SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17354 / February 6, 2002
U.S. DISTRICT COURT ENJOINS TWO TRADERS FROM FUTURE VIOLATIONS OF THE
FEDERAL SECURITIES LAWS AND COMMISSION SUSPENDS THEM FROM ASSOCIATION
WITH BROKERS OR DEALERS IN CONNECTION WITH MANIPULATION OF BIOTECH
SECURITIES
C.A. No. 99 Civ. 4770 (S.D.N.Y.)
The Commission announced that on January 31, 2002, the United States
District Court for the Southern District of New York entered judgments
against Richard Silverman, the former head trader at D. Blech & Co.,
and Alefheim Prodani, a trader at Baird Patrick & Co., Inc. ("Baird
Patrick") in SEC v. David Blech, 99 Civ. 4770 (RWS). The judgments
enjoin both Silverman and Prodani from violating Section 17(a) of the
Securities Act of 1933, Section 10(b) of the Securities Exchange Act
of 1934 and Rule 10b-5. The judgment requires Silverman to pay a civil
penalty of $20,000, and the judgment requires Prodani to pay $35,000
in disgorgement and prejudgment interest, and a $15,000 penalty.
In related administrative proceedings instituted February 6, 2002, the
Commission suspended Silverman from associating with a broker or
dealer for a period of six months and suspended Prodani from
associating with a broker or dealer for a period of nine months.
Both Silverman and Prodani consented to the entry of the judgments and
the suspensions without admitting or denying the allegations made by
the Commission.
In the injunctive action, the Commission alleged the following
From approximately June through September 1994, David Blech, the chief
executive officer of D. Blech & Co., Inc., orchestrated a massive
manipulative scheme designed to increase or stabilize the prices of a
number of the biotechnology securities for which D. Blech & Co. was a
market maker. Silverman, the head trader at D. Blech & Co., and
Prodani, a trader at another broker-dealer, participated in this
scheme. As part of this scheme, David Blech routinely sold
biotechnology stocks from D. Blech & Co.'s inventory accounts to
brokerage accounts that Blech controlled that were in the names of
other individuals and entities. These controlled accounts then sold
the biotechnology stocks back to the brokerage firm or to other
accounts controlled by David Blech. These trades created the
appearance of active trading in the biotechnology stocks.
Additionally, through this trading, Blech was able to reduce D. Blech
& Co.'s inventory position in the biotechnology stocks, yet still
SNIPPETS:
U.S. DISTRICT COURT ENJOINS TWO TRADERS FROM FUTURE VIOLATIONS OF THE FEDERAL SECURITIES LAWS
The Commission announced that on January 31, 2002, the United States District Court for the
The judgments enjoin both Silverman and Prodani from violating Section 17of the Securities
The judgment requires Silverman to pay a civil penalty of $20,000, and the judgment requires
In related administrative proceedings instituted February 6, 2002, the Commission suspended
Silverman, the head trader at D. Blech & Co., and Prodani, a trader at another broker-dealer,
David Blech routinely sold biotechnology stocks from D. Blech & Co.'s inventory accounts to
These controlled accounts then sold the biotechnology stocks back to the brokerage firm or to
These trades created the appearance of active trading in the biotechnology stocks.
Additionally, through this trading, Blech was able to reduce D. Blech & Co.'s inventory
Silverman personally executed manipulative trades at David Blech's direction and supervised
For instance, Silverman executed unauthorized transactions in customer accounts, including
Prodani also executed numerous manipulative trades in firm accounts and customer accounts
|
