Suspended by DTC
http://www.sec.gov/litigation/admin/2010/33-9121.pdf
Labi: Trading in Lifeline Biotechnologies, Inc. (“LBTN”)
29.
During 2006, a Labi customer delivered more than 1 billion shares of LBTN stock into two accounts held at Leeb in the name of entities the customer controlled. The customer was a stock promoter and LBTN affiliate, who had sent Labi an instant message in the fall of 2005 communicating information about the timing of a promotional campaign. The customer obtained 2 billion shares out of 6.5 billion shares that LBTN had issued from March through December 2006, representing 31.7% of all newly-issued shares. Labi’s customer obtained the stock by having entities he controlled participate in Rule 504 offerings, which under certain circumstances can provide issuers with a means of issuing unrestricted stock without registering the offering. Here, however, Labi’s customer was acting as an underwriter, and his entities’ immediate resales of the stock violated investment intent representations contained in subscription agreements and referred to in the Rule 504 legal opinion letters.
30.
From January 4, 2006 through March 28, 2007, Labi sold in excess of 1 billion of the customer’s shares of LBTN to the public without a registration statement being in effect, and no exemption from registration was available.
31.
Labi failed to conduct a reasonable inquiry into the origin and ownership of the customer’s stock prior to selling it to the public, despite several red flags. The customer had sent Labi instant messages and emails informing Labi of his connection to the issuer and his knowledge of forthcoming news and promotional activity. Accounts controlled by the customer repeatedly transferred into Leeb large blocks of LBTN stock comprising a significant percentage of the company’s share balance. Although the customer directed all trading in the accounts held in entity names, the sole proprietor and officer of the entities was actually the customer’s daughter.
http://www.sec.gov/litigation/admin/2010/33-9121.pdf
Labi: Trading in Lifeline Biotechnologies, Inc. (“LBTN”)
29.
During 2006, a Labi customer delivered more than 1 billion shares of LBTN stock into two accounts held at Leeb in the name of entities the customer controlled. The customer was a stock promoter and LBTN affiliate, who had sent Labi an instant message in the fall of 2005 communicating information about the timing of a promotional campaign. The customer obtained 2 billion shares out of 6.5 billion shares that LBTN had issued from March through December 2006, representing 31.7% of all newly-issued shares. Labi’s customer obtained the stock by having entities he controlled participate in Rule 504 offerings, which under certain circumstances can provide issuers with a means of issuing unrestricted stock without registering the offering. Here, however, Labi’s customer was acting as an underwriter, and his entities’ immediate resales of the stock violated investment intent representations contained in subscription agreements and referred to in the Rule 504 legal opinion letters.
30.
From January 4, 2006 through March 28, 2007, Labi sold in excess of 1 billion of the customer’s shares of LBTN to the public without a registration statement being in effect, and no exemption from registration was available.
31.
Labi failed to conduct a reasonable inquiry into the origin and ownership of the customer’s stock prior to selling it to the public, despite several red flags. The customer had sent Labi instant messages and emails informing Labi of his connection to the issuer and his knowledge of forthcoming news and promotional activity. Accounts controlled by the customer repeatedly transferred into Leeb large blocks of LBTN stock comprising a significant percentage of the company’s share balance. Although the customer directed all trading in the accounts held in entity names, the sole proprietor and officer of the entities was actually the customer’s daughter.
