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GenesisIntermedia Inc., a telemarketing firm linked to the crippling of two brokerage houses late last month, is being investigated by the Securities and Exchange Commission, the company announced Monday. The Los Angeles-based GenesisIntermedia raised the possibility that the Nasdaq may delist the company, whose shares were suspended from trading Sept. 25. In addition to the SEC, the Nasdaq is also investigating what appears to be a mammoth effort to short-sell the stock. The Nasdaq has requested information on the possible involvement of GenesisIntermedia’s chairman and CEO, Ramy El-Batrawi. The company said Monday that El-Batrawi, who has extensive holdings in travel and aviation, resigned and is being replaced on an interim basis by Stephen Weber, a board member. Native Nations Securities Inc., based in Jersey City, N.J., lent and relent 7.2 million GenesisIntermedia shares — some 31 percent of total outstanding shares and almost equal the float — earlier this year to Minneapolis-based Stockwalk Group Inc., which immediately relent the shares to four yet-unnamed brokerage houses. Where Native Nations got the shares hasn’t been disclosed. Both Stockwalk and Native Nations made money off the interest payments. GenesisIntermedia’s share price dropped dramatically during a five-day period beginning Sept. 19. This followed the pulling of a three-for-one share split announced earlier in the month. The share price drop triggered what was supposed to be a routine wiring of payments from the various lending and borrowing brokerages to satisfy government-regulated maintenance requirements. However, Native Nations failed to pay Stockwalk $60 million, claiming it didn’t have enough money. That sent Stockwalk into liquidation and Native Nations searching for a way to stay in business. Oct. 1, Stockwalk announced that it would repurchase its full-service brokerage and that its clearinghouse accounts would be transferred to SWS Securities Inc. of Dallas, pending approval by the U.S. Bankruptcy Count in Minneapolis. The first major securities firm owned by an American Indian, Native Nations said it is trying to undo the January acquisition of Freeman Securities. Native Nations claims a rogue trader from Freeman was responsible for the unauthorized lending. While Monday’s GenesisIntermedia announcement provides few new details, it does suggest that the company’s 44 percent shareholder, the Bermuda-based Ultimate Holdings Ltd., may have lent the shares to Native Nation. Minnesota publications have linked Ultimate Holdings to Saudi arms dealer Adnan Khashoggi. Copyright (c)2001 TDD, LLC. All rights reserved.

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