UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION INVESTMENT ADVISERS ACT OF 1940 Release No. 2606 / May 23, 2007 ADMINISTRATIVE PROCEEDING File No. 3-12641 In the Matter of ALLOCATION PLUS ASSET MANAGEMENT COMPANY, INC., Respondent. ORDER INSTITUTING ADMINISTRATIVE PROCEEDINGS PURSUANT TO SECTION 203(e) OF THE INVESTMENT ADVISERS ACT OF 1940, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS I. The Securities and Exchange Commission (“Commission”) deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 203(e) of the Investment Advisers Act of 1940 (“Advisers Act”) against Allocation Plus Asset Management Company, Inc. (“APAM” or “Respondent”). II. In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission’s jurisdiction over it and the subject matter of these proceedings, and the findings contained in Section III.2 below, which are admitted, Respondent consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Section 203(e) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions (“Order”), as set forth below. 2 III. On the basis of this Order and Respondent’s Offer, the Commission finds that: 1. APAM is an investment adviser registered with the Commission from March 1994 to the present. Bradford C. Bleidt (“Bleidt”) was the sole shareholder, officer and director of APAM. 2. On May 8, 2007, a final judgment was entered by consent against APAM and Bleidt, permanently enjoining both from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act, in the civil action entitled Securities and Exchange Commission v. Bradford C. Bleidt, et al., Civil Action Number 104-12415-NG, in the District of Massachusetts. 3. The Commission’s complaint alleged that Bleidt, through APAM, diverted investor funds into his personal bank account, falsely stated to investors that their funds were invested, and otherwise engaged in a variety of conduct which operated as a fraud and deceit on investors. IV. In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions agreed to in Respondent APAM’s Offer. Accordingly, it is hereby ORDERED: Pursuant to Section 203(e) of the Advisers Act, that the registration of Respondent APAM be, and hereby is revoked. By the Commission. Nancy M. Morris Secretary
UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 55800 / May 23, 2007 ADMINISTRATIVE PROCEEDING File No. 3-12642 In the Matter of JAMES PROFFITT, Respondent. ORDER INSTITUTING ADMINISTRATIVE PROCEEDINGS PURSUANT TO SECTION 15(b) OF THE SECURITIES EXCHANGE ACT OF 1934, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTION I. The Securities and Exchange Commission (“Commission”) deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 (“Exchange Act”) against James Proffitt (“Respondent” or “Proffitt”). II. In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission’s jurisdiction over him and the subject matter of these proceedings, and the findings contained in Section III.2 below, which are admitted, Respondent consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanction (“Order”), as set forth below. III. On the basis of this Order and the Respondent’s Offer, the Commission finds that: 1. Proffitt, 69 years old, is a resident of Tomkinsville, Kentucky. Between January 1999 and March 2001, Proffitt solicited investors for Growth Benefit Systems. During that time period, Proffitt acted as an unregistered broker or dealer when he offered and sold securities for 2 Growth Benefit Systems, and was associated with unregistered brokers or dealers. Proffitt has never been associated with a registered broker or dealer. 2. On May 9, 2007, a final judgment was entered by consent against Proffitt, permanently enjoining him from future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder, in a civil action entitled Securities and Exchange Commission v. Jack Calvin, et al., Civil Action No. 03-CV-10586-MEL (D. Mass.), in the United States District Court for the District of Massachusetts. 3. The Commission’s complaint alleged, among other things, that Proffitt fraudulently offered and sold unregistered securities--while not being registered as a broker or dealer or associated with a registered broker or dealer--in Growth Benefit Systems, a purported “Prime Bank” trading program that was completely fictitious. The complaint also alleged that the Growth Benefit Systems securities were sold through Proffitt and salespeople that he recruited. The salespeople recruited by Proffitt were not registered as brokers or dealers. Proffitt received commission payments and shared commissions with the salespeople that he recruited. Based on his conduct, Proffitt was associated with salespeople who were operating as brokers or dealers. IV. In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanction agreed to in Respondent Proffitt’s Offer. Accordingly, it is hereby ORDERED: Pursuant to Section 15(b)(6) of the Exchange Act, that Respondent Proffitt be, and hereby is, barred from association with any broker or dealer. Any reapplication for association by the Respondent will be subject to the applicable laws and regulations governing the reentry process, and reentry may be conditioned upon a number of factors, including, but not limited to, the satisfaction of any or all of the following: (a) any disgorgement ordered against the Respondent, whether or not the Commission has fully or partially waived payment of such disgorgement; (b) any arbitration award related to the conduct that served as the basis for the Commission order; (c) any self-regulatory organization arbitration award to a customer, whether or not related to the conduct that served as the basis for the Commission order; and (d) any restitution order by a self-regulatory organization, whether or not related to the conduct that served as the basis for the Commission order. By the Commission. Nancy M. Morris Secretary
UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 55801 / May 23, 2007 ADMINISTRATIVE PROCEEDING File No. 3-12643 In the Matter of HEWLETT-PACKARD COMPANY, Respondent. ORDER INSTITUTING CEASE-AND-DESIST PROCEEDINGS, MAKING FINDINGS, AND IMPOSING A CEASE-AND-DESIST ORDER PURSUANT TO SECTION 21C OF THE SECURITIES EXCHANGE ACT OF 1934 I. The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities Exchange Act of 1934 (“Exchange Act”), against Hewlett-Packard Company (“HP,” “Hewlett-Packard,” or “Respondent”). II. In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission’s jurisdiction over Respondent and the subject matter of these proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-and-Desist Proceedings, Making Findings, and Imposing a Cease-and-Desist Order Pursuant to Section 21C of the Securities Exchange Act of 1934 (“Order”), as set forth below. III. On the basis of this Order and Respondent’s Offer, the Commission finds that: 2 A. Summary 1. This matter involves Hewlett-Packard’s failure to disclose the circumstances surrounding a board member’s resignation amidst the company’s controversial investigation into boardroom leaks. On May 18, 2006, HP’s Board of Directors learned the findings of the company’s leak investigation and voted to request the resignation of a director believed to have violated HP’s policies by providing confidential information to the press. Silicon Valley venture capitalist and fellow director Thomas Perkins (not the source of the leak) voiced his strong objections to the handling of the matter, announced his resignation, and walked out of the Board meeting. Contrary to the reporting requirements of the federal securities laws, HP failed to disclose to investors the circumstances of Mr. Perkins’ disagreement with the company. B. Respondent 2. Hewlett-Packard is a Delaware corporation headquartered in Palo Alto, California. HP sells computers, computer equipment, and support services. HP’s common stock is registered with the Commission pursuant to Section 12(b) of the Exchange Act and is listed on the New York Stock Exchange under the stock symbol “HPQ.” C. Facts Legal Background 3. Under the Exchange Act, a public company must file with the Commission a report on Form 8-K when a director resigns from the board. If a director has resigned because of a disagreement with the company, known to an executive officer, on any matter relating to the company’s operations, policies, or practices, the company must, among other things, disclose a brief description of the circumstances of the disagreement. In addition, the company must give the director the opportunity to timely review and respond to the company’s disclosure about the director’s resignation, and the company is required to file any letter written by the director to the company in response to the company’s disclosure. Absent such a disagreement, the company must report the resignation, but need not provide the reasons. HP’s Leak Investigation 4. In or around January 2006, in response to apparent unauthorized disclosures of confidential information about HP Board meetings to the press, HP initiated an investigation to determine the source of the leaks. HP Board member Thomas Perkins, Chairman of the Board’s Nominating and Governance Committee (which was responsible for, among other things, establishing board member qualifications and evaluating board operations), was generally informed of the inquiry. Mr. Perkins believed that he and HP’s Chairman had agreed that, upon completion of the investigation, they would approach any individual implicated privately, obtain an assurance that it would not happen again, and inform the full Board that the matter had been resolved without identifying the source of the leak. 3 5. By April 2006, HP investigators tentatively concluded that a long-standing HP director had leaked information in connection with a January 23, 2006 press article. After consulting with HP’s Chief Executive Officer, General Counsel, outside counsel, and Chairman of the Audit Committee, the Chairman of the Board determined that the leak investigation findings should be presented to the full Board. Mr. Perkins Resigns During the May 18, 2006 Board Meeting 6. HP’s Board of Directors met beginning at 12:30 p.m. on May 18, 2006 at HP’s headquarters in Palo Alto, California. All but one of the directors attended, including the CEO (who is a director), as did the company’s General Counsel (acting as the Board secretary). 7. At the start of the meeting, the head of HP’s Audit Committee discussed the leak investigation and its findings. After some discussion, the identity of the director who provided information for the January 2006 article was revealed. The director addressed the Board, explained his actions, and left the room to permit additional deliberations. The Board discussed HP’s policy on unauthorized public disclosures, and considered measures that could be taken in response to the director’s actions, including asking him to resign. 8. During the course of the Board’s deliberations, which lasted approximately 90 minutes, Mr. Perkins voiced his strong objections to the manner in which the matter was being handled. Among other things, he repeatedly told the Board that the source of the leak should have been approached “off-line” for an explanation and a warning, rather than identified to the whole Board. He affirmed his belief that the matter should have been handled confidentially by the Chairman of the Board and himself as Chairman of the Nominating and Governance Committee. He also questioned the wisdom of requesting the director to resign over what he perceived to be a relatively minor offense, noting that the director had made significant contributions to HP. 9. After a lengthy and heated discussion, the Board, by a secret written ballot, passed a motion to ask the director to resign from the Board. When HP’s General Counsel announced the results of the vote on whether to ask the director to resign, Mr. Perkins continued to voice disagreement. As noted in the Board minutes, Mr. Perkins “restated his strong objections to the process, specifically [the Chairman’s] decision to bring the matter to the full Board and the manner in which the meeting was conducted.” Mr. Perkins then resigned from the Board and departed the meeting at approximately 2:00 p.m. The director identified by the leak investigation was asked to resign following the vote, but declined to resign at that time. HP Fails to Disclose the Reasons for Mr. Perkins’ Resignation 10. HP executives understood that, in the event a director resigned over a disagreement with the company on a matter relating to its operations, policies, or practices, the company would need to report to the Commission (and thereby disclose to investors) the circumstances of the disagreement. 4 11. On May 22, 2006, HP filed a report on Form 8-K, pursuant to Item 5.02(b), reporting Mr. Perkins’ resignation, but did not comply with Item 5.02(a) by failing to disclose that there had been a disagreement with the company. HP also filed with the Form 8-K a May 19 press release, which announced that Mr. Perkins had resigned without disclosing the circumstances of his disagreement. 