U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 18574 / February 12, 2004

Securities and Exchange Commission v. Carlos H. Soto, et al., Case No. 04-1105JP (USDC/D. Puerto Rico)

SEC OBTAINS EMERGENCY ORDERS FREEZING ASSETS OF CARLOS H. SOTO, BASLE ADVISERS AND ICR CORPORATION

The United States Securities and Exchange Commission (SEC) announced that on February 11, 2004, it filed an emergency federal civil action against defendant Carlos H. Soto and relief defendants Basle Advisers and ICR Corporation (ICR). On February 11, 2004, the Honorable Jaime Pieras, Jr., of the United States District Court for the District of Puerto Rico, entered, among other things, an emergency order to temporarily freeze the assets of the defendants. A preliminary injunction hearing has been set for February 19, 2004.

The SEC's civil complaint, filed with the application for emergency relief, alleges that Soto, a stock broker at Morgan Stanley DW, Inc., raised at least $50 million by telling investors that he would invest their funds in low risk mortgage-backed securities issued by the Government National Mortgage Association (so-called "Ginnie Maes"). According to the complaint, contrary to his representations, Soto diverted the investors' money to accounts in the names of Basle Advisers and ICR. He then used the funds for personal use and to engage in speculative and risky trading, including short sales.

Soto, 59 years old, is a resident of San Juan, Puerto Rico. Basle Advisers and ICR, upon the SEC's information and belief, are Puerto Rican corporations under the exclusive control of Soto.

The SEC's complaint charges Soto with violations of the antifraud provisions of the federal securities laws, specifically Section 17(a)(1) of the Securities Act of 1933 and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. Among other things, the SEC seeks preliminary and permanent injunctions against Soto prohibiting further violations of the antifraud provisions, and requests that Soto, Basle Advisers, and ICR disgorge their ill-gotten proceeds and that Soto pay a civil monetary penalty for his misconduct.

SEC Complaint in this matter

http://www.sec.gov/litigation/litreleases/lr18574.htm