SEC Settles Charges Related to Online Auction

The Securities and Exchange Commission said it settled charges against three people whom the agency accused of illegally trying to auction stock on EBay Inc. The SEC said it was the first time it filed charges that were based on the sales of securities in an online auction. SEC laws mandate that if securities are offered to the public, even on the Web, they must be registered or have a registration exemption. None of the three planned auctions was completed. EBay pulled the plug on them after it was contacted by the SEC. Richard Davis of Duncanville, Texas; J.R. Hoff of Hudson, Wis.; and Louis Sitaras of Jupiter, Fla., agreed to cease-and-desist orders, without admitting or denying the charges. EBay was not accused of any wrongdoing. San Jose-based EBay, which is not registered with the SEC as a brokerage, wasn’t aware of the auctions. The commission alleged that in May, Davis posted an offer on EBay to sell a 5% interest in his company, Mindhunt.com, which he said would go public in a few months. The SEC said Davis had not incorporated the company and had no basis to claim it would go public then. There were several bids on Hoff’s offer in April to sell unregistered shares of AmeriGa.net, which also had not been incorporated, the SEC said. Sitaras offered 2,000 shares of Metropolitan Health Networks Inc. in May, but the shares were restricted and couldn’t be sold until September.