12. HP concluded, with the advice of outside legal counsel and the General Counsel, that it need not disclose the reasons for Mr. Perkins’ resignation because he merely had a disagreement with the company’s Chairman, and not a disagreement with the company on a matter relating to its operations, policies, or practices. Contrary to HP’s conclusion, the disagreement and the reasons for Mr. Perkins’ resignation should have been disclosed, pursuant to Item 5.02(a), in the May 22 Form 8-K. Mr. Perkins resigned as a result of a disagreement with HP on the following matters: (1) the decision to present the leak investigation findings to the full Board; and (2) the decision by majority vote of the Board of Directors to ask the director identified in the leak investigation to resign. Mr. Perkins’ disagreement related to important corporate governance matters and HP policies regarding handling sensitive information, and thus constituted a disagreement over HP’s operations, policies or practices. 13. HP did not disclose further information relating to Mr. Perkins’ resignation until September 6, 2006, after Mr. Perkins (and the staff of the Securities and Exchange Commission) had begun to raise questions about the adequacy of the company’s disclosures. D. Violations 14. Section 13(a) of the Exchange Act and Rule 13a-11 promulgated thereunder require issuers of securities registered pursuant to Section 12 of the Exchange Act to file with the Commission current reports on Form 8-K upon the occurrence of certain events, including the departure of directors or principal officers. Item 5.02(a) of Form 8-K specifies that if a director has resigned because of a disagreement with the registrant, known to an executive officer of the registrant, on any matter relating to the registrant’s operations, policies, or practices, the registrant must, among other things, disclose a brief description of the circumstances representing the disagreement that the registrant believes caused, in whole or in part, the director’s resignation. In addition, the registrant must provide the resigning director with a copy of the disclosure no later than the day the company files the disclosure with the Commission. Also, the registrant must provide the director with the opportunity to furnish a response letter stating whether the director agrees with the disclosure in the registrant’s Form 8-K. In the event that the registrant receives a response letter from the former director, the letter must be filed by the registrant as an amendment to its Form 8-K within two business days of its receipt. No showing of scienter is required to establish a violation of Section 13(a) of the Exchange Act. SEC v. Savoy, 587 F.2d 1149, 1167 (D.C. Cir. 1978). 15. On May 18, 2006, director Thomas Perkins resigned because of a disagreement with HP regarding the decision to present the leak investigation findings to the full Board and the decision by the Board to ask the director identified in the leak investigation to resign. The disagreement was known to HP executive officers. Mr. Perkins’ disagreement with HP related to 5 the operations, policies, or practices of HP. Consequently, HP was required by Item 5.02(a) of Form 8-K to disclose a brief description of the circumstances representing the disagreement, and was required to provide Mr. Perkins with a copy of this disclosure no later than the day of filing. By disclosing the resignation of Mr. Perkins pursuant to Item 5.02(b) in a Form 8-K filed on May 22, 2006, HP failed to disclose the circumstances of Mr. Perkins’ disagreement with HP and also failed to provide the director with a copy of such a filing. As a result, HP violated Section 13(a) of the Exchange Act and Rule 13a-11 thereunder. IV. In view of the foregoing, the Commission deems it appropriate to impose the sanctions agreed to in Respondent HP’s Offer. Accordingly, it is hereby ORDERED that Respondent HP cease and desist from committing or causing any violations and any future violations of Section 13(a) of the Exchange Act and Rule 13a-11 thereunder. By the Commission. Nancy M. Morris Secretary
33-8805 May 23, 2007 David A. Finnerty, Donald R. Foley II, Scott G. Hunt, Thomas J. Murphy, Jr., Kevin M. Fee, Frank A. Delaney IV, Freddy DeBoer, Todd J. Christie, James V. Parolisi, Robert W. Luckow, Patrick E. Murphy, Robert A. Johnson, Jr., Patrick J. McGagh, Jr., Joseph Bongiorno, Michael J. Hayward, Richard P. Volpe, Michael F. Stern, Warren E. Turk, Gerard T. Hayes, and Robert A. Scavone, Jr. Other Release No.: 34-55805 http://www.sec.gov/litigation/admin/2007/33-8805.pdf
UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION Securities Act of 1933 Release No. 8805 / May 23, 2007 Securities Exchange Act of 1934 Release No. 55805 / May 23, 2007 Administrative Proceeding File Number 3-11893 ______________________________ : In the Matter of : ORDER MAKING FINDINGS, : IMPOSING REMEDIAL SANCTIONS, : AND IMPOSING A CEASE-AND-DESIST David A. Finnerty, : ORDER PURSUANT TO SECTION 8A Donald R. Foley II, : OF THE SECURITIES ACT OF 1933 AND Scott G. Hunt, : SECTIONS 15(b)(6), 21C AND 11(b) OF THE Thomas J. Murphy, Jr., : SECURITIES EXCHANGE ACT OF 1934 AND Kevin M. Fee, : RULE 11b-1 THEREUNDER AS TO Frank A. Delaney IV, : PATRICK J. MCGAGH, JR. Freddy DeBoer, : Todd J. Christie, : James V. Parolisi, : Robert W. Luckow, : Patrick E. Murphy, : Robert A. Johnson, Jr., : Patrick J. McGagh, Jr., : Joseph Bongiorno, : Michael J. Hayward, : Richard P. Volpe, : Michael F. Stern, : Warren E. Turk, : Gerard T. Hayes, and : Robert A. Scavone, Jr. : : Respondents. : _____________________________ I. On April 12, 2005, the Securities and Exchange Commission (“Commission”) entered an Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933 and Sections 15(b)(6), 21C and 11(b) of the Securities Exchange Act of 1934 and Rule 11b-1 Thereunder (“OIP”) against respondent Patrick J. McGagh, Jr. (“McGagh”). II. McGagh has submitted an Offer of Settlement (“Offer”) in these administrative proceedings, which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission’s jurisdiction over him and the subject matter of these proceedings, which are admitted, McGagh consents to the entry of this Order Making Findings, Imposing Remedial Sanctions, and Imposing a Cease-and-Desist Order Pursuant to Section 8A of the Securities Act of 1933 and Sections 15(b)(6), 21C and 11(b) of the Securities Exchange Act of 1934, and Rule 11b-1 Thereunder as to Patrick J. McGagh, Jr. (“Order”), as set forth below. III. On the basis of this Order and McGagh’s Offer, the Commission finds1 that: FACTS 1. McGagh is one of twenty respondents in pending administrative and cease-and-desist proceedings, file number 3-11893, who have been charged with fraudulent and other improper trading during the period from at least 1999 through June 30, 2003, while they were acting as specialists on the New York Stock Exchange (“NYSE”). 