Securities regulators imposed a fine and a temporary suspension on penny stock promoter Ray Dirks and his wife following allegations they issued misleading and incomplete research reports.
The fines and suspensions stem from separate settlements the couple negotiated with the
. The securities industry's largest self-regulatory agency recently disclosed the enforcement actions on its Web site.
The settlements come six months after the NASD filed an enforcement action alleging the couple pumped up a handful of penny stocks while working at
Dirks & Co.
, a defunct brokerage owned by Dirks' wife, Jessy. Ray Dirks, best known for battling the
Securities and Exchange Commission
to the U.S. Supreme Court on an insider trading charge in the 1970s and 1980s and winning, had been an analyst at the small brokerage firm.
The NASD handed down the stiffer penalty to Dirks' wife, fining her $15,000 and prohibiting her from working for any brokerage firm in a supervisory capacity for six months. Dirks was fined $25,000 and suspended for a month.
In April, the 69-year-old Dirks resigned his managing director's job at
, a New York investment bank.
Before becoming an advocate for small-cap stocks, Dirks was something of a legend on Wall Street because of his triumph over the SEC. In that case, the SEC charged Dirks, then an insurance industry analyst, with insider trading for quietly telling some of his big brokerage clients about a massive accounting fraud at a company called Equity Funding. The Supreme Court, in a landmark 1983 decision, sided with Dirks and ruled he was only doing his job as an analyst.
But since then, Dirks has often been associated with stocks of dubious merits.
Most recently, he was the contact person for Sky Capital on the initial public offering for
Vaso Active Pharmaceuticals
, a tiny, over-the-counter drug manufacturer that was one of the hottest stocks of the year before the SEC suspended trading in its shares in April. Vaso Active ultimately was brought public by another underwriter,
, after regulators objected to Sky Capital's lack of experience in stock offerings.