SEC Bans 3 Brokers From Industry Work : Securities: They worked in Orange and San Diego counties for Stuart-James, a penny stock brokerage.

The Securities and Exchange Commission’s chief administrative law judge has taken the unusually harsh action of permanently banning from the securities industry three Southern California brokers who had been affiliated with a now-defunct penny stock brokerage.

All three had worked in Orange County or San Diego in the late 1980s for Stuart-James Co., a penny stock brokerage. Stuart-James folded in 1990 after paying $1.9 million to settle civil charges of defrauding customers.

Judge Warren E. Blair imposed the bans Monday on Martin H. Engelman, who now works for the brokerage Chatsworth Dean & Co. in San Diego; Lawrence D. Isen, employed by the firm Cohig & Associates in Solana Beach; and Peter P. Kim of Los Angeles.

In a 50-page opinion, Blair ruled that the three had defrauded customers by making false statements about stocks and other securities. According to the ruling, they falsely assured customers that they were certain to make money on particular stocks but failed to tell customers about the serious financial problems of companies whose stock they were selling.

Blair also ruled that Engelman and Kim made purchases for customers’ accounts that the customers had not authorized.

“This is a very strong decision that reflects the seriousness of the conduct and should serve as a deterrent to others,” said Joseph I. Goldstein, the SEC’s associate director of enforcement.

Reached by telephone, Engelman said he had not been notified of the decision and said he had no comment. He said he would confer with his attorney about whether to appeal.

David A. Zisser, a Denver attorney who represents Kim and Isen, said he, too, had not been notified of the decision and would not comment until he had read it.