2. McGagh, age 41, acted as a specialist on the NYSE at Van der Moolen Specialists USA, LLC (“Van der Moolen”) from at least January 1, 1999 to approximately March 2004 (the “Relevant Period”). 3. During the Relevant Period, McGagh was the specialist in the following securities: Nortel Networks Corp. (“NT”) (from January 1999 to January 2001) and Pfizer, Inc. (“PFE”) (from May 2001 to approximately April 2003, with absences from the panel where that security was traded in February 2002 and March 2002). 1 The findings herein are made pursuant to McGagh’s Offer of Settlement and are not binding on any other person or entity in this or any other proceeding. 2 4. As a specialist, McGagh had an obligation to serve public customer orders over the proprietary interests of the firm with whom he was formerly employed, Van der Moolen. In his role as a specialist, McGagh had a general duty to match executable public customer or “agency” buy and sell orders and not to fill customer orders through trades from Van der Moolen’s own account when those customer orders could be matched with other customer orders. McGagh violated this obligation by filling orders through proprietary trades rather than through other customer orders, through two types of improper trading referred to herein as “interpositioning” and “trading ahead.” 5. Interpositioning involves a two-step process that allows the specialist to generate a profit for the specialist firm from the spread between two opposite trades. Interpositioning can take various forms. In one form, the specialist purchases stock for the specialist firm’s proprietary account from the customer sell order, and then fills the customer buy order by selling from the specialist firm’s proprietary account at a higher price – thus locking in a riskless profit for the specialist firm’s proprietary account. A second form of interpositioning involves the specialist selling stock into the customer buy order, and then filling the customer sell order by buying for the specialist firm’s proprietary account at a lower price – again, locking in a riskless profit for the specialist firm’s proprietary account. In both forms of interpositioning, the specialist participates on both sides of the trade, thereby capturing the spread between the purchase and sale prices, disadvantaging at least one of the parties to the transaction. 6. Trading ahead involves a practice whereby the specialist fills an agency order through a proprietary trade for the specialist firm’s proprietary account – and thereby improperly ‘steps in front’ of, or ‘trades ahead’ of, another agency order – simply to allow the specialist firm to take advantage of market conditions promptly. Unlike interpositioning, the practice of “trading ahead” does not necessarily involve a second specialist trade for the specialist firm’s proprietary account into the opposite, disadvantaged agency order. For example, in a declining market, a specialist may “trade ahead” by filling a market buy order by selling stock from the specialist firm’s proprietary account in front of an agency market sell order. In so doing, the specialist would lock in a higher price for the proprietary trade, then fill the agency sell order after the proprietary trade, and thereby force the agency market sell order to accept a slightly lower price as the price of the stock fell. 7. During the Relevant Period, in NT and PFE, McGagh knowingly or recklessly engaged in approximately 20,043 instances of interpositioning, locking in a riskless profit of approximately $3,271,406 for his firm’s proprietary account at the expense of customer orders, and approximately 4,014 instances of trading ahead, causing approximately $1,178,892 in customer harm. 8. On May 12, 2006, McGagh pled guilty to one count of securities fraud, in U.S. v. Joseph Bongiorno, et al., 05 Crim. 390 (S.D.N.Y.), stemming from the same conduct 3 as that charged in the OIP as it relates to PFE. On October 13, 2006, McGagh was sentenced to 27 months imprisonment and assessed a $250,000 fine. McGagh paid the fine in full on November 1, 2006. McGagh is currently incarcerated in the satellite prison camp at the Federal Correctional Institution – McKean in Bradford, Pennsylvania. APPLICABLE LAW Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act of 1934 and Rule 10b-5 Thereunder 9. The antifraud provisions of Section 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder prohibit, among other things, any schemes to defraud or fraudulent or deceptive acts and practices in the offer or sale (Section 17(a)) or in connection with the purchase or sale (Section 10(b) and Rule 10b-5) of securities. Basic, Inc. v. Levinson, 485 US 224, 235 n.13 (1988) (citing SEC v. Texas Gulf Sulphur Co., 401 F.2d 833, 862 (2d Cir. 1968) (en banc)). To prove a violation of Section 17(a)(1) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, the Commission must prove that the respondent acted with scienter. Aaron v. SEC, 446 U.S. 680, 691 (1980). Scienter may be established by proof of conscious behavior or recklessness on the part of the respondent. In re Scholastic Corp. Sec. Litig., 252 F.3d 63, 74 (2d Cir. 2001); SEC v. U.S. Environmental, Inc., 155 F.3d 107, 111 (2d Cir. 1998), cert. denied, 526 U.S. 1111 (1999). Scienter need not be shown in order to establish violations of Sections 17(a)(2) and (3) of the Securities Act. Aaron v. SEC, 446 U.S. 680, 696-97 (1980). 10. As a result of the described conduct above, McGagh willfully violated Section 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Section 11(b) of the Exchange Act and Rule 11b-1 Thereunder 11. Section 11(b) of the Exchange Act and Rule 11b-1 thereunder impose various limitations on the operations of specialists, including limiting a specialist’s dealer transactions to those “reasonably necessary to permit him to maintain a fair and orderly market.” 12. Where specialists make trades for their firm’s proprietary accounts that are not “reasonably necessary to permit [such specialists] to maintain a fair and orderly market,” and “were not effected in a manner consistent with the rules adopted by [the pertinent national securities exchange],” they have violated Section 11(b) and Rule 11b-1 of the Exchange Act. See In the Matter of Albert Fried & Co. and Albert Fried, Jr., 1978 WL 196046, S.E.C. Release No. 34-15293 (Nov. 3, 1978). 