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U.S. Securities and Exchange Commission

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES ACT OF 1933
RELEASE NO. 7876 / July 24, 2000

SECURITIES EXCHANGE ACT OF 1934
RELEASE NO. 43067 / July 24, 2000

ADMINISTRATIVE PROCEEDING
FILE NO. 3-9923

In the Matter of

L.T. LAWRENCE & CO., INC.,
TODD E. ROBERTI, and
LAWRENCE PRINCIPATO,
Respondents.

ORDER MAKING FINDINGS
AND IMPOSING REMEDIAL
SANCTIONS

I.

In this public administrative proceeding ordered pursuant to Section 8A of the Securities Act of 1933 ("Securities Act") and Sections 15(b), 19(h) and 21C of the Securities Exchange Act of 1934 ("Exchange Act"), L.T. Lawrence & Co., Inc. ("LAWR"), Todd E. Roberti ("Roberti") and Lawrence Principato ("Principato") have submitted Offers of Settlement ("Offers"), which the Commission has determined to accept.1 Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings contained in this Order, except for the Commission's jurisdiction with respect to the matters set forth in this Order and those facts which are set forth in paragraph II.A.1. below, which LAWR, Roberti and Principato admit, LAWR, Roberti and Principato consent to the entry of this Order.

II.

On the basis of this Order, the Order Instituting Public Administrative Proceedings in this matter and the Offers of Settlement submitted by LAWR, Roberti and Principato, the Commission finds that:

A. Respondents

1. Principato and Roberti were, at all relevant times, and continue to be, co-owners of LT Capital Corp. ("LTC"), which owns 100% of LAWR. Roberti and Principato have been officers of LAWR from at least March 1993 to the present. LAWR is a registered broker-dealer that has been registered with the Commission since March 1993.

2. LAWR was the managing underwriter of two initial public offerings ("IPOs"): the Ecotyre Technologies, Inc. ("Ecotyre") IPO on December 12, 1995, and the Bigmar, Inc. ("Bigmar") IPO on June 19, 1996.

3. Principato and Roberti have personally controlled and directed the activities of LAWR, including the activities described below, from March 1993 to the present.

B. Ecotyre IPO

1. On or about December 12, 1995, the entire Ecotyre IPO of 1,725,000 units, including 225,000 units resulting from LAWR's exercise of the underwriter's over-allotment option, was sold out at the price of $4.00 per unit. LAWR sold approximately 83% of the IPO to its own retail customers. In addition, before trading began, LAWR obtained orders from retail customers for units in the aftermarket.

2. Aftermarket trading began on December 13, 1995, at approximately 12:20 p.m. On December 13, 1995, between approximately 12:20 p.m. and 1:52 p.m., LAWR acquired for its inventory approximately 320,000 of the units sold in the Ecotyre IPO, having purchased approximately 305,000 of those units by 12:25 p.m. at an average cost of approximately $4.81. Between approximately 12:20 p.m. and 12:25 p.m., LAWR executed no sales to retail customers, even though it held retail customer orders. LAWR acquired approximately 52,000 units from other broker-dealers into inventory between 1:52 p.m. and 4:00 p.m. The price of the Ecotyre units rose from the IPO price of $4.00 to approximately $6.50 by 1:52 p.m.

3. Between approximately 12:36 p.m. and 4:00 p.m. on December 13, 1995, LAWR began to sell units out of inventory to customers. LAWR sold approximately 944,400 Ecotyre units to its customers at prices ranging from approximately $7.00 to $8.00 per unit. By the end of the day on December 13, 1995, LAWR took a short position in its inventory accounts of approximately 624,400 units. LAWR's purchases from and sales to its customers of Ecotyre units constituted approximately 95% of all retail transactions on December 13, 1995. More than 98% of all retail sales on December 13, 1995, were made to customers of LAWR. LAWR ultimately profited by approximately $1.2 million from the sales of the Ecotyre units on December 13, 1995.

4. As a result of purchasing the Ecotyre units at ever increasing prices while dominating and controlling the market, and as a result of LAWR increasing the bid for the securities, LAWR manipulated the price of the Ecotyre units to approximately $8.00 by the end of trading on December 13, 1995.

