Securities Law Prof Blog

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

Wednesday, July 15, 2009

Marshall Holdings Int'l Liable for Public Offerings on Form S-8

The SEC announced that on July 6, 2009 the United States District Court for the Central District of California entered Final Judgments by consent against defendants Marshall Holdings International, Inc. (Marshall Holdings) and Mark T. Ellis, a resident of Irvine, California.  In the complaint filed on August 6, 2008, the Commission alleged that Marshall Holdings and Ellis, an officer of Winsted Holdings, Inc. (Winsted Holdings), improperly registered shares issued under employee stock option programs on Form S-8 registration statements from 2003 through 2005. Marshall Holdings and Winsted Holdings then received at least 85% of the proceeds from the shares' sales as payment of the options' exercise price.  According to the complaint, the option programs functioned as public offerings through which Marshall Holdings and Winsted Holdings used their employees as conduits to the market so that they could raise capital without complying with the registration provisions.

Without admitting or denying the complaint's allegations, Marshall Holdings and Ellis have consented to the entry of Final Judgments enjoining them from violating Section 5 of the Securities Act of 1933, ordering them to pay disgorgement of $8,974,033 and $1,042,000, respectively, plus prejudgment interest and, based upon their financial conditions, waiving payment of all such amounts. The litigation continues as to two remaining defendants.

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