The U.S. Securities and Exchange Commission has won a default judgement against three Bahamian companies involving “wash sales” through Canadian brokerage accounts.

The SEC announced that a U.S. District Judge for the Southern District of Florida, entered a default judgment against Lantern Investments, Ltd., Lipton Holdings Ltd., and Beaufort Holdings Ltd., permanently enjoining them from further violations of securities laws. The court ordered Beaufort to pay disgorgement of US$61,903, plus prejudgment interest of US$14,124.

It ordered Lantern to pay disgorgement of US$57,702, plus prejudgment interest of US$12,300. And it imposed civil penalties against Beaufort, Lantern and Lipton in the amount of US $100,000 each.

On September 5, 2000, the commission alleged in its complaint that Rajiv Vohra, Sean Healey, and three Bahamian companies, (Lantern, Lipton, and Beaufort) used “wash sales” to create the appearance of active trading in the stock of New Directions Manufacturing, Inc., a small furniture manufacturing company. Vohra and Healey attempted to conceal their scheme by conducting much of their activity through Canadian brokerage accounts and the Bahamian companies, it said.

The complaint alleged that Vohra and Healey also arranged to have a false and misleading research report published on a stock-picker web site, on their own Web site, and through unsolicited mass e-mails.