C. Bigmar IPO

1. Bigmar was listed on the Boston Stock Exchange and the NASDAQ SmallCap Market. On or about June 19, 1996, the entire Bigmar IPO of 1,610,000 shares, including the 210,000 shares resulting from LAWR's exercise of the underwriter's over-allotment option, was sold out at the price of $7.50 per share. LAWR sold approximately 81% of the IPO to its own retail customers. In addition, before trading began, LAWR obtained orders from retail customers for shares in the aftermarket.

2. Aftermarket trading began at approximately 1:20 p.m. on June 20, 1996. On June 20, 1996, between approximately 1:20 p.m. and 2:41 p.m., LAWR acquired for its inventory approximately 394,730 of the shares sold in the Bigmar IPO. The average cost of those shares was approximately $9.74. The price of the Bigmar shares rose from the IPO price of $7.50 to approximately $11.00 by 2:41 p.m. During this period, LAWR executed virtually no sales to retail customers, even though it held retail customer orders.

3. Between approximately 2:42 p.m. and 4:00 p.m. on June 20, 1996, LAWR began to sell shares out of inventory to customers. LAWR sold approximately 746,375 Bigmar shares to its customers at prices ranging from approximately $10.75 to $12.00 per share. By the end of the day on June 20, 1996, LAWR took a short position in its inventory accounts of approximately 269,055 shares. LAWR's purchases from and sales to its customers of Bigmar shares constituted approximately 90% of all retail transactions on June 20, 1996. More than 96% of all retail sales on June 20, 1996, were made to customers of LAWR. LAWR ultimately profited by approximately $861,000 from the sales of the Bigmar shares on June 20, 1996.

4. As a result of purchasing the Bigmar shares at ever increasing prices while dominating and controlling the market, and as a result of LAWR increasing the bid for the securities, LAWR manipulated the price of the Bigmar shares to approximately $12.00 by the end of trading on June 20, 1996.

D. Summary of Respondents' Manipulative Conduct

LAWR, Roberti, and Principato:

1. effected a series of transactions, thereby acquiring over 86% of the public float of the Ecotyre units by effectively controlling the Ecotyre units held in its customer accounts and by purchasing the securities from IPO investors, members of the Ecotyre selling group, and others in the Ecotyre aftermarket;

2. manipulated the price of the Ecotyre units from the IPO price of $4.00 to approximately $8.00 by:

a. exercising price leadership by purchasing Ecotyre units at increasing prices and entering increasing bids into the NASDAQ system;

b. dominating and controlling the market for the Ecotyre units; and

c. controlling and substantially reducing the floating supply of the Ecotyre units; and

3. after accumulating the vast majority of the Ecotyre units and manipulating the price of the Ecotyre units, sold the units to its customers at the artificially inflated prices.

4. effected a series of transactions, thereby acquiring over 86% of the public float of the Bigmar shares by effectively controlling the Bigmar shares held in its customer accounts and by purchasing the securities from IPO investors, members of the Bigmar selling group, and others in the Bigmar aftermarket;

5. manipulated the price of the Bigmar shares from the IPO price of $7.50 to approximately $12.00 by:

a. exercising price leadership by purchasing Bigmar shares at increasing prices and entering increasing bids into the NASDAQ system;

b. dominating and controlling the market for the Bigmar shares; and

c. controlling and substantially reducing the floating supply of the Bigmar shares;

6. after accumulating the vast majority of the Bigmar shares and manipulating the price of the Bigmar shares, sold the shares to its customers at the artificially inflated prices; and

7. in furtherance of the schemes to manipulate the securities of Ecotyre and Bigmar, engaged in unauthorized transactions and delayed orders to purchase securities.

E. Violations of Law

1. Roberti and Principato

Based on the foregoing, Roberti and Principato (a) willfully violated Section 17(a) of the Securities Act, Sections 9(a)(2) and 10(b) of the Exchange Act, and Rule 10b-5 thereunder, and (b) willfully aided and abetted and caused violations of Section 15(c) of the Exchange Act, and Rules 15c1-2 and 15c1-8 thereunder.

