [17 C.F.R. §240.10b-5];

3. as to Steele, Glushko, Kocherhans, Kwak, Strauss and Wilson only,
Section 17(a) of the Securities Act [15 U.S.C. §77q(a)]; and

4. as to Steele only, Section 17(a) of the Exchange Act [15 U.S.C. §78q(a)]
and Rule 17a-3 thereunder;

B. Order Steele, Glushko, Kocherhans, Kwak, Strauss, Wilson and McPike to

disgorge their ill-gotten gains, plus pre-judgment interest;

C. Order each defendant to pay an appropriate civil penalty pursuant to Section

21(d)(3) of the Exchange Act [15 U.S.C. §78u(d)(3)] and, as to Steele, Glushko, Kocherhans,

Kwak, Strauss and Wilson only, Section 20(d) of the Securities Act [15 U.S.C. §77t(d)];



24

D. Enter an order, pursuant to Section 21(d)(2) of the Exchange Act [15 U.S.C.

§78u(d)(2)], barring McPike from serving as an officer or director of any issuer required to file

reports with the Commission pursuant to Sections 12(b), 12(g) or 15(d) of the Exchange Act [15

U.S.C. §§78l(b), 78l(g), 78o(d)];

E. Retain jurisdiction over this action to implement and carry out the terms of all

orders and decrees that may be entered; and

F. Award such other and further relief as the Court deems just and proper.

Respectfully submitted,

/s/________________________________
Walter G. Ricciardi
District Administrator

Celia D. Moore (Mass. Bar No. 542136)
Deputy Assistant District Administrator

Frank C. Huntington (Fed. Bar No. CT-01850)
Senior Trial Counsel

Paul G. Block (Mass. Bar No. 551158)
Senior Enforcement Counsel

David H. London (Mass. Bar No. 638289)
Senior Enforcement Counsel

Attorneys for Plaintiff           
SECURITIES AND EXCHANGE COMMISSION
73 Tremont Street, 6th Floor      
Boston, MA  02108      
(617) 573-8960  direct (Huntington)
(617) 424-5940  fax



25

Local Counsel:
John B. Hughes (Fed. Bar No. CT-05289)
Assistant United States Attorney
Chief, Civil Division
United States Attorney=s Office
Connecticut Financial Center
157 Church Street, 23  Floorrd

New Haven, CT  06510
(203) 821-3700
(203) 773-5373  fax

Dated: August 11, 2004