Securities and Exchange Commission v. Hasho

Ben Hasho, William Mecca, Robert Yule, and Aurelio Vuono (the RRs) (defendants) were registered representatives at J.T. Moran & Co. The Securities and Exchange Commission (SEC) (plaintiff) filed a complaint against the RRs and others, alleging that their boiler-room operation violated the antifraud provisions of the securities laws. After trial, the court found that Hasho told a customer he never lost a penny for any client and the warrants he was recommending would rise $3 or $5 in 30 days, and failed to disclose that the company had negative earnings and its warrants were a speculative investment; Mecca told a customer that his predictions had always been correct, another customer that he had inside information, and a third customer that he would have to buy immediately to get a good price, the stock price would double, and the customer would recoup his money in three months, and failed to disclose that the company lost $4.1 million and screamed and cursed when the customer wanted to cancel the purchase; Yule intimated to a customer that he had inside information and said he knew the stock was going to take off and the customer should buy as much as he could, and recommended to a customer who was about to undergo life-threatening surgery that a stock would be in the double digits in six months and would protect the customer’s family; Vuono represented that the price of warrants he was recommending would increase by $1.25 to $1.75 per share in a few months and failed to disclose that the company had historical losses; Hasho, Mecca, and Yule misrepresented that customers would recoup past losses through the recommended stock purchases; and all RRs discouraged sell orders through high-pressure sales tactics.