U.S. securities regulators have started enforcement proceedings against a broker-dealer and its principal accused of helping inflate the price of tool maker Spear & Jackson Inc.'s (SJCK.PK: Quote, Profile, Research) shares and executing orders to sell them. The Securities and Exchange Commission said the proceedings would determine what remedial actions, such as civil penalties, are appropriate against Winter Park, Florida-based broker-dealer Park Financial Group Inc. and its principal, Gordon Cantley.

Spear & Jackson's former chief executive, Dennis Crowley, has already settled with the SEC in a related fraud case, agreeing to pay more than $6.1 million.

Lawyers for Park and Cantley did not immediately return phone calls seeking comment.

Spear & Jackson manufactures and distributes hand tools, lawn and garden tools, industrial magnets and meteorology tools.

The SEC said that between February 2002 and July 2003, Park and Cantley executed numerous trades in Spear & Jackson stock, despite obvious red flags. Proceeds from the trades were about $2.5 million.

On several occasions, former CEO Crowley gave Park and Cantley sell orders on Spear & Jackson stock for three British Virgin Islands companies that he secretly controlled, the SEC said.

The SEC said Park and Cantley filled the orders knowing that Crowley was the CEO of Spear & Jackson and that the British Virgin Islands companies' accounts traded only in the stock, often buying and selling shares on a daily basis.