Speculator Pleads Guilty To HotMoney IPO Scheme
NEW HAVEN, Ct. - (08/17/05) A former securities brokerpleaded guilty to securities fraud in a scheme that earned himalmost $1 million by paying depositors of New Haven Savings Bank toacquire stock in the mutual savings banks hot initial publicoffering last year. Robert Ross, 60, of Fairfield, admitted heearned a quick $989,000 profit by getting in on the first tier ofthe IPO, which is reserved for depositors of a mutual savings bank.Ross and four others were charged with paying existing depositorsof the mutual savings bank to buy shares in the IPO, then totransfer the shares to them, which earned them a fast profit as thestock appreciated 20% soon after it hit the markets. Under a pleadeal with federal prosecutors, Ross is expected to serve as much asfour years in prison. Ross and the others are also facing a civilsuit brought by the Securities and Exchange Commission. The casecomes to light as credit union giants Community CU and OmniAmericanCU are asking a federal court Wednesday to allow them to convert toa mutual savings bank, then to sell stock to the public in separateIPOs.