Tuesday, May 11, 2010
The SEC charged two Boca Raton, Fla., residents for engaging in illegal short selling of securities in advance of participating in numerous secondary offerings to make illicit profits. These mark the first enforcement actions brought by the SEC under Rule 105 of Regulation M against individuals with no securities industry background.
In separate orders issued by the Commission, Peter G. Grabler was charged with repeatedly violating Rule 105 over a period of more than two years for gains of $636,123. Leonard Adams was charged with similarly violating Rule 105 for gains of $331,387. According to the orders, Grabler and Adams engaged in a strategy of participating in numerous secondary offerings of stock in public companies in order to improve their access to initial public offerings underwritten by the same broker-dealers through which they participated in the secondary offerings.
Grabler and Adams agreed to pay a combined total of more than $1.5 million to settle the SEC's charges. In settling the SEC's charges without admitting or denying the SEC's findings, Grabler and Adams separately consented to cease and desist from violating Rule 105.