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   PastimesNEIP - A lesson in how to lose a fortune with market order


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To: Arcane Lore who wrote (15)1/23/2001 4:25:36 PM
From: Arcane Lore
   of 20
 
From today's SEC Digest:

THREE SETTLE SEC CHARGES IN NEI WEBWORLD INTERNET STOCK MANIPULATION CASE; TWO SENTENCED TO PRISON IN RELATED CRIMINAL PROSECUTION

The Commission today announced settlements in its previously filed NEI Webworld, Inc. Internet stock-price manipulation case. That case was originally filed as an emergency action seeking preliminary relief including asset freezes on December 15, 1999. The Commission alleged that the three defendants, all recent college graduates, acquired large blocks of stock of NEI Webworld for pennies per share, created demand for the stock by disseminating false statements on the Internet that NEI Webworld, Inc. would be acquired by another company, and then sold their stock into the rising market for profits totaling nearly $364,000. The Commission subsequently amended its complaint to allege a scheme to use the Internet to manipulate the market for eleven additional issuers that continued for nearly six months. Yesterday Hootan Melamed and Allen Derzakharian, two of three defendants named in the Commission's complaint, agreed to settle the case, without admitting or denying the allegations in the amended complaint, by disgorging their trading profits and consenting to the entry of permanent injunctions against future violations of the Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Melamed and Derzakharian agreed to surrender the contents of a previously frozen brokerage account containing their $211,250 in illegal trading profits from trading in NEI Webworld, together with prejudgment interest earned thereon. Melamed agreed to disgorge an additional $2,066 in profits and prejudgment interest from his trading in two other securities. Neither Melamed nor Derzakharian will be ordered to pay penalties based on the sworn statements of financial condition that each submitted. The Commission also filed a new action naming a fourth individual, Arash (Danny) Molayem, for participating in the NEI Webworld and other Internet manipulations. Simultaneous with the filing of the Complaint against him, Molayem also consented to the entry of a permanent injunction and agreed to disgorge his trading profits of $16,006 plus prejudgment interest. Because of Molayem's early and substantial cooperation in the investigation of this matter, the Commission did not seek to freeze his assets, and settled without seeking civil penalties against him. The Commission's complaint against Arash Aziz-Golshani, the third defendant in the original case, remains pending.

Separately, the United States Attorney for the Central District of California prosecuted Aziz-Golshani and Melamed criminally for their manipulation of NEI Webworld. Aziz-Golshani pled guilty to one count of securities fraud and one count of conspiracy to commit securities fraud. Melamed pled guilty to one count of conspiracy to commit securities fraud. Aziz-Golshani was sentenced on January 22, 2001 to 15 months incarceration, and ordered to pay restitution in an amount to be determined. Melamed was sentenced on January 12, 2001 to 10 months incarceration and also ordered to pay restitution in an amount to be determined. [SEC v. Arash Aziz-Golshani, et al., USDC, CD Cal., Civil Action No. 99-13139, CBM, AJWx]; [SEC v. Arash Molayem, USDC, CD Cal., Civil Action No. 01-00649, CBM, CTx] (LR-16867)

sec.gov

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