4 13. Several NYSE rules prohibit a specialist from trading ahead of a customer order, as well as from engaging in interpositioning, and require agency orders to be matched whenever possible, consistent with a specialist’s duty to maintain a fair and orderly market. 14. NYSE Rule 104 (Dealings by Specialists), which sets forth specialists’ obligations, prohibits specialists from trading for their own accounts unless it is reasonably necessary to maintain a fair and orderly market. This is known as the negative obligation. Rule 104 states in relevant part: “No specialist shall effect . . . purchases or sales of any security in which such specialist is registered . . ., unless such dealings are reasonably necessary to permit such specialist to maintain a fair and orderly market.”2 15. NYSE Rule 92 (Limitations on Members’ Trading Because of Customers Orders) generally prohibits a member from entering a proprietary order to buy (or sell) a security while in possession of an executable buy (or sell) agency order that could be executed at the same price. During the Relevant Period, Rule 92 stated in relevant part: No member shall personally buy . . . any security . . . for his own account or for any account in which he is . . . interested . . . while such member personally holds or has knowledge that his member organization holds an unexecuted market order to buy such security . . . for a customer.3 2 Rule 104.10(3), which describes specialists’ affirmative obligations, also expands on the negative obligation: Transactions on the Exchange for his own Account effected by a member acting as a specialist must constitute a course of dealings reasonably calculated to contribute to the maintenance of price continuity with reasonable depth, and to minimizing of the effects of temporary disparity between supply and demand, immediate or reasonably to be anticipated. Transactions not part of such a course of dealings … are not to be effected. 3 Rule 92 was amended on January 7, 2002 to read in relevant part: [n]o member or member organization shall cause the entry of an order to buy (sell) any Exchange-listed security for any account in which such member or member organization or any approved person thereof is directly or indirectly interested (“a proprietary order”), if the person responsible for the entry of such order has knowledge of any particular unexecuted customer’s order to buy (sell) such security which could be executed at the same price. 5 16. Similarly, NYSE Rule 92 also applies to the specialist buying or selling a security while holding an unexecuted market buy or sell order, as well as to circumstances where the specialist holds unexecuted customer limit orders at a price that could be satisfied by the proprietary transaction effected by the specialist. 17. NYSE Rule 123B (Exchange Automated Order Routing Systems) requires specialists to cross orders received over the DOT system. Rule 123B(d) states in relevant part: “a specialist shall execute System orders in accordance with the Exchange auction market rules and procedures, including requirements to expose orders to buying and selling interest in the trading crowd and to cross orders before buying or selling from his own account.” (Emphasis added). 18. NYSE Rule 401 requires NYSE members to “adhere to the principles of good business practice in the conduct of his or its business affairs.” Similarly, NYSE Rule 476(a)(6) provides sanctions if NYSE members are adjudged guilty of “conduct or proceeding inconsistent with just and equitable principles of trade.” 19. As a result of the conduct described above, McGagh willfully violated all of the aforementioned NYSE rules as well as Section 11(b) of the Exchange Act and Rule 11b-1 thereunder. IV. In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions agreed to in McGagh’s Offer. Accordingly, it is hereby ORDERED that: 1. Pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, McGagh shall cease and desist from committing or causing any violations and any future violations of Section 17(a) of the Securities Act, and Sections 10(b) and 11(b) of the Exchange Act and Rules 10b-5 and 11b-1 thereunder. 2. Pursuant to Section 15(b)(6) of the Exchange Act, McGagh be, and hereby is, barred from association with any broker or dealer. Any reapplication for association by McGagh will be subject to the applicable laws and regulations governing the reentry process, and reentry may be conditioned upon a number of factors, including, but not limited to, the satisfaction of any or all of the following: (a) any disgorgement ordered against McGagh, whether or not the Commission has fully or partially waived payment of such disgorgement; (b) any arbitration award related to the conduct that served as the basis for the Commission order; (c) any self-regulatory organization arbitration award to a customer, whether or not related to the conduct that served as the basis for the Commission order; and (d) any restitution order by a self- 6 regulatory organization, whether or not related to the conduct that served as the basis for the Commission order. By the Commission. Nancy M. Morris Secretary 7
33-8806 May 23, 2007 David A. Finnerty, Donald R. Foley II, Scott G. Hunt, Thomas J. Murphy, Jr., Kevin M. Fee, Frank A. Delaney IV, Freddy DeBoer, Todd J. Christie, James V. Parolisi, Robert W. Luckow, Patrick E. Murphy, Robert A. Johnson, Jr., Patrick J. McGagh, Jr., Joseph Bongiorno, Michael J. Hayward, Richard P. Volpe, Michael F. Stern, Warren E. Turk, Gerard T. Hayes, and Robert A. Scavone, Jr. Other Release No.: 34-55802 http://www.sec.gov/litigation/admin/2007/33-8806.pdf
UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION Securities Act of 1933 Release No. 8806 / May 23, 2007 Securities Exchange Act of 1934 Release No. 55802 / May 23, 2007 Administrative Proceeding File Number 3-11893 ______________________________ : In the Matter of : ORDER MAKING FINDINGS, : IMPOSING REMEDIAL SANCTIONS, : AND IMPOSING A CEASE-AND-DESIST David A. Finnerty, : ORDER PURSUANT TO SECTION 8A Donald R. Foley II, : OF THE SECURITIES ACT OF 1933 AND Scott G. Hunt, : SECTIONS 15(b)(6), 21C AND 11(b) OF THE Thomas J. Murphy, Jr., : SECURITIES EXCHANGE ACT OF 1934 AND Kevin M. Fee, : RULE 11b-1 THEREUNDER AS TO Frank A. Delaney IV, : JOSEPH BONGIORNO Freddy DeBoer, : Todd J. Christie, : James V. Parolisi, : Robert W. Luckow, : Patrick E. Murphy, : Robert A. Johnson, Jr., : Patrick J. McGagh, Jr., : Joseph Bongiorno, : Michael J. Hayward, : Richard P. Volpe, : Michael F. Stern, : Warren E. Turk, : Gerard T. Hayes, and : Robert A. Scavone, Jr. : : Respondents. : _____________________________ I. On April 12, 2005, the Securities