Securities Law Prof Blog

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

Monday, June 22, 2009

SEC & Ram Capital Resources Settle Unregistered Broker Dealer Charges

On June 19, the SEC instituted a settled administrative proceeding charging Ram Capital Resources, LLC (Ram) and its two principals - Michael E. Fein and Stephen E. Saltzstein - with willfully violating Section 15(a) of the Securities Exchange Act of 1934 (Exchange Act).  The Commission found that Michael E. Fein and Stephen E. Saltzstein, neither of whom was registered as a broker or associated with a registered broker-dealer, operated and controlled Ram as an unregistered broker-dealer while serving as it principals. Specifically, from 2001 through early 2005, Ram engaged in the business of identifying, structuring, and soliciting investors -- a majority of which were hedge funds -- for PIPE offerings (an acronym for "private investments in public equities"). Ram's business model focused on identifying investment opportunities within the PIPEs market and soliciting hedge funds and other investors to invest in these PIPE offerings. Ram also played a significant role in structuring, and negotiating the terms of, the PIPE offerings.

The investors compensated Ram by paying to it a certain percentage of the gross amount invested and, in most instances, allocated to Ram a certain percentage of any warrants they received as part of their investment in the PIPE offerings. Fein's and Saltzstein's compensation was directly derived from the fees Ram earned.

Under the terms of the settlement, Ram, Fein, and Saltzstein, without admitting or denying the Commission's findings, consented to the issuance of an administrative order requiring each of them to cease and desist from committing or causing any violations and any future violations of Section 15(a) of the Exchange Act. Ram also consented to the issuance of an administrative order imposing a censure. In addition, Fein and Saltzstein consented to the issuance of an administrative order (i) requiring each to pay disgorgement of $364,721, plus prejudgment interest of $83,657; (ii) requiring Fein and Saltzstein to pay civil penalties of $90,000 and $60,000, respectively; and (iii) suspending Fein and Saltzstein from association with any broker or dealer for a period of twelve and six months, respectively. (Rel. 34-60149; File No. 3-13524)

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Interesting to notice that SEC failed to prove that Mr. Clamens tried to move assets. Furthermore, the SEC misrepresented the facts to obtain the order so that Mr. Clamens is deprived from cash to defend himself.

Posted by: Benito Camela | Jul 21, 2009 6:48:44 PM

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