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Wednesday, November 04, 2009

SEC Charges Value Line In Bogus Commission Scheme

By Darryl R. Isherwood

FOXBusiness

The Securities and Exchange Commission Wednesday charged Value Line Inc. (VALU), its chief executive officer and its affiliated broker dealer with defrauding the Value Line mutual funds by charging millions in bogus commissions on trades funneled through Value Line Securities.

The company, along with Chief Executive Jean Buttner, former Chief Compliance Officer David Henigson and Value Line Securities, has agreed to settle with the SEC, consenting without admitting to the agency’s findings to nearly $45 million in fines and penalties.

Buttner is personally on the hook for $1 million, while Henigson must pay $250,000 in penalties.

“Value Line misappropriated millions of dollars from mutual funds they managed by artificially allocating fund trades and then charging the funds for phantom brokerage services,” said Robert Khuzami, director of the SEC’s division of enforcement in a statement.

As a result of the settlement, both Buttner and Henigson are barred from association with any broker dealer, investment advisor or investment company, the SEC said.

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