U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 21439 / March 5, 2010

Securities and Exchange Commission v. Chaya Unger, Civil Action No. 10-CV-0991 (ILG) (E.D.N.Y. March 5, 2010)

SEC FILES SETTLED CHARGES AGAINST CHAYA UNGER FOR FRAUD IN CONNECTION WITH BANK CONVERSIONS

The Securities and Exchange Commission today filed settled fraud charges against Chaya Unger in connection with her fraudulent purchase of stock in four public offerings of banks that were converting from mutual to stock form of ownership. According to the complaint filed in U.S. District Court for the Eastern District of New York, in each instance, Unger circumvented offering terms and banking regulations by secretly using her friends or relatives, who were depositors at the converting banks and thus had priority rights in the offerings, as nominees to acquire stock in those conversions. In each instance, Unger had the nominees falsely represent to the converting banks that the nominees were purchasing the stock for their own accounts, and that they had no agreement or understanding regarding the sale or transfer of the stock. In fact, the nominees were purchasing the stock with funds provided mostly or wholly by Unger and with the understanding that, once the stock was received, most or all of the stock or the proceeds from its sale would be transferred to Unger. The illegal profits from the fraudulently obtained stock amounted to approximately $227,589. The complaint charges Unger with violating and aiding and abetting the violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

Without admitting or denying the allegations in the SEC's complaint, Unger has agreed to a permanent injunction from further violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. She has also agreed to pay disgorgement of $227,588.84, prejudgment interest of $80,998.25, and a civil penalty of $65,000. The settlement is subject to the approval of the Court.

See Also: SEC Complaint