The US Securities and Exchange Commission (SEC) says it has reached a USD1 million settlement with Barry Clare, the vice president of finance at Baltia Air Lines (New York JFK), following charges filed earlier this year that he acted as an unregistered broker for the start-up airline.
In a statement issued this week, the regulatory body said the settlement also includes a cease-and-desist order which affects Clare's business dealings for twelve months effective immediately.
In March, the SEC charged Clare with violating terms of Section 15(a) of the Exchange Act accusing him of soliciting potential investors and recommending investments in Baltia on a commission basis despite him not being an SEC-registered broker.
Clare reportedly encouraged investment in Baltia via broadcasts on a New York-area, Russian-language radio station in February and May 2014. Once potential investors were lured in, Clare allegedly followed up with emails claiming the airline's stock, at present undervalued, would appreciate dramatically once operations commenced. Once a sale was completed, Baltia then paid him a commission based on the amount of the investment paid. In all, a total of USD26 million worth of Baltia common shares were sold in a series of at least 820 transactions between March 2011 and March 2015.
Over that period, the SEC says Clare received transaction-based compensation, totaling at least USD988,277.30, for approximately 605 of those transactions. Clare’s ledgers show that Baltia owed him additional amounts of unpaid transaction-based compensation.
As such, the SEC says it accepted Clare's settlement offer wherein he will pay the body disgorgement of USD988,277.30, prejudgment interest of USD69,330.03, and a civil money penalty of USD15,000.00 for a total of USD1,072,607.33.
"Respondent Clare be, and hereby is, suspended from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, and prohibited from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter, for a period of twelve months, effective on the second Monday following the entry of this Order."
Baltia was founded in 1989 ostensibly to take advantage of a thaw in relations between the United States and the then Soviet Union by opening up direct flights between the two countries. However, almost thirty years on, the airline has yet to complete its certification with the US Federal Aviation Administration (FAA) let alone operate a commercial flight for that matter. And because Baltia has never generated any revenue, it has relied on unregistered offerings of its common stock to fund its operations.