and Exchange Commission (“Commission”) entered an Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933 and Sections 15(b)(6), 21C and 11(b) of the Securities Exchange Act of 1934 and Rule 11b-1 Thereunder (“OIP”) against respondent Joseph Bongiorno (“Bongiorno”). II. Bongiorno has submitted an Offer of Settlement (“Offer”) in these administrative proceedings, which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission’s jurisdiction over him and the subject matter of these proceedings, which are admitted, Bongiorno consents to the entry of this Order Making Findings, Imposing Remedial Sanctions, and Imposing a Cease-and-Desist Order Pursuant to Section 8A of the Securities Act of 1933 and Sections 15(b)(6), 21C and 11(b) of the Securities Exchange Act of 1934 and Rule 11b-1 Thereunder as to Joseph Bongiorno (“Order”), as set forth below. III. On the basis of this Order and Bongiorno’s Offer, the Commission finds1 that: FACTS 1. Bongiorno is one of twenty respondents in pending administrative and cease-and-desist proceedings, file number 3-11893, who have been charged with fraudulent and other improper trading during the period from at least 1999 through June 30, 2003, while they were acting as specialists on the New York Stock Exchange (“NYSE”). 2. Bongiorno, age 52, acted as a specialist on the NYSE at Van der Moolen Specialists USA, LLC (“Van der Moolen”) from at least January 1, 1999 to approximately March 2004 (the “Relevant Period”). 3. From January 1999 to June 2003, Bongiorno was the specialist in Hewlett-Packard Co. (“HPQ”). 4. As a specialist, Bongiorno had an obligation to serve public customer orders over the proprietary interests of the firm with whom he was formerly employed, Van der Moolen. In his role as a specialist, Bongiorno had a general duty to match 1 The findings herein are made pursuant to Bongiorno’s Offer of Settlement and are not binding on any other person or entity in this or any other proceeding. 2 executable public customer or “agency” buy and sell orders and not to fill customer orders through trades from Van der Moolen’s own account when those customer orders could be matched with other customer orders. Bongiorno violated this obligation by filling orders through proprietary trades rather than through other customer orders, through two types of improper trading referred to herein as “interpositioning” and “trading ahead.” 5. Interpositioning involves a two-step process that allows the specialist to generate a profit for the specialist firm from the spread between two opposite trades. Interpositioning can take various forms. In one form, the specialist purchases stock for the specialist firm’s proprietary account from the customer sell order, and then fills the customer buy order by selling from the specialist firm’s proprietary account at a higher price – thus locking in a riskless profit for the specialist firm’s proprietary account. A second form of interpositioning involves the specialist selling stock into the customer buy order, and then filling the customer sell order by buying for the specialist firm’s proprietary account at a lower price – again, locking in a riskless profit for the specialist firm’s proprietary account. In both forms of interpositioning, the specialist participates on both sides of the trade, thereby capturing the spread between the purchase and sale prices, disadvantaging at least one of the parties to the transaction. 6. Trading ahead involves a practice whereby the specialist fills an agency order through a proprietary trade for the specialist firm’s proprietary account – and thereby improperly ‘steps in front’ of, or ‘trades ahead’ of, another agency order – simply to allow the specialist firm to take advantage of market conditions promptly. Unlike interpositioning, the practice of “trading ahead” does not necessarily involve a second specialist trade for the specialist firm’s proprietary account into the opposite, disadvantaged agency order. For example, in a declining market, a specialist may “trade ahead” by filling a market buy order by selling stock from the specialist firm’s proprietary account in front of an agency market sell order. In so doing, the specialist would lock in a higher price for the proprietary trade, then fill the agency sell order after the proprietary trade, and thereby force the agency market sell order to accept a slightly lower price as the price of the stock fell. 7. During the Relevant Period, in HPQ, Bongiorno knowingly or recklessly engaged in approximately 14,688 instances of interpositioning, locking in a riskless profit of approximately $1,321,869 for his firm’s proprietary account at the expense of customer orders, and approximately 7,550 instances of trading ahead, causing approximately $1,199,452 in customer harm. 8. On May 12, 2006, Bongiorno pled guilty to one count of securities fraud, in U.S. v. Joseph Bongiorno, et al., 05 Crim. 390 (S.D.N.Y.), stemming from the same conduct as that charged in the OIP. On October 13, 2006, Bongiorno was sentenced to 27 months imprisonment and assessed a $250,000 fine. Bongiorno paid the fine in full 3 on November 6, 2006. Bongiorno is currently incarcerated in the satellite prison camp at the United States Penitentiary – Lewisburg in Lewisburg, Pennsylvania. APPLICABLE LAW Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 Thereunder 9. The antifraud provisions of Section 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder prohibit, among other things, any schemes to defraud or fraudulent or deceptive acts and practices in the offer or sale (Section 17(a)) or in connection with the purchase or sale (Section 10(b) and Rule 10b-5) of securities. Basic, Inc. v. Levinson, 485 US 224, 235 n.13 (1988) (citing SEC v. Texas Gulf Sulphur Co., 401 F.2d 833, 862 (2d Cir. 1968) (en banc)). To prove a violation of Section 17(a)(1) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, the Commission must prove that the respondent acted with scienter. Aaron v. SEC, 446 U.S. 680, 691 (1980). Scienter may be established by proof of conscious behavior or recklessness on the part of the respondent. In re Scholastic Corp. Sec. Litig., 252 F.3d 63, 74 (2d Cir. 2001); SEC v. U.S. Environmental, Inc., 155 F.3d 107, 111 (2d Cir. 1998), cert. denied, 526 U.S. 1111 (1999). Scienter need not be shown in order to establish violations of Sections 17(a)(2) and (3) of the Securities Act. Aaron v. SEC, 446 U.S. 680, 696-97 (1980). 