Stratton Oakmont Steve Madden Ipo

Stratton oakmont steve madden ipo


Footwear Designer Steve Madden Settles SEC Fraud Charges

FOR IMMEDIATE RELEASE

2001-53

Madden Barred for Seven Years From Serving as Officer or Director of Any Public Company; Will Pay $7.8 Million in Disgorgement, Interest and Penalties; Settlement Includes New Insider Trading Charges

Washington, D.C., May 23, 2001 – The Securities and Exchange Commission today announced a multi-part settlement of securities fraud charges against Steven Madden, the Chief Executive Officer of Steven Madden, Ltd.

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("SHOO"). The settlement encompasses market manipulation charges that the Commission filed against Madden in June 2000, as well as new insider trading charges filed today.

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The insider trading case is based upon Madden's sale of 100,000 shares of SHOO stock on May 31, 2000, when he was aware that he would be indicted or otherwise criminally charged in the manipulation case.

Today's Settlements

Under today's settlements, which Madden has entered without admitting or denying the Commission's allegations, Madden has agreed to the following relief:

  • An order barring Madden from serving as an officer or director of any public company for seven years;
  • Total payments of $7,820,465 as follows:
    • $5,183,450 in disgorgement of ill-gotten gains in the manipulation case (subject to offset for restitution payments made in the related criminal cases);
    • $784,000 in disgorgement plus $69,015 in interest in the insider trading case;
    • $1 million civil penalty in the market manipulation case;
    • $784,000 civil penalty in the insider trading case; and
  • Injunctions against future violations.

    Today's Settlements

June 2000 Manipulation Case

In its Complaint filed June 20, 2000, the Commission alleged as follows:

From 1991 through 1997, Madden was a key participant in a series of manipulations orchestrated by Stratton Oakmont, Inc.

and Monroe Parker Securities, Inc. Both firms were quintessential "boiler rooms" and the manipulations followed a standard formula.

Stratton and Monroe gained control over the float of each stock by issuing allocations of IPO stock to persons with whom Stratton and Monroe had entered into secret agreements to serve as "flippers." The flippers received their stock with the understanding that they would sell the stock back to Stratton or Monroe at pre-arranged prices once trading had commenced in the aftermarket.

Stratton oakmont steve madden ipo

Stratton and Monroe would then reap huge profits by selling the stock to their own customers at artificially inflated prices created by the use of high-pressure sales tactics.

In each of 22 manipulations, Madden served as a "flipper," sold his stock back to Stratton and Monroe and retained an agreed-upon profit for the transaction. Stratton also conducted the IPO for SHOO in December 1993.

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Stratton, with Madden's knowledge and participation, manipulated this IPO as well.

Newly Filed Insider Trading Case

The Commission's new Complaint filed today alleges:

  • On December 20, 1999, Madden and his attorneys met with representatives of the U.S.

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    Attorney's Offices for the Eastern District (USAO-EDNY) and the Southern District (USAO-SDNY) of New York and the Federal Bureau of Investigation.

    During the meeting, Madden was informed that: (a) he had been the target of USAO-EDNY and USAO-SDNY investigations into Madden's participation in stock manipulations at Stratton Oakmont and Monroe Parker; and (b) he would be indicted or otherwise charged with securities fraud.

    Madden was also told that the principals of both Stratton Oakmont and Monroe Parker were cooperating with the government and would testify against him.

  • On May 31, 2000, Madden sold 100,000 shares of SHOO common stock at $16.00 per share without disclosing to the public the information he had learned on December 20, 1999.

    Stratton oakmont steve madden ipo

    On June 20, 2000, Madden was arrested and charged with, among other things, conspiracy to commit securities fraud and securities fraud.

  • When the news of Madden's arrest became public on June 20, 2000, the National Association of Securities Dealers suspended trading in SHOO stock.

    When trading resumed on June 22, 2000, SHOO's share price, which had closed at $13.13 on June 19, 2000, fell as low as $5.50 before closing at $6.69.

    Stratton oakmont steve madden ipo

    By selling his stock on May 31, 2000, Madden illegally avoided losses of $784,000.

         

The Commission acknowledges the assistance of the United States Attorney's Offices for the Eastern District of New York and the Southern District of New York in this matter.

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Persons To Contact

Wayne M. Carlin: tel.: (212) 748-8035

Barry W.

Jordan Belfort and Stratton Oakmont (Wolf of Wall Street Explained)

Rashkover: 

tel.: (212) 748-8186

Mark K. Schonfeld: tel.: (212) 748-8178

 

http://www.sec.gov/news/headlines/maddensettles.htm


Stratton oakmont steve madden ipo