Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Thursday, February 1, 2007

Houston Attorney Settles SEC Charges of Registration Violations

On February 1, the Commission  filed  to  amend  its  complaint  in  a lawsuit against Allixon International Corp.,  a  Delaware  corporation based in South Korea, to name Houston attorney Hank A. Vanderkam as  a defendant. Vanderkam is the former securities counsel to Allixon.  The SEC filed the original lawsuit in November 2005  against  Allixon  and other defendants to halt an ongoing unregistered distribution  of  1.3 million shares of Allixon's common stock.

   The amended complaint  alleges  that  Vanderkam  participated  in  the illegal  distribution  of  the  1.3  million  Allixon  shares,   which represented 94% of the company's float. The 1.3  million  shares  were issued to two offshore entities without a restrictive legend based  on  Vanderkam's opinion letter that the Allixon  stock  offering  complied with "Section (sic) 504 of Regulation D and the laws of the  State  of Texas." In fact, the offering failed to comply with  the  requirements of Rule 504 under Regulation D of the Securities Act of 1933, and  the offering was never registered in, and had no connection to, the  State of  Texas.  The  two  offshore  entities,   defendants   Silver   Lake  Investments, Inc. and Crescendo Investments Inc., were control persons of Allixon who allegedly sold over 900,000 of the  Allixon  shares  in the Pink Sheets for approximately $4.3 million.

Vanderkam consented to the entry of an agreed final judgment,  permanently  enjoining  him from future violations of the  securities-registration  provisions and other relief.  In addition, the consent  order  bars  Vanderkam  from  issuing  opinion letters under Rule 504 of Regulation D. [SEC v. Allixon  International  Corp., et al., Civil Action No. 3:05-CV-2260-P, United States District Court for the Northern District of Texas, Dallas Division] (LR-19987)

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