SEC settles stock-shorting charges for $1.5 million

BOSTON (Reuters) - Federal securities regulators on Tuesday charged two Florida retirees with illegal short-selling in a scheme that made them nearly $1 million.

The two defendants, Peter Grabler, 55, and Leonard Adams, 61, did not admit or deny wrongdoing as part of a deal to settle the charges, the Securities and Exchange Commission said in a statement.

According to the SEC, the two violated market-manipulation rules over a period of two years through 2008. They participated in numerous secondary stock offerings from public companies, in order to improve their access to initial public offerings underwritten by the same broker-dealer firms, the SEC said.

The agency said the actions violated Rule 105 of the SEC's Regulation M, because selling ahead of offerings can artificially depress the market price companies may receive for their shares. The SEC said the actions marked the first such charges against individuals with no securities-industry background.

Grabler, who retired but is still licensed to practice law in Massachusetts and Florida, and Adams, who retired from a family-owned business, were friends who lived in the Boston suburbs at the time of the transactions, the SEC and their attorney, Juan Marcelino of Greenberg Traurig said.

Grabler has been a full-time investor since the '90s as has Adams.

Both men later moved to Boca Raton, Florida.

They agreed to pay more than $1.5 million to settle the charges, and consented to cease and desist orders.

"Grabler and Adams are pleased to resolve these technical violations," Marcelino said.

(Reporting by Ross Kerber, editing by Leslie Gevirtz)