David T. Henigson

David T. Henigson, was ousted in November 2009 from Value Line, Inc for fraud. Henigson, age 52, held various positions at Value Line Incorporated (VLI) since joining VLI in 1988, including at various times serving as a Director, Vice-President, Treasurer and/or Chief Compliance Officer of VLI, and as a Director and Vice President of VLS. Henigson has been described as being the de facto Chief operating Officer of Value Line. From 1991 until 2008, virtually all budget and resource allocations, personnel decisions and policies, and product launchings / terminations needed his approval before being sent to Buttner for final signature; many of these same operations decisions were also initiated by Henigson. He also held various positions at the Value Line Family of Funds, including at various times serving as Vice President, Secretary, Treasurer and/or Chief Compliance Officer for the Funds. Along with Brecher, Henigson was Buttner's chief advisor in structuring the "special dividend" in 1996 that was used to buyout disgruntled brother Arnold Van Bernhard Jr. from the firm. In February 2009, Henigson ceased serving in any capacity with VLS and in June 2008 he resigned as VLI’s Chief Compliance Officer and also resigned from all of his positions with the Funds..

Memorable Events

== At a memorable company picnic on the Bernhard Estate in 1990, Henigson's wife Nancy openly accused him of infidelity with a female Value Line Employee. Henigson was also purportedly the object of a [...] harrassment complaint by a female employee. That same employee was dismissed from VL the following week after agreeing to separation terms presented by then corporate attorney Rodney Baxter.

Hengison Buttner Value Line Fraud Pre-dates Madoff Fraud

According to the SEC the Henigson Buttner scheme began in 1986 and lasted until November 2004. Madoff scheme began in early 1990s. A whistleblower tipped off the SEC.

SEC fines Henigson $250,000 for helping perpetrate $24 million fraud against Value Line Mutual Fund shareholders spanning nearly 20 Years

Summary of the fraudulent actions of Buttner and Henigson:

1. From 1986 to November 2004 (“Relevant Period”), VLI, VLS, Buttner and, from the time he joined VLI in 1988 to November 2004, Henigson engaged in a fraudulent practice that misappropriated assets from the Value Line Family of Mutual Funds (the “Funds”) in the form of inflated brokerage commission payments to VLS, VLI’s affiliated broker-dealer. During the Relevant Period, VLI entered into arrangements with several unaffiliated brokerage firms (“Rebate Brokers”) to execute, clear and settle securities trades on behalf of the Funds at a discounted commission rate that varied during the period from $.02 per share to as low as $.01 per share. Instead of passing this discount directly to the Funds, the Respondents arranged for the Rebate Brokers to charge the Funds a commission rate of $.0488 per share and then to “rebate” to VLS between $.0288 and $.0388 per share, which represented between 59% to nearly 80% of the total commissions. VLS, however, did not provide any brokerage services to the Funds for the commissions it received on these trades. In total, VLI directed over $24 million of the Funds’ assets to its affiliated broker-dealer, VLS, through this so-called “commission recapture” program.

2. The Respondents misled the Independent Directors (“Independent Directors”) of the Funds’ Board of Directors/Trustees (“Board”) and the Funds’ shareholders into believing that VLS provided bona fide brokerage services for the Funds’ securities trades when, in fact, VLS did not provide any such services. Rather, the Rebate Brokers performed the necessary brokerage services, i.e., execution, clearing and settlement, for the Funds’ trades and did so for as little as $.01 per share. The Respondents also failed to disclose to the Independent Directors and the Funds’ shareholders that they required that a target percentage – as much as 70% of the Funds’ 2 trades in securities listed on the New York Stock Exchange, Inc. (“NYSE”) – be allocated to the recapture program. The target trading percentages served to undermine VLI’s obligation to seek “best execution” for the Funds’ securities trades. The Respondents also made materially false and misleading statements and omissions about VLS and the recapture program to the Independent Directors at Board meetings and to the Funds’ shareholders in public filings with the Commission, including in the Funds’ registration statements.

3. Buttner, who became Chairman and CEO of VLI in 1988 and who was the President of VLI when the commission recapture program was instituted by the predecessor CEO, continued to authorize and monitor the commission recapture program through November 2004. Buttner also discussed the program periodically with Henigson, who periodically updated her on the amount of commissions being diverted to VLS. In addition, Buttner and Henigson were both responsible for preparing and making presentations to the Independent Directors about why VLS was receiving commission payments from the Funds, and they also signed certain Commission filings that mischaracterized the reason why VLS was receiving commission payments from the Funds.

