SEC Enforcement Action Against Former CEO of Competitive Technologies Inc for Fraudulent Stock Manipulation

SEC NEWS DIGEST
Issue 2004-154 August 11, 2004

The Commission today sued Competitive Technologies, Inc. (CTT), a
Connecticut technology company, its former CEO, and six brokers,
alleging that they engaged in a fraudulent scheme to inflate CTT's stock
price. Defendant Chauncey Steele allegedly orchestrated the scheme as a
broker at Prudential Securities in Massachusetts, acting with Richard
Kwak in California, John Glushko in Nevada, Stephen Wilson in
Massachusetts, Thomas Kocherhans in Utah and Sheldon Strauss in Ohio.
Frank McPike, while acting as CTT's CEO, allegedly made purchases in the
company's stock repurchase plan as part of the manipulative scheme.

According to the Commission's complaint, from at least 1998 through
2001, the defendants "painted the tape," that is, created a misleading
market appearance. Most commonly they "marked the close," by placing
numerous orders at or near the close of the market to inflate the
reported closing price. They also pre-arranged purchases to match
sales, offsetting any impact sales would otherwise have on CTT's price.
Employing these devices, defendants placed hundreds of purchase orders,
and made the closing trade in CTT stock on almost 300 trading days
during the period. On more than 90% of those days, they succeeded in
raising the reported closing price of the stock. Because of defendants'
fraud, CTT traded at far above its true value.

The complaint alleges that defendants violated Section 17(a) of the
Securities Act of 1933, Sections 9(a) and 10(b) and Rule 10b-5 of the
Securities Exchange Act of 1934, which prohibit fraudulent conduct. The
Commission is seeking injunctive relief, disgorgement, and civil
penalties, and a permanent officer and director bar against McPike.
[SEC v. Competitive Technologies, Inc., Chauncey Steele, John Glushko,
Thomas Kocherhans, Richard Kwak, Sheldon Strauss, Stephen Wilson, and
Frank McPike [United States District Court for the District of
Connecticut, Civil Action No. 304 CV 1331 JCH] (LR-18827)