Penny Stocks

In the latest round in a decade-long struggle with penny stock mogul Meyer Blinder, federal regulators on Friday suspended the firm he founded, Blinder Robinson, from trading in the low-cost, high-risk securities for 45 days and from underwriting such offerings for two years. The Securities and Exchange Commission, in an administrative action, also barred Blinder himself from associating with any registered broker-dealer for at least two years.

In the latest round in a decade-long struggle with penny stock mogul Meyer Blinder, federal regulators on Friday suspended the firm he founded, Blinder Robinson, from trading in the low-cost, high-risk securities for 45 days and from underwriting such offerings for two years. The Securities and Exchange Commission, in an administrative action, also barred Blinder himself from associating with any registered broker-dealer for at least two years.

Eight men associated with a penny stock brokerage firm in New Jersey were indicted Tuesday in the government's continuing crackdown on penny stock fraud. The government is seeking more than $12 million from seven of the eight defendants who worked at F. D. Roberts Securities Inc., a penny stock brokerage in Paramus, N.J., under the federal racketeering statute, said U.S. Atty. Samuel Alito. F. D.

Within the next month, Georgia Gov. Joe Frank Harris is to sign one of the toughest laws in the nation designed to weed out corruption and fraud in penny stock dealings within the state. Harris expects to sign by April 18 the law approved by the 1990 session of the Georgia Legislature, said the governor's spokeswoman, Barbara Morgan.

An Orange County Superior Court judge has temporarily frozen the California assets of Blinder, Robinson & Co., a penny stock brokerage that has been under investigation by the Securities and Exchange Commission and the Internal Revenue Service. The temporary restraining order was requested by Newport Beach attorney Jeff Ferentz on behalf of Arthur Eastman of Tustin, who filed suit against Blinder in November.

Philip Haines, chairman of the troubled computer components maker Digitext in Thousand Oaks, describes the feeling he gets when he thinks about the plunge in Digitext's stock: "Terror." He has reason to feel terrified. Digitext's stock has fallen from its all-time high of $15.38 in October, 1986, to less than it costs for a cup of coffee: It traded at 44 cents a share as of Friday's close. That means investors, who once valued the company at about $39 million, now figure it's worth less than $2.

An admitted penny stock scam artist, wearing a hood to conceal his identity, told a House subcommittee Thursday that penny stocks traded over the counter are often controlled by organized crime. Lorenzo Formato, a former broker and promoter of the inexpensive but highly risky securities known as penny stocks, testified that "organized crime has their hand on the shoulder of someone inside any (over-the-counter) brokerage that's making money."

A convicted stock swindler, wearing a hood to hide his features, urged Congress today to "do something now" to end what he called rampant fraud and organized crime control of the penny stock market, in which investors lose about $2 billion a year.