10. As a result of the described conduct above, Bongiorno willfully violated Section 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Section 11(b) of the Exchange Act and Rule 11b-1 Thereunder 11. Section 11(b) of the Exchange Act and Rule 11b-1 thereunder impose various limitations on the operations of specialists, including limiting a specialist’s dealer transactions to those “reasonably necessary to permit him to maintain a fair and orderly market.” 12. Where specialists make trades for their firm’s proprietary accounts that are not “reasonably necessary to permit [such specialists] to maintain a fair and orderly market,” and “were not effected in a manner consistent with the rules adopted by [the pertinent national securities exchange],” they have violated Section 11(b) and Rule 11b-1 of the Exchange Act. See In the Matter of Albert Fried & Co. and Albert Fried, Jr., 1978 WL 196046, S.E.C. Release No. 34-15293 (Nov. 3, 1978). 13. Several NYSE rules prohibit a specialist from trading ahead of a customer order, as well as from engaging in interpositioning, and require agency orders to be matched whenever possible, consistent with a specialist’s duty to maintain a fair and orderly market. 4 14. NYSE Rule 104 (Dealings by Specialists), which sets forth specialists’ obligations, prohibits specialists from trading for their own accounts unless it is reasonably necessary to maintain a fair and orderly market. This is known as the negative obligation. Rule 104 states in relevant part: “No specialist shall effect . . . purchases or sales of any security in which such specialist is registered . . ., unless such dealings are reasonably necessary to permit such specialist to maintain a fair and orderly market.”2 15. NYSE Rule 92 (Limitations on Members’ Trading Because of Customers Orders) generally prohibits a member from entering a proprietary order to buy (or sell) a security while in possession of an executable buy (or sell) agency order that could be executed at the same price. During the Relevant Period, Rule 92 stated in relevant part: No member shall personally buy . . . any security . . . for his own account or for any account in which he is . . . interested . . . while such member personally holds or has knowledge that his member organization holds an unexecuted market order to buy such security . . . for a customer.3 16. Similarly, NYSE Rule 92 also applies to the specialist buying or selling a security while holding an unexecuted market buy or sell order, as well as to circumstances 2 Rule 104.10(3), which describes specialists’ affirmative obligations, also expands on the negative obligation: Transactions on the Exchange for his own Account effected by a member acting as a specialist must constitute a course of dealings reasonably calculated to contribute to the maintenance of price continuity with reasonable depth, and to minimizing of the effects of temporary disparity between supply and demand, immediate or reasonably to be anticipated. Transactions not part of such a course of dealings … are not to be effected. 3 Rule 92 was amended on January 7, 2002 to read in relevant part: [n]o member or member organization shall cause the entry of an order to buy (sell) any Exchange-listed security for any account in which such member or member organization or any approved person thereof is directly or indirectly interested (“a proprietary order”), if the person responsible for the entry of such order has knowledge of any particular unexecuted customer’s order to buy (sell) such security which could be executed at the same price. 5 where the specialist holds unexecuted customer limit orders at a price that could be satisfied by the proprietary transaction effected by the specialist. 17. NYSE Rule 123B (Exchange Automated Order Routing Systems) requires specialists to cross orders received over the DOT system. Rule 123B(d) states in relevant part: “a specialist shall execute System orders in accordance with the Exchange auction market rules and procedures, including requirements to expose orders to buying and selling interest in the trading crowd and to cross orders before buying or selling from his own account.” (Emphasis added). 18. NYSE Rule 401 requires NYSE members to “adhere to the principles of good business practice in the conduct of his or its business affairs.” Similarly, NYSE Rule 476(a)(6) provides sanctions if NYSE members are adjudged guilty of “conduct or proceeding inconsistent with just and equitable principles of trade.” 19. As a result of the conduct described above, Bongiorno willfully violated all of the aforementioned NYSE rules as well as Section 11(b) of the Exchange Act and Rule 11b-1 thereunder. IV. In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions agreed to in Bongiorno’s Offer. Accordingly, it is hereby ORDERED that: 1. Pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, Bongiorno shall cease and desist from committing or causing any violations and any future violations of Section 17(a) of the Securities Act, and Sections 10(b) and 11(b) of the Exchange Act and Rules 10b-5 and 11b-1 thereunder. 2. Pursuant to Section 15(b)(6) of the Exchange Act, Bongiorno be, and hereby is, barred from association with any broker or dealer. 6 Any reapplication for association by Bongiorno will be subject to the applicable laws and regulations governing the reentry process, and reentry may be conditioned upon a number of factors, including, but not limited to, the satisfaction of any or all of the following: (a) any disgorgement ordered against Bongiorno, whether or not the Commission has fully or partially waived payment of such disgorgement; (b) any arbitration award related to the conduct that served as the basis for the Commission order; (c) any self-regulatory organization arbitration award to a customer, whether or not related to the conduct that served as the basis for the Commission order; and (d) any restitution order by a self-regulatory organization, whether or not related to the conduct that served as the basis for the Commission order. By the Commission. Nancy M. Morris Secretary 7
UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 55813 / May 25, 2007 ADMINISTRATIVE PROCEEDING File No. 3-12644 In the Matter of ANGELO RAGONE Respondent. ORDER INSTITUTING ADMINISTRATIVE PROCEEDINGS PURSUANT TO SECTION 15(b) OF THE SECURITIES EXCHANGE ACT OF 1934, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS I. The Securities and Exchange Commission (“Commission”) deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 (“Exchange Act”) against Angelo Ragone (“Respondent” or “Ragone”). II. In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission’s jurisdiction over him and the subject matter of these proceedings, and the findings contained in Section III.2 below, which are admitted, Respondent consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions (“Order”), as set forth below. III. On the basis of this Order and Respondent’s Offer, the Commission finds that: 1. Angelo Ragone, 43 years old, is a resident of Sarasota, Florida. He is the founder and sole owner of New York Partnership Exchange, Inc., an unregistered broker-dealer. 2 2. On May 15, 2007, a final judgment was entered by consent against Ragone, permanently enjoining him from future violations of Sections 17(a)(1), (2), and (3) of the Securities Act of 1933, and Sections 10(b) and 15(a)(1) of the Exchange Act and Rule 10b-5 thereunder, in the civil action titled Securities and Exchange Commission v. Ragone, et al., Civil Action Number 8:07-cv-816, in the United States District Court for the Middle District of Florida. 3. The Commission’s complaint alleged that from 1989 through August 2006, Ragone, through his firm New York Partnership Exchange, Inc., engaged in the business of effecting transactions in securities for the accounts of others and for his own account without being associated with a broker-dealer registered with the Commission. The Commission also alleged in its complaint that from January 1, 1999 through August 2006, Ragone knowingly or, at a minimum, recklessly violated the anti-fraud provisions of the federal securities laws by making and/or directing others to make material misrepresentations to customers about the status of a transaction in order to delay payment and by improperly withholding portions of trade proceeds due to customers. IV. In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions agreed to in Ragone’s Offer. Accordingly, it is hereby ORDERED: Pursuant to Section 15(b)(6)(A) of the Exchange Act, that Ragone be, and hereby is barred from association with any broker or dealer. Any reapplication for association by the Respondents will be subject to the applicable laws and regulations governing the reentry process, and reentry may be conditioned upon a number of factors, including, but not limited to, the satisfaction of any or all of the following: (a) any disgorgement ordered against the Respondent, whether or not the Commission has fully or partially waived payment of such disgorgement; (b) any arbitration award related to the conduct that served as the basis for the Commission order; (c) any self-regulatory organization arbitration award to a customer, whether or not related to the conduct that served as the basis for the Commission order; and (d) any restitution order by a self-regulatory organization, whether or not related to the conduct that served as the basis for the Commission order. For the Commission, by its Secretary, pursuant to delegated authority. Nancy M. Morris Secretary
UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION INVESTMENT ADVISERS ACT OF 1940 Release No. 2607 / May 25, 2007 ADMINISTRATIVE PROCEEDING File No. 3-12645 In the Matter of Albert E. Parish, Jr. Respondent. ORDER INSTITUTING ADMINISTRATIVE PROCEEDINGS PURSUANT TO SECTION 203(f) OF THE INVESTMENT ADVISERS ACT OF 1940, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS I. The Securities and Exchange Commission (“Commission”) deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 203(f) of the Investment Advisers Act of 1940 (“Advisers Act”) against Albert E. Parish, Jr. (“Parish” or “Respondent”). II. In anticipation of the institution of these proceedings, Respondent Parish has submitted an Offer of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission’s jurisdiction over him and the subject matter of these proceedings, and the findings contained in Section III.2 below, which are admitted, Respondent consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Section 203(f) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions (“Order”), as set forth below. III. On the basis of this Order and Respondent’s Offer, the Commission finds that: 1. Parish served as vice-president and part owner of a registered investment adviser in Mt. Pleasant, South Carolina until March 28, 2007. Since approximately 1986, Parish 2 has been operating various investment funds that he described as “informal pools of money” through which investors could invest in, respectively, commodities and securities futures products (the Futures Pool), bonds (the Hedged Income Pool), stocks (the Stock Pool), and hard assets such as expensive watches, jewelry and fine art (Hard Asset Pool). Parish, 49 years old, is a resident of Summerville, South Carolina. 2. On May 4, 2007, a permanent injunction was entered by consent against Parish, enjoining him from future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act, in the civil action entitled Securities and Exchange Commission v. Albert E. Parish, et al., Civil Action Number 2:07-CV-919-DCN, in the United States District Court for the District of South Carolina. 3. The Commission’s complaint alleged that, in connection with the sale of interests in the investment funds previously described, Parish misused and misappropriated investor funds, falsely stated to investors that their funds were invested, sent out false account statements indicating that investors funds were fully invested and earning returns, and otherwise engaged in a variety of conduct which operated as a fraud and deceit on investors. IV. In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions agreed to in Respondent Parish’s Offer. Accordingly, it is hereby ORDERED: Pursuant to Section Section 203(f) of the Advisers Act, that Respondent Parish be, and hereby is barred from association with any investment adviser. Any reapplication for association by the Respondent will be subject to the applicable laws and regulations governing the reentry process, and reentry may be conditioned upon a number of factors, including, but not limited to, the satisfaction of any or all of the following: (a) any disgorgement ordered against the Respondent, whether or not the Commission has fully or partially waived payment of such disgorgement; (b) any arbitration award related to the conduct that served as the basis for the Commission order; (c) any self-regulatory organization arbitration award to a customer, whether or not related to the conduct that served as the basis for the Commission order; and (d) any restitution order by a self-regulatory organization, whether or not related to the conduct that served as the basis for the Commission order. By the Commission. Nancy M. Morris Secretary
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