NASD Charges Hornblower and Weeks with Violating Settlement by Issuing Research During NASD Ban
Washington, D.C.—NASD announced today that it has charged New York investment-banking firm Hornblower & Weeks with violating a recent NASD-imposed prohibition against issuing research reports. NASD also charged in its complaint that the research report issued by Hornblower contained exaggerated and misleading statements and failed to disclose material facts.
On May 7, 2002, Hornblower reached a settlement with NASD regarding charges related to a research report recommending the common stock of MyTurn.com. NASD found the report contained baseless projections, misleading and exaggerated statements and omitted to state important facts. As part of the settlement with NASD, Hornblower was suspended from issuing research reports for six months, www.nasdr.com/news/pr2002/release_02_019.html.
According to today’s complaint, Hornblower violated the terms of the prior settlement by issuing a research report relating to American Diversified Group, Inc. in late May 2002. NASD charged that the research report was published on two websites, including the website of American Diversified, a provider of telecommunication services.
NASD also charged Hornblower failed to disclose material facts in the research report, including that American Diversified has experienced significant losses, the company has received an opinion from its auditors that there is substantial doubt about its ability to continue as a going concern, and the company has had to rely on loans from its executive officers or directors to pay certain operating expenses.
NASD further charged that the research report made exaggerated, unwarranted and misleading statements about American Diversified, including that the company "is positioned as a premier provider of communication products and enhanced value-added services…," and "is positioned to exploit the upside potential of the vast expansion of the Internet."
Investors can obtain more information and the disciplinary record of any NASD-registered broker or brokerage firm by calling (800) 289-9999 or by sending an e-mail through NASD’s Web site at www.nasdr.com.
NASD is the leading private-sector provider of financial regulatory services, dedicated to bringing integrity to the markets and confidence to investors through effective and efficient regulation and complementary compliance and technology-based services. NASD touches virtually every aspect of the securities business – from registering and educating all industry participants, to examining securities firms, enforcing both NASD rules and the federal securities laws, and administering the largest dispute resolution forum for investors and member firms. For more information please visit www.nasd.com.