COMPLAINT FOR SECURITIES FRAUD """' '~""~ ~~~~ ~

PHILIP RALPH BEI,PASSO;

Plaintiff,

vs.

SMITH BARNEY, HARRIS UPHAM & CO. Incorporated

Defendant, FACTS COMMON TO ALL COUNTS (10) At times relevant herein, Smith Barney employed

one Jack Wilson as a registered representative in its branch

office in Houston, Texas. Mr. Wilson he3d the title and acted in

the capacity of Branch Manager of said Houston office. Mr. Wilson's

activities as a registered r~presentatjve were under the super-

vision and control of Smith Barney.

(II) At times relevant herein, Smith Barney employed as

registered representative in its branch office in Houston, Texas,

one Sandra Reeves who acted under the supervision of jack Wilson

as broker for the plaintiff. Another registered representative of

Smith Barney in the Houston office, acting as broker for the plain-

tiff and involved in the action was Mr. George Nazarian.

(12) During the period from June 1980 through January

1981, Smith Barney through its registered representative in its

Houston office engaged in the following courses of conduct:

(A) Smith Barney took complete control of plaintiff's

account giving Smith Barney's registered rep-

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resentatives discretionary authority to trade

the account, and place orders for the purchases

and sales therein without securing the approval

of the plaintiff for each such trade, Smith

Barney encouraged this type of relationship by:

(a ) assuring the plaintiff that the financial accumen

on the part of Smith RarneN's representatives

was so great as to prevent any loses;

(h ) tellin~ plaintiff that because of the fast pace

of the market they did not have time to discuss

stratagy with the plaintiff before making

decisions;

(e ) engaging in a pattern of trading which made it

difficult, if not impossible, for an individual

investor to follow: (B) Smith Barney through its registered representative George NazariRn at times relevant l·ierein, made transactions for plaintiff and at the conclussion of said transactions, said plain- tiff suffersd in loses the amount of $20.000 not including monies lost in interest. During the course of the aforementioned trans-

actions, these irregularities were perceived by the plaintiff as

su spi ciou s . (a) The plaintiff was told by George Nazarian to ignore the remintance portions of the confirmations sent by the Houston. Texas office. The plaintiff has kept in his possession these remittance copies that should of been mailed back to Smith Barney

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(b) Smith Barney sold plaintiff six hundred (600)

shares in Troy Gold Limited and after said sales transpired, Troy

Gold was taken off the market for fraudulent representation by the

Securities and Exchange Commission. (S.E.C. Litigation Release

N 9511 dated November 2L, 1980). (c The plaintiff, after suffering $1,689.j-n loses in two days and during the transaction of ICN Pharmacecutical Company, confronted his broker Mr. Nazarian for an explaination concerning plaintiff's loses which amounted to $20.000 in 19 81 George Nazsrian stated to the plaintiff on the telephone that some person(s) had bnen watching the plaintiff's STOP-LOSE

strategy and were using said information to manipulate him out of

his securities. Mr. Nazarian's exact words were "They saw your

stop and they bought you out." At this point, the plaintiff stop-

ped tradine with Mr. George Nazarian. (d) Mr. Nazai~ian left the employment of Smith Barney shortly after telling Mr. Philip Belpasso about the "stop- lose" manipulation scheme.

in June of 1982, Ms. Sandra Reeves solicated the plaintiff

and offered her services as a representative of Smith Barney.

Ms. Reeves assured plaintiff of the soundness of her investment

goals and Mr. Belpasso agreed with Ms. Reeve's requests to become

his authorized stock market representative.

In July of 1982, Ms. Sandra Reeves purchased 2 Cell Mesa Petroleum options for the plaintiff. The plaintiff was not notified until four days later after said purchases has been transacted. At which time, plaintiff was informed that he had

lost fifty=percent (50~) of his investment on the options he

knew nothing about.

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On October 11, 1982, Ms. Sandra Reeves made transactions in plain+iff's account, again without the plaintiff's knowledge. Then these said transactions were manipulated out of the plaintiff's account into another account not his own. These manipulations were aided by: (a) the use of vague, untrue statements refering to time ot purchase, sale and quantity of securities being transacted such as: (i) "few" (ii) "best time"

(iii) "we'll see" (b) the making of two seperate purchases of Schlumberger Call options and selling both said transactions simultaneously then transferring the most profitable of the two transactions into another account not his own.

