Dan Rapoport, Exchange Act Rel. 63744, January 20, 2011
Rapoport, a Russian resident was found based on his default to have violated the securities laws. The ALJ barred him from broker-dealer association and ordered to cease and desist various violations. He was also ordered to pay penalties of $315,000.
Rapoport was charged with soliciting U.S. investors to purchase thinly traded Russian stocks. Process was served on an attorney who claimed to represent Rapoport pursuant to an order from the ALJ even though he claimed he was not authorized to accept service. That attorney appeared on behalf of Rapoport at several hearings. After the default order was entered against him, Rapoport was served with it by U.S. Customs when he entered the country. He then filed a motion with the ALJ to set aside the default which was denied.
Commission rules permit the ALJ to order alternative service methods. The Commission noted that the ALJ's order authorizing service on Rapoport's lawyer was appropriate and noted that such service has been upheld in the federal courts. The attorney represented to the ALJ that he would inform Rapoport of the judge's order that service be made upon the lawyer. The Commission ruled that since Rapoport had notice of the service of process, he could not ignore it.