Broker-Dealer Litigation - Greenberg Traurig LLP

consented to the entry of a final judgment enjoining him from violations of the aforementioned
provisions of the securities laws, requiring him to pay $157,615 in disgorgement and
prejudgment interest, and a $157,066 civil penalty.
SEC v. Kovzan, 2011 U.S. Dist. LEXIS 85794 (D. Kan. Aug. 4, 2011).
The Commission alleged violations of the securities laws by defendant, CFO and CAO of
NIC Inc., in connection with failures to disclose information about compensation and perquisites
provided to the CEO, such as compensation for his commute by private airplane from Wyoming
to Kansas, as well as reimbursement of other personal expenses. Count 9 alleged that defendant
aided and abetted violations of Section 14(a) of the Exchange Act, and Rules 14a-3 and 14a-9
thereunder.
On a motion to dismiss, the court denied the Section 14(a) to the extent it was based on
allegations that NIC’s proxy statements were misleading because they referred to NIC’s code of
ethics without also disclosing violations of that code. The court found that the disclosures did
not suggest that there had been no violations or waivers of the provisions of that code of ethics.
The court found, with respect to other allegations underlying the Section 14(a) claim, that the
Commission had sufficiently pleaded that defendant had notice of problems with the CEO’s
expenses and that without identifying all facts entering into the total mix of information
concerning NIC, it could be said as a matter of law, that the alleged perquisites to the CEO
would not have altered the total mix of information. The court also found that the complaint
alleged facts supporting a plausible inference that defendant knew the CEO was commuting from
Wyoming to Kansas, and was receiving reimbursements for personal expenses, and that this was
sufficient to show either recklessness or actual knowledge as required for aiding and abetting
liability. Accordingly, the court denied the motion to dismiss with respect to aiding and abetting
violations of Section 14(a).
SEC v. Weintraub, 2011 U.S. Dist. LEXIS 14999 (S.D. Fla. Dec. 30, 2011)
The Commission filed suit against the defendant, Allen E. Weintraub (“Weintraub”) and
AWMS Acquisition, Inc. d/b/a/ Sterling Global Holdings (“Sterling Global”) for violations of
sections 10(b) and 14(e) of the Securities and Exchange Act and Rules 10b-5 and 14e-8
thereunder. The court granted the Commission’s motion for summary judgment.
On March 19 and March 29, 2011, Weintraub issued offer letters to both Eastman Kodak
Company (“Kodak”) and AMR Corporation (“AMR”) offering to purchase the company’s
outstanding stock. Weintraub also provided the offer letters to investors of both companies and
press outlets. However, Weintraub had not secured any credit with which to finance either
purchase transaction, nor did he disclose to the companies or their investors that he had pled
guilty to organized fraud and money laundering and was on probation at the time the offer letters
were issued. The SEC alleged that Weintraub violated the above sections of the Securities and
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