Life Partners Holdings, Inc. (LPHI)?has announced in a press release that it filed a lawwsuit against optionsXpress, Inc., a subsidiary of The?Charles Schwab?Corporation (SCHW), the company?s Chief Financial Officer, and one of the company?s largest customers for issuing and selling counterfeit shares of Life Partners Holdings stock.
The lawsuit has been filed in Illinois by California attorney Gary Aguirre. He has asked the Court for an order preventing optionsXpress “from creating and selling shares of Life Partners Holdings? stock” which had not been authorized by the company. The action has also asked the Court for “protection from securities fraud, deceptive business practices and civil conspiracy arising from the unlawful issuance of the counterfeit shares.”
Schwab has said of the case, according to ThinkAdvisor, that it “did not own optionsXpress at the time of the trading at issue and was not named in the complaint.?
The case stems from a Securities and Exchange Commission (SEC) administrative proceeding against optionsXpress and defendants initiated in 2012. The agency determined in 2013 that “the firm,?its chief financial officer, former?CFO Thomas E. Stern and one of its biggest customers, Jonathan I. Feldman, had committed securities fraud by engaging in the sales of hundreds of millions of dollars in counterfeit-phantom stock passed off as the genuine stock of 25 public companies, including almost $5.5 million of counterfeit-phantom stock of Life Partners Holdings, Inc.”
The SEC case involved naked short selling on approximately 25 stocks (including Sears and AIG) with?five customers, including Feldman. The time period in question took place from 2008 (late in the year) to early 2010.?
In last year’s decision,?optionsXpress had been order to pay approximately $3.6 million with Feldman paying almost $4.7 million. Stern, who had been fired in 2012, had to pay $75,000 and received a ban from the securities industry.?
In Tuesday’s press release,?Life Partners Holdings CEO Brian Pardo commented, ?This case isn?t about money. It?s about confidence in the market. It?s about making sure that, in the future, shareholders can be sure that they are purchasing legitimate, authorized stock. Individual investors need to know that the stock they are buying is real and not phantom stock cooked up by Wall Street insiders. Without a stock certificate, we?ve seen how easy it is for Wall Street to pass off counterfeit stock in your account as legitimate and we want to put a stop to it.?