Last week the U. S. Securities and Exchange Commission judged that David Lubin, a New York-based attorney, may no longer appear or practice before the SEC, and may no longer act as an officer or director of a public company. He was charged with making false and misleading statements in corporate filings.
The SEC stated in a press release that Lubin committed fraud while both a director and corporate counsel of Entertainment Art, a public company in which he was also a large shareholder.
Per the SEC’s order, when the company was renamed Biozoom, over 14 million shares were resold to the public in an illegal unregistered distribution with illicit proceeds of $34 million. Seven defendants, including the buyer of Entertainment Art, have been charged thus far.
Lubin also is facing separate criminal charges filed by prosecutors in Miami that claim he conspired to fraudulently register shell companies with the SEC, issue shares in the companies that shell investors secretly controlled, and sell the shares to the investing public at a profit.
Antonia Chion, Associate Director in the SEC’s Enforcement Division, provided this statement: “As the SEC’s order notes, Lubin drafted and signed misleading public filings and masked the true ownership and restricted nature of a significant portion of the company’s stock. Lubin’s deception led to many of these same shares being illegally resold to the general public by others a few years later.”
According to the SEC’s order, Lubin intentionally and willfully violated Section 10(b) of the Securities Exchange Act and Rule 10b-5. The SEC imposed a cease-and-desist order and an officer-and-director bar. The order also prohibits Lubin from representing clients in SEC matters, including investigations, litigation, or examinations, and from advising clients about SEC filing obligations or content.
As we have seen with this case and others like it, securities fraud violations are not tolerated. Therefore, it is imperative for firms to proactively review corporate filings and further investigate whether any activities appear to circumvent federal securities laws.
Jacko Law Group, PC can help financial firms develop and evaluate internal controls that will help detect and prevent such violations before they occur. For more information, please contact one of our securities attorneys at 619.298.2880 or at [email protected].
