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by Mike Caswell

The U.S. Securities and Exchange Commission has suspended and fined Eugene Miller, the president of New York firm Leeb Brokerage Services Inc., for facilitating illegal sales of penny stocks. The regulator claims that Mr. Miller's firm served as a conduit for promoters looking to dump millions of shares, and that it routinely put revenue ahead of compliance. Among its customers were shareholders of Golden Apple Oil & Gas Inc., a pink sheets promotion that included Vancouver lawyer John Briner.

In an administrative order handed down on Aug. 20, 2010, the SEC suspended Mr. Miller from associating with any broker or dealer for 12 months, and entered a $50,000 fine against him. (All figures are in U.S. dollars.) Without admitting to any wrongdoing, Mr. Miller agreed to the order to settle the case.

According to the order, Mr. Miller failed to properly supervise brokers at now-defunct Leeb between April, 2005, and April, 2007. During this period, he should have noticed several red flags that indicated unscrupulous promoters were using the firm to dump their shares. Among other things, one of the customers had a prior pump-and-dump judgment and another customer, from Vancouver, sold millions of questionably issued shares using a private company incorporated in Nevis, and had $30-million in proceeds wired to Liechtenstein.

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