Stock Promoter Khan Agrees to 5-Year Ban

Longtime Los Angeles stock promoter Rafi M. Khan on Wednesday agreed to a five-year ban from the securities industry to settle charges that he manipulated the share prices of Future Communications Inc. in 1993 and L.L. Knickerbocker Co. in 1995.

The settlement with the U.S. Securities and Exchange Commission follows Khan’s guilty plea with federal prosecutors in July on tax-fraud charges. At the time, Khan--who became well known to regulators for his dealings in the brokerage and mutual fund industries in the 1990s--agreed to cooperate with prosecutors in other fraud investigations.

The SEC’s civil case against Khan charged him with making at least $552,500 in illegal profits from the alleged schemes with Future Communications and Knickerbocker.

Although the SEC sought restitution from Khan when it filed its civil case against him in 1998, the settlement announced Wednesday required no payment by Khan.

Saied Kashani, Khan’s attorney, said he settled to avoid further legal expense. “The cost was overwhelming for one person to bear,” Kashani said. Khan neither admitted nor denied any wrongdoing in the settlement.

Kashani also said Khan didn’t implicate anyone else in connection with his SEC settlement.

Khan, a former broker, made his clients millions of dollars in the summer of 1993 by recommending shares of companies including Future Communications and Spectrum Information Technologies Corp. Share prices of both increased fourfold.

He also led a battle to oust former Yugoslav Prime Minister Milan Panic from his post as head of ICN Pharmaceuticals Inc.

The SEC alleged that Khan employed a variety of manipulative practices--including restricting the available supply of the stock and touting “wildly exaggerated” earnings projections--to run up the price of Future Communications.

Khan used similar manipulations, including making unauthorized customer trades, to push up shares of Knickerbocker in 1995, the SEC alleged.