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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) February 14, 2000
JB Oxford Holdings, Inc.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-16240 95-4099866
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
9665 Wilshire Boulevard, Suite 300, Beverly Hills, California 90212
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code)(310) 777-8888
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events
JB Oxford Holdings, Inc. ("JBOH") and its wholly-owned subsidiary JB
Oxford & Company ("JBOC", and together with JBOH, the "Company"), have
reached a settlement with the United States Attorney's Office for the Central
District of California (the "USAO") in connection with the USAO's
investigation of the prior management and ownership of the Company. The
investigation by the USAO and a concurrent investigation by the U.S.
Securities and Exchange Commission (the "SEC") have been previously reported
by JBOH in its periodic filings with the SEC. Neither current management nor
current ownership is or was the subject of the USAO or the SEC investigations.
While the Company maintains its innocence, JBOH agreed to pay $2.0
million to the USAO over the next three years in settlement of the
investigation and to offset the USAO's costs of its investigation. Under the
terms of the Settlement Agreement between the USAO and the Company, dated
February 14, 2000 (the "Settlement"), JBOH paid $500,000 concurrently with
the signing of the Settlement and will pay the remainder in $500,000 annual
installments over the next three years. JBOH will recognize a charge in the
fourth quarter of 1999 to account for the Settlement.
If JBOH fails to make payment of any installment when due, the
entire unpaid balance will become immediately due and payable, and if JBOH
sells a controlling interest in JBOC to a third party, the remaining unpaid
installments must be paid prior to the closing of the sale. If on or before
February 14, 2001 the Company enters into a settlement with the SEC that
involves a payment of $1.0 million or more to the SEC, the USAO agreed that
JBOH's obligation to the USAO would be reduced by $500,000.
The Settlement provides that as long as the Company complies with
its terms, the USAO will not bring charges against the Company in connection
with the matters that are the subject of the investigation. In addition, the
USAO will, at the request of the Company, notify the SEC, the National
Association of Securities Dealers or any other prosecutorial authority,
regulatory or administrative authority of the nature and extent of the
cooperation the Company provides under the terms of the Settlement.
The Settlement requires the Company to comply with all applicable
federal and state securities and other laws and regulations and to cooperate
with the ongoing investigation of others by the USAO and other governmental
agencies, including producing documents and other evidence, and providing
technical assistance and analysis. In addition, within 30 days of the signing
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of the Settlement, JBOC is required to hire, with the USAO's approval, a law
firm to serve as an independent expert to insure JBOC's compliance with
applicable securities, broker-dealer laws and regulations. Within 120 days of
the appointment of the expert, the expert is required to report to the USAO
regarding JBOC's compliance and, if applicable, to make recommendations for
bringing JBOC into compliance. With the express consent of the USAO, the
deadline for the report can be extended for up to an additional 120 days. The
USAO will provide JBOC with written notice of the recommendations that it
wants JBOC to implement, and JBOC will have six months from the date of the
notice to complete the implementation of the recommendations, if any. JBOC is
required to pay all the costs of the expert.
In addition, the Settlement requires the Chief Executive Officer,
President, Chief Financial Officer, Chief Compliance Officer and General
Counsel of JBOC to execute semi-annual certificates stating that the Company
is abiding by the terms of the Settlement, including adherence to the
expert's recommendations, if any, that were required to be implemented. The
obligation to provide the certificates will continue for the next three years.
Under the terms of the Settlement, the Company also agreed that it
would be subject to monetary penalties and the USAO would not be bound by its
promise of non-prosecution if JBOH or JBOC materially failed to abide by the
terms of the Settlement.
The Settlement also required the Company to enter into agreements
waiving possible defenses the Company might have raised in the event of a
breach of the Settlement. The defenses waived included double jeopardy,
indictment and the tolling of any applicable statute of limitations.
While the Settlement brings a resolution to the USAO investigation,
the SEC investigation into these matters remains ongoing. The Company
continues to cooperate with the SEC and is hopeful that the SEC investigation
will be settled, but can make no assurance as to if or when it might be
resolved.
The USAO and SEC investigations appear to focus primarily on two
areas related to previous management of the Company. The first is whether
JBOH, in its proxy filings with the SEC, properly and accurately reported
shareholder information regarding its former management and ownership. JBOH
believes that is fulfilled its duties and obligations under applicable
securities law in furnishing the required shareholder information.
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The second area of focus is trading activity dating back to as early
as 1993 by entities alleged to be associated with Irving Kott, a former
consultant to the Company. The Company has assessed its trading in the
securities in question and has determined that it lost over $7.0 million on
those positions. As previously reported, the Company liquidated its remaining
positions in these securities in the fourth quarter of 1998 and has no
further downside risk from these securities.
This Form 8-K contains statements that are forward looking. Any
number of events may occur which would affect important factors in this
analysis and materially change expectations. These factors include, but are
not limited to, JBOH's inability to assure that the SEC investigation will be
settled. For a description of the USAO and SEC investigations and other
factors, investors and others should refer to JBOH's filings with the SEC,
including its annual report on Form 10-K for the year ended December 31,
1998, its quarterly reports on Form 10-Q and other periodic filings. JBOH
undertakes no obligation to update the forward-looking statements contained
herein to reflect changed events or circumstances after today's date.
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: February 17, 2000 JB Oxford Holdings, Inc.
/s/ Christopher L. Jarratt
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By Christopher L. Jarratt,
Chief Executive Officer
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