The Securities and Exchange Commission charged yesterday that a Herndon telecommunications equipment firm illegally sold unregistered securities on an almost continuous basis throughout 1984 and 1985.
Without admitting or denying the charges, Spectrum Digital Corp. simultaneously agreed to a permanent court injunction preventing the firm from violating the registration and proxy disclosure provisions of federal securities laws. The company also agreed to offer to repurchase the unregistered securities from stockholders.
Spectrum Digital, founded in 1984 by three former MCI executives, has developed and manufactured sophisticated telecommunications equipment, including microwave communications devices.
Since its founding, Spectrum Digital raised $3.8 million through a series of private placements of common and preferred stock, as well as debt, the SEC said in papers filed in federal court in the District. The SEC alleged, however, that the series of placements constituted a public offering that should have been registered with the agency.
The commission also alleged that proxy material sent last August to Spectrum Digital shareholders was "false and misleading." The material, which solicited shareholder approval for a class of preference stock, said that the company may issue a series of senior preferred stock, the SEC said. However, the commission added, the company had already placed such stock with, among others, the company's officers and directors.
Company executives could not be reached for comment yesterday, but John Mann, Spectrum Digital's president, said in a statement that the company was "pleased with the swift negotiation of the settlement and resolution of the action and had not sought to litigate with the SEC." Mann said the company "was anxious to put the matter behind it and to move ahead with the manufacture and marketing of its products." He also said the company did not expect many stockholders to accept the offer to sell back their shares.