JB Oxford faces stock manipulation investigation|
By Sue Zeidler
LOS ANGELES, Aug 20 (Reuter) - Broker JB Oxford Holdings Inc. is being investigated for alleged stock manipulation and other practices involving Irving Kott, a controversial stock promoter and consultant to the firm, sources said on Wednesday.
Meanwhile, JB Oxford said it was back to business as usual after FBI agents raided its offices in Beverly Hills and Swiss authorities did the same in Basel, Switzerland on Tuesday. ``Our operations were disrupted for a time on Tuesday by the federal searches, but we have now resumed full and normal operations,'' said Oxford's chief executive Stephen Rubenstein.
FBI spokesman John Hoos said agents on Wednesday began the task of reviewing evidence that had been collected.
JB Oxford said it is cooperating with federal authorities. The firm also said the Securities & Exchange Commission served a subpoena on Oxford and some of its employees. The SEC declined comment. Oxford would not disclose names, but sources near the case said the list includes Irving Kott.
``His track record speaks for itself,'' said one source familiar with the case, which is focusing on Kott, a consultant to Oxford, and who was convicted in 1976 in Canada of stock fraud and is associated with several penny stock firms that have left investors with huge losses.
Kott's son, Ian, is Oxford's chief operating officer.
The company said on Wednesday its chairman Felix Oeri arrived in Los Angeles from Switzerland, where authorities searched for records on Tuesday. Oeri, who is chairman of Oeri Finance, JB Oxford's largest shareholder, is based in Basel, Switzerland. He also heads international brokerage operations for Oxford.
The firm, with branches in New York, Dallas, Boston and Miami, has attracted attention from Internet investors and advertises on financial TV outlets. It has also faced various disciplinary actions with the National Association of Securities Dealers in recent years.
Oxford was the subject of a cease and desist order from the Connecticut Department of Banking last year. The state alleged the firm employed unregistered agents and fined Oxford $35,000, according to documents released by NASD.
Kott has been associated with several controversial practices. In the 1980s, he helped run a Netherlands-based company, First Commerce Securities, which was raided by Dutch authorities in 1986 and forced it into bankruptcy the following year, leaving thousands of investors with losses.
Dutch authorities accused Kott of fraud, tax evasion and various other crimes, but the criminal investigation stalled because Kott could not be extradited from Canada. Kott settled the case against him for about $4 million, press reports said.
NASD last year fined a former JB Oxford unit, Reynolds Kendrick Stratton Inc., $415,000 for failing to disclose negative information about a stock the firm pushed.
Meanwhile, Bill Sliney, chief financial officer of Legacy Software, a client of Oxford, had no complaints about Oxford. Legacy recently terminated talks to buy certain assets of a unit of Hariston Corp. (HRSNF). Hariston was formerly touted by Reynolds Kendrick, but has since restructured from its former incarnation as an oil and gas company, beset by criticisms the operation was a scam, press reports said.
Hariston distributes computer games and CD-ROM software. ``We did not do that deal (Hariston) because it wasn't fitting into our mix. Oxford is our investment banking firm and they present transactions to us all the time,'' Sliney said. ``They've done a good job.''