2. LAWR

Based on the foregoing, LAWR willfully violated Section 17(a) of the Securities Act, Sections 9(a)(2), 10(b), 15(c) and 17(a) of the Exchange Act, and Rules 10b-5, 15c1-2, 15c1-8 and 17a-3(a)(7) thereunder.

III.

In view of the foregoing, the Commission deems it appropriate in the public interest and for the protection of investors to impose the sanctions specified in the Offers of Settlement.

Accordingly, IT IS HEREBY ORDERED that:

Principato

1. Principato is hereby barred from association with any broker or dealer;

2. Pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, Principato is hereby ordered to cease and desist from committing or causing any violation and any future violation of Section 17(a) of the Securities Act, Sections 9(a)(2) and 10(b) of the Exchange Act, and Rule 10b-5 thereunder, and from causing any violation and any future violation of Section 15(c) of the Exchange Act and Rules 15c1-2 and 15c1-8 thereunder;

2. Principato shall pay disgorgement and prejudgment interest in the amount of $274,276.27, and a civil penalty in the amount of $100,000 to the United States Treasury, as follows:

a. Principato will pay $150,000.00 by no later than 30 days after the entry of this Order;

b. Principato will pay $150,000 by no later than 180 days after the entry of this Order;

c. Principato will pay $74,276.27 by no later than 270 days after the entry of this Order;

Each such payment shall be: (a) made by United States postal money order, certified check, bank cashier's check or bank money order; (b) made payable to the Securities and Exchange Commission; (c) hand delivered or mailed to the Comptroller, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Stop O-3, Alexandria, Virginia 22312; and (d) submitted under cover of letter which identifies Principato as a respondent in this proceeding, the file number of this proceeding, a copy of which cover letter and money order or check shall be sent to Mary Keefe, Regional Director, Midwest Regional Office, Securities and Exchange Commission, 500 West Madison, Suite 1400, Chicago, Illinois, 60661.

Roberti

1. Roberti is hereby barred from association with any broker or dealer;

2. Pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, Roberti is hereby ordered to cease and desist from committing or causing any violation and any future violation of Section 17(a) of the Securities Act, Sections 9(a)(2) and 10(b) of the Exchange Act, and Rule 10b-5 thereunder, and from causing any violation and any future violation of Section 15(c) of the Exchange Act and Rules 15c1-2 and 15c1-8 thereunder;

2. Roberti shall pay disgorgement and prejudgment interest in the amount of $274,276.27, and a civil penalty in the amount of $100,000 to the United States Treasury, as follows:

a. Roberti will pay $150,000.00 by no later than 30 days after the entry of this Order;

b. Roberti will pay $150,000 by no later than 180 days after the entry of this Order;

c. Roberti will pay $74,276.27 by no later than 270 days after the entry of this Order;

Each such payment shall be: (a) made by United States postal money order, certified check, bank cashier's check or bank money order; (b) made payable to the Securities and Exchange Commission; (c) hand delivered or mailed to the Comptroller, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Stop O-3, Alexandria, Virginia 22312; and (d) submitted under cover of letter which identifies Roberti as a respondent in this proceeding, the file number of this proceeding, a copy of which cover letter and money order or check shall be sent to Mary Keefe, Regional Director, Midwest Regional Office, Securities and Exchange Commission, 500 West Madison, Suite 1400, Chicago, Illinois, 60661.

LAWR

1. LAWR's registration with the Commission as a broker-dealer is hereby revoked;

2. Pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, LAWR is hereby ordered to cease and desist from committing or causing any violation and any future violation of Section 17(a) of the Securities Act, Sections 9(a)(2), 10(b), 15(c) and 17(a) of the Exchange Act, and Rules 10b-5, 15c1-2, 15c1-8 and 17a-3(a)(7) thereunder.

For the Commission.

Jonathan G. Katz

Secretary


Footnotes

1 The Order Instituting Proceedings in this matter was issued on June 26, 1999.

http://www.sec.gov/litigation/admin/33-7876.htm


Modified:07/25/2000