FACTS from SEC investigation:

The Commission Recapture Program

8. From 1986 to November 2004, while VLI was serving as investment adviser to the Funds, the Respondents engaged in a practice to direct a portion of the Funds’ securities trades to VLI’s commission recapture program. For the securities trades subject to the recapture program, VLI’s Trading Department (“Trading Department”) sent the trades to one of three Rebate Brokers that the Respondents had recruited to fully execute, clear and settle securities trades on behalf of the Funds at a discounted commission rate as low as $.01 per share. Although the Rebate Brokers charged at the outset $.02 per share for their services, which rate was reduced over time to as little as $.01 per share for their services, the Respondents instructed the Rebate Brokers to bill the Funds $.0488 per share and then to pay the balance – from $.0288 to $.0388 – of that commission charge to VLS. In total, VLI directed over $24 million of the Funds’ assets to VLS. This commission recapture practice was not fully disclosed to the Independent Directors or to the Funds’ shareholders.

9. Although VLS received as much as 59% to nearly 80% of the total commissions charged on the securities trades that were allocated to the recapture program, VLS did not perform any brokerage services for the Funds in connection with those trades. VLS did not have the capacity to execute, clear and settle trades on its own. It, therefore, relied on the Rebate Brokers to access the markets and effect the trading process for the Funds’ securities trades. In fact, VLS did not provide any trading services beyond the services that the Trading Department was already contractually obligated to provide the Funds under the terms of VLI’s investment advisory agreements with the Funds. Having no independent brokerage operations of its own, VLS consisted of the same traders, trading facilities and offices as the Trading Department. The traders staffed to the Trading Department were told by management that they wore “two hats” – a VLI hat and a VLS hat. In practice, however, the VLI traders handled all of the Funds’ securities trades in the same manner whether the trades were routed for execution to the Rebate Brokers or to other unaffiliated brokers.

10. Upon becoming CEO, Buttner was responsible for the commission rates charged by VLS. Buttner approached the negotiations with the Rebate Brokers with the goal of maximizing profits for VLS, not for the Funds. Buttner pursued fee concessions from the Rebate Brokers that ultimately resulted in agreements with the Rebate Brokers to execute, clear and settle the Funds’ securities trades for only $.01 per share. This $.01 rate was significantly lower than the commission rates charged by other brokers for executing VLI trades because the Rebate Brokers did not provide other services in connection with the trades, such as “soft-dollars” services. Buttner, however, did not pass this discount to the Funds. Rather, she and the other Respondents referred to VLS as an “introducing broker” and collected from $.0288 to $.0388 per share for VLS on the Funds’ securities trades that the Trading Department sent to the Rebate Brokers for 4 execution, clearing and settlement. This practice allowed VLS and VLI to reap the benefit of the Rebate Brokers’ discounted rates at the Funds’ expense.

11. Buttner and Henigson were involved in negotiating and structuring the commission recapture arrangements with the various Rebate Brokers. Over the years, they signed written agreements with the Rebate Brokers formalizing the terms of the recapture arrangements, including the “commissions split” between VLS and the Rebate Brokers. In addition, Henigson supervised the head traders working in the Trading Department and, in turn, reported to Buttner on the profitability of the recapture program for VLS and he also assisted in the preparation of reports for the Independent Directors as to the profitability of VLS. Target Trading Percentages For Recapture Trades

12. Buttner was also responsible for requiring that a target percentage of the Funds’ securities trades be allocated to the recapture program. The target percentage, which applied only to the Funds’ trades in NYSE-listed securities, was initially set at approximately 50% but increased over time to as much as 70%. The purpose of the target percentages was to ensure a certain amount of revenue for VLS each quarter. Henigson relayed Buttner’s target percentages to VLI’s head traders and, at times, instructed them to increase the number of the Funds’ securities trades being allocated to the Rebate Brokers in order to meet Buttner’s target percentages. As a result, rather than selecting brokers based solely on their ability to provide best execution for the Funds’ trades, the VLI traders were instructed to send securities trades to the Rebate Brokers to meet management’s target trading percentages. Misleading Disclosures To The Funds’ Independent Directors

