SEC Settles Counts Against 9 in Fraud Case : * Lawsuit: Associates of former penny stock king David Sterns agree not to violate securities laws. They will make no restitution.

The Securities and Exchange Commission said Friday that it has settled stock fraud charges against nine associates of former Orange County penny stock king David D. Sterns, accused of looting thousands of investors nationwide of about $10 million.

The SEC sued Sterns and 13 others in March for their alleged involvement in a massive penny stock fraud through a network of Laguna Hills companies, known collectively as the Ultimate Business Network.

Without admitting or denying any wrongdoing, nine UBN associates--including Sterns’ brother and two nephews--agreed not to violate securities laws in the future. Friday’s settlement did not cover five remaining defendants, including Sterns.

The SEC waived $1.1 million in restitution against the nine defendants and seven related companies after they said they had no money.

“My guess is they may be cooperating in the investigation,” said Jim Sanders, the SEC’s regional manager in Los Angeles until last April.

Sterns’ nephews--Mark A. Sterns of Irving, Tex., and Jonathan D. Sterns of Tampa, Fla.--each pleaded guilty late last year to securities registration violations and mail fraud in connection with UBN. Federal investigators have said they are cooperating in a criminal investigation of Sterns by a grand jury.

Sterns, while denying the charges against him, said in an April interview that he expects to be indicted later this year for wire, mail and securities fraud. He has accused the federal and state agencies investigating him of conducting a witch hunt.

He could not be reached for comment Friday.

Sterns, 55, is the first Californian, and only the second person nationally, to be sued under the Securities Enforcement Remedies and Penny Stock Reform Act of 1990.

The act allows the SEC to prohibit anyone proven to have engaged in penny stock fraud from ever running a publicly traded company and authorizes the agency to issue penalties of up to $500,000 per violation against offenders.

Previously, the SEC could win penalties only in insider trading cases.

Those settling Friday were Verl V. Sterns II, Mark A. Sterns, Jonathan D. Sterns, J. Marcus Ryan, Joseph P. Cillo, Barry L. Gilliam, David R. High, David N. Gliksman, Norman L. Dixon, Primeritexx Inc., Acrotech Inc., Advanced Technical Systems Inc., Ameritex Inc., Ayin Corp., Gentre Laboratories Inc. and OmniSource Inc.