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

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Thursday, October 16, 2008

SEC Files Manipulation Complaint against Excellency Investment Realty Trust

The SEC filed a civil injunctive action in the United States District Court for the District of Connecticut against Excellency Investment Realty Trust, Inc., a publicly-traded real estate investment trust located in Hartford, Connecticut, and its chief executive officer, David D. Mladen, of Scarsdale, New York, in connection with an alleged fraudulent market manipulation scheme.  The Commission's complaint, filed on October 16, 2008, alleges that during at least July 2006 through September 2006, Mladen and Excellency engaged in a market manipulation scheme to defraud Excellency investors. According to the complaint, Mladen, acting in his capacity of CEO of Excellency and acting through a brokerage account that was owned and controlled in part by Excellency and Mladen, traded in Excellency stock in such a way as to artificially increase the price of Excellency stock. The complaint alleges that Mladen purchased Excellency stock in small quantities at progressively higher prices and executed wash or match trades in order to create the appearance of an active market for Excellency shares. Mladen's trading activity systematically manipulated the stock price of Excellency, causing it to increase from $8 per share to $24.35 per share.

According to the complaint, Excellency and Mladen violated the antifraud provision of the Securities Exchange Act of 1934, including Section 10(b) and Rule 10b-5 thereunder. The Commission is seeking injunctive relief against both, and the imposition of civil penalties against Mladen and an order barring Mladen from serving as an officer or director of a publicly traded company.

http://lawprofessors.typepad.com/securities/2008/10/sec-files-manip.html

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