13. The Respondents misled the Independent Directors about why VLS was receiving commission payments in connection with the Funds’ securities trades. The Respondents told the Independent Directors that using VLS as a broker for the Funds’ securities trades was in the best interests of the Funds and their shareholders. Buttner and Henigson, in particular, told the Independent Directors at quarterly Board meetings that the “use” of VLS for the Funds’ securities trades served the Funds’ best interests because VLS was charging the Funds a commission rate of $.0488 per share, while other brokerage firms were charging an average commission rate of $.05 per share for the same services. The Respondents, however, failed to disclose to the Independent Directors that the Rebate Brokers were actually providing all of the brokerage services in connection with the Funds’ securities trades for as little as $.02 to $.01 per share. Buttner and Henigson also failed to disclose to the Independent Directors that they had instructed the Rebate Brokers to charge the Funds $.0488 per share and to then send the balance -- $.0288 to $.0388—of this commission charge back to VLS, even though VLS did not provide any brokerage services on the trades.

14. The Respondents also failed to disclose to the Independent Directors the existence of Buttner’s target trading percentages requiring that a fixed percentage of the Funds’ NYSE-listed securities trades be allocated to VLS and the recapture program. Rather, the Respondents told the Independent Directors that VLI’s decision to use VLS as a broker for the Funds’ securities trades was being made consistent with VLI’s obligation to seek best execution. Unaware of the target 5 trading percentages, the Independent Directors continued to authorize commission payments to VLS under the belief that VLI was meeting its obligation to seek best execution for the Funds’ securities trades. Misleading Disclosures To The Funds’ Shareholders

15. The Respondents made similarly misleading statements about why VLS was receiving commissions to the Funds’ shareholders in public filings with the Commission. These misrepresentations were made in VLI’s investment advisory registration statements (“Forms ADV”) and in the Funds’ registration statements, which included the Funds’ Prospectuses and Statements of Additional Information. Buttner and Henigson signed the Funds’ registration statements in their capacities as officers of the Funds. The Forms ADV and the Funds’ registration statements were provided to, or were otherwise made available to, the Funds’ shareholders.

16. The Forms ADV and the Funds’ registration statements mischaracterized the reason why VLS was receiving commission payments from the Funds. These documents falsely represented that VLS provided brokerage services for the Funds’ securities trades and that the trades were “cleared” through unaffiliated broker-dealers. These representations were false because VLS did not provide any brokerage services in connection with the Funds’ securities trades, and the unaffiliated broker-dealers did more than just “clear” the trades. The Rebate Brokers, in fact, executed, cleared and settled the trades. Furthermore, the Forms ADV and the Funds’ registration statements did not disclose the fact that the VLI’s traders were under orders from senior management to meet target trading percentages for allocating the Funds’ NYSE-listed securities trades to the recapture program so that VLS could generate revenue on those trades. The Forms ADV and the Funds’ registration statements purported to list all of the factors the Trading Department considered when selecting brokers to execute the Funds’ securities trades, such as price, broker execution capability, commission rates and the value of research provided by the broker, but did not disclose the target trading percentages.

Howard A. Brecher named acting CEO

Mr. Brecher,56 years old, has been an officer of the Company for more than 17 years during the period in which the fraud took place. Mr. Brecher was Chief Legal Officer, Secretary and Vice President of the Company, Vice President and Secretary of the Value Line Family of Funds, Secretary of EULAV Asset Management, LLC (since February 2009), and Vice President, Secretary, Treasurer, General Counsel and a Director of Arnold Bernhard & Co., Inc., the parent of the Company. Mr. Brecher is a graduate of Harvard University, Harvard Business School and Harvard Law School. He also holds a Masters Degree in tax law from New York University.

Value Line Buttner litigious

According to New York State Court records Jean Buttner / Value Line have sued portfolio managers, analysts, architects, vendors and others . She has been represented as plaintiff by Irwin M. Echtman (Easton & Echtman, PC, NY, New York) ( Etkind & Ecthman, LLP, NY New York) at least nine times. Remarkably, Ecthman himself was implicated in insurance fraud in one case and it was noted that he had deposited $1 million in a Swiss bank account in another case. The insurance fraud case was referred to the New York State Attorney General's Office. Echtman was also rebuked for a frivolous legal action where Circuit Judge Mulligan wrote "This appeal reveals a crass misuse of both the state and federal judicial systems to avoid the payment of a judgment." Also stated, "The history of this litigation in the state courts and its continuation in the federal court, even before the Supreme Court had demolished the only semblance of support plaintiffs could muster, serves to illustrate that this appeal was and is frivolous. This court has been utilized, as were earlier the state and district courts, as a device to frustrate the collection of a judgment of a state court."