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Sec. & Exch. Comm'n v. Terminus Energy Inc.

Third-Tier Civil Penalty Appropriate for Conduct Involving Fraud, Deceit But Is Halved

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MEMORANDUM & ORDER   Plaintiff Securities and Exchange Commission (the “Commission”) moves for the imposition of a one-time, third-tier civil monetary penalty of $150,000 against Defendant Joseph L. Pittera (“Pittera”) pursuant to Section 20(d) of the Securities Act of 1933 (the “Securities Act”), 15 U.S.C. §77t(d), and Section 21(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. §78u(d). For the reasons that follow, this Court imposes a civil penalty of $75,000. BACKGROUND I. Procedural History On February 14, 2017, the Commission initiated this enforcement action against Terminus Energy, Inc. (“Terminus”), its directors and officers, and one of its brokers for violations of the federal securities laws in the offering of $7.9 million in Terminus securities to over 200 investors worldwide. (Compl., ECF No. 1 (“Compl.”), 2.) Terminus was a Delaware corporation in the business of developing and selling fuel cell technology, (Compl. 16), and, during the relevant period, it sold its common stock as “penny stock,” as defined in the Exchange Act, (Compl. 57). The Commission alleges that Terminus, along with its directors or officers, misled investors about the: (1) research, profitability, and viability of a fuel cell prototype that Terminus was purportedly developing, (see, e.g., Compl.

38-41); (2) misappropriation of investor proceeds and the diversion of those proceeds to pay unregistered brokers, (see, e.g., Compl.

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