Inquiry by the Securities and Exchange Commission
Re: Administrative Proceeding File No. 3-10384
“These are the facts: Until the year 2000 ADAR was engaged in the practice of bringing buyers and sellers together for the purpose of effecting “reverse mergers”. A reverse merger is a process where a private company is merged with a public company which may be dormant or non-operating to establish a public personae; standard stuff. Our activities were always carried out with the advice and overview of counsel for buyer and seller. Somewhat to our chagrin, the SEC informed many firms, including ADAR, of their interpretation of the act, to require that one must be a registered Broker/Dealer as defined by the Securities and Exchange Commission in order to facilitate this type of transaction. Perhaps we should have known this, but unfortunately, we did not.
We agreed to cease this activity until such time as we should be authorized to do so, given the parameters of Section 15(b) (4) of the Exchange act.
While we have determined not to continue that business, we have taken steps to comply should we decide to do so. In accordance with the SEC’s requirements we have taken and passed the required SEC exam and need only to associate with a properly registered firm and so notify the SEC. It should be stressed that there is no impediment preventing this course should we choose to do so.
While any action by the SEC gets one’s attention, I hasten to point out that our attorney, who was in an enforcement capacity with the SEC for some time, has advised us to view this action as no more serious than a slap on the wrists. It does, obviously, raise a question that should be addressed. We are doing so here.
The action by the SEC was a civil administrative hearing. There was no court action. It is important to also note, that no one was injured, no fiduciary responsibility was breached and there has never been a complaint filed against us with the SEC by a third party. The SEC itself initiated the action independently. They simply want to insure that this type of activity be carried on by properly registered parties in general; they did not single out our firm. As mentioned, we are not restricted in any way, should we choose to pursue that endeavor in the future, provided we become registered with the commission; a simple formality. We are however, of a mind at this time, not to pursue this activity.
One should view this unfortunate event in the context of an innocent, uninformed undertaking and that it should not be considered in any way an indication that our high standards of financial discipline and corporate governance, which we have exhibited with our US and UK endeavors over the last 15 years, have been abrogated.”
Adar International, Inc. d/b/a The Adar Group
UNITED STATES OF AMERICA
Before the SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 43711 / December 12, 2000
File No. 3-10384
|In the Matter of
Sidney J. Golub and
|Order Instituting Proceedings Pursuant to Sections 15(b)(4) and 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order|
The Securities and Exchange Commission (“Commission”) deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be instituted pursuant to Sections 15(b)(4) and 21C of the Securities Exchange Act of 1934 (“Exchange Act”) against Respondents Sidney J. Golub and Adar International, Inc. d/b/a The Adar Group (together “Respondents”).
In anticipation of the institution of these administrative proceedings, Respondents have submitted a joint Offer of Settlement (“Offer”), which the Commission has determined to accept. Solely for the purposes of these proceedings and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings herein, except for those findings contained in paragraphs II. A. and B. below and the jurisdiction of the Commission over them and over the subject matter of these proceedings, which are admitted, Respondents have consented to the entry of the findings and the imposition of the remedial sanctions and cease-and-desist order as set forth below.
On the basis of this Order and the Offer submitted by each Respondent, the Commission makes the following findings:
A. Sidney J. Golub, age 64, of West Palm Beach, Florida, is the president of Adar International, Inc. Golub has never been associated with a registered broker-dealer.
B. Adar International, Inc. d/b/a The Adar Group (“Adar”) is a Massachusetts corporation located in Mashpee, Massachusetts. Adar is primarily engaged in locating unclaimed assets for individuals and businesses. Adar has also engaged in introducing parties to reverse mergers with public shells. Adar has never been registered as a broker-dealer.
C. Golub created and maintains a website located at adargroup.com. The website offers advice regarding alternative methods for privately held companies to become public and begin trading. One of the methods described on the Adar Group website is a reverse merger transaction with an existing shell company. On the website, Golub states that Adar is available to provide “hands-on supervision” with respect to, among other things, locating shell companies and buyers, preparing the reverse merger transaction, performing due diligence, restructuring the corporation, and assisting with negotiation. The website also provides contact information for interested parties.
D. Contacts received through the Adar Group website and otherwise led to Golub and Adar introducing parties for the purpose of reverse mergers with public shells. One such merger has been completed.
E. Between October 1999 and July 2000, Golub received $100,000 and 326,000 shares of common stock for brokering the sale of a public shell company.
F. Section 15(a) of the Exchange Act requires that any person or entity engaged in the interstate business of effecting securities transactions for the account of others must register with the Commission as a broker or dealer or, if a natural person, be associated with an entity that is registered with the Commission as a broker or dealer. By virtue of the conduct described above, the Respondents willfully violated Section 15(a) of the Exchange Act.
In view of the foregoing, the Commission deems it appropriate and in the public interest to accept the Offer submitted by Respondents and to impose the sanctions specified therein.
Accordingly, IT IS ORDERED that:
A. Pursuant to Section 15(b)(4) of the Exchange Act, the Respondents be censured;
B. Pursuant to Section 21C of the Exchange Act, the Respondents cease and desist from committing or causing any violation or future violation of Section 15(a) of the Exchange Act;
C. Pursuant to Section 21B and Section 15(b)(4) of the Exchange Act, within thirty (30) days of the entry of this Order, Sidney J. Golub and Adar International, Inc. shall together pay a civil money penalty in the amount of $10,000 to the United States Treasury. Such payment shall be: (1) made by United States postal money order, certified check, bank cashier’s check or bank money order; (2) made payable to the Securities and Exchange Commission; (3) hand-delivered or mailed to the Office of the Comptroller, U.S. Securities and Exchange Commission, Operations Center, 6432 General Green Way, Stop 0-3, Alexandria, VA 22312; and (4) submitted under cover letter which identifies Sidney J. Golub and Adar International, Inc. as the Respondents in this proceeding, the file number of the proceeding, a copy of which cover letter and money order or check shall be sent to Donald M. Hoerl, Associate Regional Director, Securities and Exchange Commission, Central Regional Office, 1801 California Street, Suite 4800, Denver, Colorado 80202.
By the Commission.
Jonathan G. Katz