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Businessman Denies Stock Scheme

November 8, 2002

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WINONA, Minn. (AP) _ A local businessman denied accusations by the U.S. Securities and Exchange Commission that he participated in a stock market manipulation scheme with a former U.S. Bancorp Piper Jaffray broker.

``The SEC charges are without merit,″ Michael Rivers said Thursday. ``I certainly had no knowledge that anything was being done wrong.″

Rivers, 56, whose company owns a Holiday Inn and a Best Western inn, was accused of participating in a fraudulent scheme to artificially increase closing stock prices in First Federal Capital Corp. of La Crosse, Wis.

The SEC alleges that Rivers was involved in a ``marking-the-close″ scheme with Thomas E. Hall of Sioux Falls, S.D., from at least January 1998 through September 2001.

Rivers was a customer at Piper Jaffray, where Hall formerly worked as a broker. The SEC says the two men placed end-of-day trades in First Federal stock at artificially high prices, which increased the stock’s closing price to satisfy or reduce margin calls on Rivers’ trading accounts at Piper Jaffray.

Often issued when an account has dropped below a certain value, a margin call requires a customer to repay money borrowed from his broker’s firm to make trades.

Rivers controlled nine brokerage accounts at Piper Jaffray, five of which he used to trade on margin.

Without admitting or denying the allegations, Hall agreed early this month to pay $50,000 in fines, and accept a permanent ban from the securities industry.

Under a settlement with the SEC, Piper Jaffray will pay a $100,000 fine and revise its supervisory systems. The SEC had charged the Minneapolis-Based investment firm with failing to supervise Hall, or to have systems in place to prevent or detect such schemes.

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