Facts

The Securities and Exchange Committee filed a federal lawsuit against defendants under the Securities Act of 1933 and the Securities Exchange Act of 1934 in relation to alleged market manipulation and matched trading for stock of Lincot Corp. and Artec Global Media Inc.

PLAINTIFF'S CONTENTIONS: The SEC claimed that defendants fraudulently executed trades that artificially increased and manipulated the price of stocks in companies that defendants owned. SEC argued that defendants bought and sold stock under assumed names and then sold the manipulated stock to unsuspecting third parties. SEC claimed defendants realized illicit profits of $3,684,954.

DEFENDANT'S CONTENTIONS: Defendants denied the allegations.

Result

The parties settled the case for $5.9 million. The settlement ordered defendants to disgorge illicit profits in the sum of $3,684,954 in addition to paying pre-judgment interest of $194,443.31. Defendants were also assessed $2,210,000 in civil damages. Plaintiffs sought the court to calculate civil penalties at the third tier of penalties, equal to each defendants' gross pecuniary gain. The court instead opted to impose civil penalties calculated at the statutory maximum.