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U.S. Securities and
Exchange Commission
Litigation Release No. 15234 / January 30, 1997
SECURITIES AND EXCHANGE COMMISSION V. MARTIN KAIDEN AND THE
MARTIN KAIDEN COMPANY 97 Civ.0641 (DC)
NEW YORK -- The Securities and Exchange Commission announced
that it filed today a Complaint in federal
court in Manhattan alleging
that
a registered broker-dealer and its chairman fraudulently
offered fictious "prime bank" securities to
a large institutional
investor.
Named in the Commission's Complaint were:
Martin Kaiden
("Kaiden") is 67 years old and resides
in Scarsdale, New York. During the time of the events alleged
in the
Complaint, he was chairman, president and sole
shareholder of
The Martin Kaiden Company, Inc.
The Martin Kaiden
Company, Inc ("Company") is a New York corporation with offices in Mamaroneck, New York. During the
time of the events alleged in the Complaint, the Company
was registered
with the Commission as a broker-dealer.
The Complaint
alleges that Kaiden and the Company falsely represented to John Hancock Mutual Life Insurance Company ("John
Hancock")
that Kaiden, through the Company, could arrange
for the
purchase and sale of so-called "prime bank"
securities. Kaiden
and
the Company falsely claimed that these securities
could be
purchased at a discount and then be sold in a secondary
market,
and
the defendants guaranteed John Hancock an extraordinary
return with virtually no risk. In fact, according to
the Complaint, the defendants could not
supply the instruments
offered
because such securities do not exist. As such,
there is
no secondary market for, or guaranteed return on, the
instruments
described
by Kaiden and the Company.
In its Complaint,
the Commission alleges that Kaiden and the
Company violated Sections 17(a)(1) and 17(a)(3) of the Securities
Act of 1933. The Commission also alleges that the Company
violated Section 15(c)(1)(A)
of the Securities Exchange Act of 1934 and Rule 15c1-2 thereunder, and that Kaiden is liable
for these violations as a controlling
person of the Company. The
Commission
seeks a permanent injunction and civil monetary penalties against both Kaiden and the Company. The litigation
is pending.
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