Securities and Exchange Commission v. Ronald Feldstein, Civil Action No. 12 Civ. 5751 (S.D.N.Y.)
SEC CHARGES AIDER AND ABETTOR OF PENNY STOCK COMPANY’S DISCLOSURE OF FAKE INVESTMENT
The Securities and Exchange Commission recently filed a complaint in the United States District Court for the Southern District of New York alleging that Ronald Feldstein aided and abetted the filing of a false press release that announced a fictitious $6 million investment in a penny stock company, Interlink-US-Network, Ltd.
The Commission’s complaint alleges that Interlink’s management paid Feldstein to play the role of a prospective investor in Interlink. Feldstein, pretending to be the President of LED Capital Corp., entered into an investment agreement with Interlink. Feldstein, however, had no position at, or affiliation with, LED. In this investment agreement, Feldstein purported to commit LED to pay $6 million for a minority block of Interlink shares that, at the time, had a market value of under $1.2 million.
According to the Commission’s complaint, when Interlink sought to inform the market of this remarkable news, Feldstein again offered crucial assistance by reviewing and contributing to a draft Form 8-K disclosing the purported agreement. Interlink filed a version of the Form 8-K that reflected Feldstein’s comments on December 14, 2010.
The Commission previously has brought a civil injunctive action against Interlink and its management alleging, among other things, that the Form 8-K they filed disclosing the purported investment was false and misleading. The name of this previously-filed action is SEC v. Aronson, et al., No. 11 Civ. 7033 (S.D.N.Y.).
In its civil injunctive action against Feldstein, the Commission’s complaint charges Feldstein with aiding and abetting violations by Interlink and its President of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder as well as violations by Interlink of Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-11 thereunder. The Commission seeks injunctions from future violations of these provisions, disgorgement of ill-gotten gains, and a civil monetary penalty.