Securities Law Prof Blog

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

Tuesday, July 3, 2007

SEC Alleges Phony Tender Offer Scheme

On June 29, the SEC filed a civil injunctive action in the U.S. District Court for the Southern District of New York against  Theodore Roxford   (a/k/a   Lawrence   David   Niren)   and   the   partnership Hollingsworth, Rothwell & Roxford (HRR).  The  Commission's  complaint alleges  that, beginning  in  January  2003,  Roxford  and   HRR made a  series  of  bogus  offers  to acquire publicly-traded companies for the purpose of manipulating  the price of the companies' stock. The  Commission  is  seeking  permanent injunctions  and  civil  monetary  penalties   for   the   defendants' violations of the tender offer and market manipulation  provisions  of the federal securities laws.  Specificallly, the SEC alleges that Roxford made  false  and materially misleading statements in connection with  purported  tender offer  announcements  for  five  publicly-traded  companies   -   Sony Corporation, Zapata  Corporation,  Edgetech  Services,  Inc.,  Playboy Enterprises, Inc., and PeopleSupport, Inc.  and made  misrepresentations to the public regarding the existence of financial  backers  or  banks that supposedly were interested in financing the tender  offers.  Roxford and HRR  publicized  the  phony offers through press releases, internet message board postings, and in at least one filing with the Commission.

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