Day Trader Settles Charges of Fraud

A Texas day trader accused of posting fake press releases on the Internet about Lucent Technologies Inc. (LU) has agreed to settle civil fraud charges.

Fred Moldofsky, a Canadian citizen living in Houston, agreed to a final judgment permanently enjoining him from future securities violations, the Securities and Exchange Commission said Wednesday.

He did not admit or deny the civil charges brought by the SEC, and he will not have to pay a fine based on his sworn inability to do so, the regulatory agency added.

Moldofsky couldn’t be reached for comment.

In March, Moldofsky was convicted on separate criminal charges of securities fraud for the Lucent postings and is scheduled to be sentenced in September, the SEC said.

In a civil suit filed in New York, the SEC claimed that Moldofsky had posted on a Yahoo Finance message board at least 20 fraudulent press releases saying Lucent would not meet analysts’ earnings estimates for the second quarter that ended March 31, 2000.

The postings were made March 22 and 23, 2000, under aliases such as “hot-like-wasabe” and “ya-gotta-believe-in-me,” the agency added.

On March 22, 2000, Lucent’s stock closed at $62.63 a share, down $2.63. The next day, it opened at $62.13 and traded as low as $60.38, according to regulators.

“Market commentators attributed this decline to the press release that Moldofsky had disseminated,” the SEC said in the complaint, adding, “Lucent disavowed the information in the release during the morning of March 23.”

This week, an El Segundo man was sentenced to nearly four years in federal prison for his role in a scam that involved issuing a fake press release claiming that Emulex Corp. (EMLX) of Costa Mesa was in trouble. The hoax cost investors $110 million, experts said.