(C) When the Houston, Texas office manager Jack Wilson was confronted by the plaintiff Jack Wilson response was: (a) To tell the plaintiff t.hat his account was never

debited for the 5 Call Schlumberger options. (b) asking ihe plaintiff not to go to Security Exchange when the plaintiff stated his intensiocs of doing so. (c) Jack Wilson manager, admitted to the plaintiff that Sandra Reeves was wrong in putting the liability of ownership on the plaintiff's account and then trans- ferring the profits to another account which was not

the plaintiffs.

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(d) Jack Wilson offered to remedy the situation

without the participation of the Securities

and Exchange Commission.

(e) manipulatinfi on November 19, 1982 Nine (9)

Call GE:O International options into the

plaintiff's account, which credited the plaintiff with the monies lost during the manipulation of the five (5)-Call Shlumherger options of November 13. 1982. (D) When the New York Headquarters of Smith Barney was confroned by the Seeurites and Exchange Committees investigation brought about by a November 6. 198;1 complaini filed by the plaintiff Mr. Philip R. Belpasso, their Compliance Director Mr. David Warmin

actions were to deny the plaintiff to redeem his account through

normal means such as:

(a) Written requests, personal appearances, an~

ignoring transfer documents forwarded by

Merill Ly-ch December 7. 1982.

(b) Threatened the plaintiff with the reduction

of the monies credited to him by Jack Wilson's

office in Houston. Texas. (c) To perform another unauthori~ed manipulation on January 10, 198~ and subtracting monies credited to him by Jack Wilson's office

These actions and statements on the part of Smith Barney were

wrongful, false, and misleading, were known to be such and were

all a part of a willful and malicous intent on Smith Barney's part

to fraudently embezzed plaintiff's equity.

(13) Contrary to its duties and responsibilities and its

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direct assurances and representation to the plaintiff Philip R. Belpasso, Smith Barney did not intend to manage plaintiff's ac- count in a conservative fashion, but rather engaged in a trading pattern which placed the plaintiff's equity at risk without giving the plaintiff any chance of profiting from siad trades. (1C) contrary to its duties and responsibilities and its direct assurances and representations, Smith Barney did not intend to manage plaintiff's accounts for the beneifit of plaintiff, but rathei for its own benefit and t'o that end, engaged in the churning of plaintiff's account by a frequent and excessive number of trades in the plaintiff's account, all done with the purpose and effect of producing commission income for Smith Barney, contrary to the needs and requirements of the plaintiff. By the way of specific characterizstion of the activities of defendant in this regard, Smith Barney engaged in transactions in the named plaintiff's account, both of purchases and sales during the month of December 198~ alone which ranged from 50~ to LOO~ of the value of the cash and securities deposited by the investor. (15) Contrary to its duties and responsibilities and its direct assurances and representation:: in connection with the opening and the management of the plaintiff's account, Smith Barney violated its own rules and regulations, the rules and regula,ions of the Securities and Exchange Comml·sion, and various national securites and options exchanges of which Smith Barney ;s a member which rules and regulations Smith Rar~ey agreed to abide by in becoming a member of such national securities and options exchanges. (16) In furtherance of its fraudulent scheme or to defraud and deceive the plaintiff, the following false statements

were made to the plaintiff;

(a) That the plaintiff was notified of the purchases

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of one and five Call Shlumberger options of November 13, 1982, and assured by Ms. Reeve's that "no liability or exposure was placed upon the plaintiff regarding the situation," when

infact the plaintiff was NOT informed of the

"error". The plaintiff's records will show that he was indeed in a state of liability. (b) The plaintiff's account was never debited for the options.

(c) That Smith Rarney could produce proof of the

authorities being notifies of an error in the

purchase of Five Ca17 Schlumbereer options on

th October 12--, 1982.

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ADDEMNUM

WHEREFORE, plaintiff demands judgment against the defendent:

(a) for compensatory damages;

(b) for three fold damages;

(c) for punitive damages;

(d) for his filing fees;

(e) for his reasonable attorney's fees;

(f) for his costs of suit;

(g) for securities analysis fees;

(h) for such other and further relief as be just and proper. I ,

By: Ph%lip R. Belpasso Dated: June 9, 1983

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