MINNEAPOLIS, Dec. 4, 2001 (PRIMEZONE) -- The United States Eighth Circuit Court of Appeals has reversed the summary judgment entered by the lower court in favor of the Securities and Exchange Commission, and remanded the case to the lower court with directions that the court enter judgment in favor of John M. Tuschner. The case is titled "United States Securities and Exchange Commission v. Zahareas, et al.," Docket No. 00-3047.
The SEC initiated a civil enforcement proceeding against John M. Tuschner and others in 1997, alleging that Mr. Tuschner and his securities firm, Tuschner & Company, had illegally associated with Nicholas Zahareas, a financial consultant doing business in Greece. The essence of the SEC's charges was that Mr. Tuschner "controlled" Mr. Zahareas, who managed a Greek investment firm, Euroamerican Securities, S.A., with exclusively Greek customers. Agreeing with the SEC, the lower court had permanently enjoined Mr. Tuschner from further association with Mr. Zahareas. Mr. Tuschner appealed, and on November 29, 2001, the Court of Appeals Court held that the SEC "failed to present evidence sufficient for a reasonable jury to conclude that Zahareas was 'controlled by' Tuschner." Accordingly, the Court of Appeals set aside the injunction, and ordered that judgment be awarded to Mr. Tuschner.
The SEC's action arose from the initial public offering and subsequent trading in a securities offering which was underwritten by Mr. Tuschner's firm in February 1996. Since going public, the shares of that company have increased substantially in value.
"We always firmly believed that the activities we engaged in with the Greek financial firm were entirely appropriate and fully consistent with the federal securities law, and so we're very pleased that the Court of Appeals has now confirmed this. We have also always been proud of the fact that the shares involved in this case have done very well for the investors who acquired them in the IPO underwritten by Tuschner & Company," said John M. Tuschner.
Tuschner & Company background: Tuschner & Company, Inc., a securities firm and NASD member that had offices in Minneapolis and St. Cloud, Minnesota and Englewood, Colorado, was formed in 1994 by John M. Tuschner and other partners. Mr. Tuschner sold his interest in Tuschner & Company and its holding company, Tuschner Financial Group, on January 1, 1999 to Equity Capital Group of Orange, California. Equity Capital Group sold the securities operation to North Star Management, a company controlled by Hou-Tex Trust, a Texas-based trust, in May 1999 and Mr. Tuschner resigned as President of Tuschner & Company in June 1999. After Mr. Tuschner's departure, Northstar Management failed to file required financial statements with the SEC and the NASD, resulting in the revocation of the firm's license in September 1999. Mr. Tuschner, through the Tuschner Family Partnership, forced the Company into Chapter 7 Bankruptcy in March 2000 after the Company failed to repay a loan due to the partnership that was made in May 1999. Those funds were to be used to pay employee wages, retirement contributions and health insurance premiums.
For further information, please contact: John M. Tuschner at 612-369-1875 or James H. Schropp of the Washington D.C. law firm of Fried, Frank, Harris, Shiver and Jacobson, legal counsel for Mr. Tuschner in the SEC's action, at 202-639-7110.