Facts

The Securities and Exchange Commission filed a complaint against Heart Tronics Inc., Mitchell Stein, William Gault, J. Rowland Perkins II, Martin Carter, Mark Nevdahl, and Ryan Rauch.

PLAINTIFF'S CONTENTIONS:
Plaintiff alleged that Stein was purportedly the outside counsel for Heart Tronics and husband of its majority shareholder. Plaintiff accused Stein of orchestrating a fraudulent scheme designed to inflate the price of Heart Tronics stock for profit. Plaintiff accused the other defendants of participating and facilitating the fraudulent scheme.

Plaintiff asserted a claim for violations of Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5 for employing devices, schemes and artifices to defraud and engaging in acts and practices and courses of business operating as a fraud or deceit, and making misrepresentation and misleading omissions of material fact. Plaintiff also asserted claims for violations of Section 17(a) of the Securities Act, aiding and abetting violations of Section 10(b) and Rule 10b-5, controlling person liability for violations of Section 10(b) and Rule 10b-5, violations of Sections 5(a) and 5(c) of the Securities Act, violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Exchange Act Rules 12b-11, 12b-20, 13a-1, 13a-11, and 13-13, aiding and abetting Heart Tronics' violations of those sections and rules, violations of Exchange Act Rule 13b2-1 against Stein and Carter, violations of Section 13(b)(5) of the Exchange Act against Gault and Perkins and six other claims against various defendants.

DEFENDANTS' CONTENTIONS:
Defendants Heart Tronics and Perkins filed a motion to dismiss for failure to state a claim.

Result

Defendant Nevdahl agreed to enter into a consent decree and pay $13,000 in civil penalty. Perkins also agreed to enter into a consent decree, providing both for injunctive relief and payment of $42,500 in civil penalty.

Other Information

FILING DATE: Dec. 20, 2011.