U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 17882 / December 6, 2002

SECURITIES AND EXCHANGE COMMISSION v. RAFI M. KHAN, Case No. CV 02-9249 RSWL (PJWx) (C.D. Cal.)

SEC MOVES TO ENFORCE SUBPOENA SERVED ON BARRED STOCKBROKER RAFI KHAN

On December 5, 2002, the Commission filed an application in U.S. District Court for the Central District of California for an order to enforce an investigative subpoena served on Rafi Khan, who was a defendant in a prior SEC enforcement action. The subpoena, which seeks Khan's testimony before the SEC, was served on Khan in connection with an ongoing investigation to determine whether Khan has violated the terms of a prior injunction or SEC bar order, and whether Khan and others have violated the antifraud, anti-touting, registration, beneficial owner reporting, issuer reporting, or proxy provisions of the federal securities laws. The SEC's application alleges that Khan has failed to comply with a subpoena legally issued by the SEC, and that he has no valid justification for failing to comply.

The application alleges that Khan's testimony is relevant and necessary because the current investigation involves, among other things, Khan's:

• apparent stock promotion activities for several public companies;

• possible use of family members and Pakistani entities to conceal his activities and receipt and subsequent trading of securities earned for his activities;

• possible issuance of promotional buy recommendations on the securities of public companies while failing to disclose the existence or terms of compensation arrangements with the companies; and

• possible interest in United States and Canadian brokerage accounts that sold securities shortly after he issued promotional buy recommendations on the securities.

In April 2000, Khan consented to a federal district court order that permanently enjoined him from violating certain antifraud provisions of the federal securities laws. The injunction related to allegations that he manipulated the stock price of two companies using a variety of fraudulent devices and practices. In May 2000, in a related action, Khan consented to an SEC order barring him from associating with any broker or dealer with the right to reapply after five years.

A hearing on the SEC's application has not yet been scheduled.

http://www.sec.gov/litigation/litreleases/lr17882.htm