UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE
COMMISSION
SECURITIES ACT OF 1933
RELEASE NO. 7965 / March 28, 2001
ADMINISTRATIVE PROCEEDINGS
FILE NO. 3-10445
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In the Matter of Kenzie, Inc., the Three Oaks
Respondents.
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ORDER INSTITUTING CEASE-AND- DESIST PROCEEDINGS, MAKING FINDINGS AND ORDERING RESPONDENTS TO CEASE AND DESIST PURSUANT TO SECTION 8A OF THE SECURITIES ACT OF 1933 |
I.
The Securities and Exchange Commission (Commission) deems it appropriate that cease-and-desist proceedings be instituted against Kenzie, Inc., the Three Oaks Fund, L.P., the Three Oaks Advanced Fund, L.L.C., Alfred R. Gerebizza and Daniel H. Spitzer (collectively the "Respondents") pursuant to Section 8A of the Securities Act of 1933 ("Securities Act").
In anticipation of these proceedings, Respondents have submitted an Offer of Settlement (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 Commission's findings contained herein, except the Commission's findings set forth in Paragraphs III.C. through III.G. below, which are admitted, Respondents consent to the entry of this Order Instituting Cease-and-Desist proceedings, Making Findings and Ordering Respondents to Cease and Desist Pursuant to Section 8A of the Securities Act of 1933 ("Order").
II.
Accordingly, IT IS HEREBY ORDERED that cease-and-desist proceedings pursuant to Section 8A of the Securities Act are hereby instituted.
III.
On the basis of this Order and Respondents' Offer, the Commission makes the following findings:
Overview
A. From in or about July 1997 through in or about June 2000, the Three Oaks Fund, L.P. and the Three Oaks Advanced Fund, L.L.C. (collectively, the "Three Oaks Funds"), Alfred R. Gerebizza, Daniel H. Spitzer and Kenzie, Inc. offered and sold approximately $17,300,000 of Three Oaks Funds securities that were not registered with the Commission to approximately 180 investors from more than 20 states.
B. The Respondents offered and sold Three Oaks Funds securities, in part, by sending periodic mailings to investors and potential investors. Some of these mailings were sent unsolicited to potential investors with whom Respondents apparently had no prior relationship.
Respondents
C. Kenzie, Inc., incorporated in Illinois, is located in Cary, Illinois. Kenzie is the fund manager for the Three Oaks Funds. Kenzie has been in operation since in or about 1981.
D. Three Oaks Fund, L.P. is an Illinois limited partnership organized to invest in, among other things, forward currency contracts, which are contracts to purchase or sell a specific currency at a future date and price agreed upon by the parties at the time that the contract is executed. Kenzie manages the Three Oaks Fund, L.P. Kenzie, Alfred Gerebizza and Daniel Spitzer established the Three Oaks Fund and they began offering shares to the public in 1997. The Three Oaks Fund, L.P. generated approximately $11,500,000 in sales to approximately 138 investors from more than 15 states during the period from July 1997 through September 1999. It has never been registered with the Commission in any capacity.
E. Three Oaks Advanced Fund, L.L.C., organized in Illinois, is a limited liability corporation established to invest in, among other things, forward currency contracts. Kenzie manages the Three Oaks Advanced Fund, L.L.C. Kenzie, Alfred Gerebizza and Daniel Spitzer established the Three Oaks Advanced Fund, L.L.C. and they began offering shares to the public in 1998. The Three Oaks Advanced Fund, L.L.C. has raised a total of approximately $5,800,000 from more than 40 investors from at least 5 states for the period from August 1998 through June 15, 2000. The Three Oaks Advanced Fund, L.L.C. has never been registered with the Commission in any capacity.
F. Alfred R. Gerebizza is the Chief Executive Officer of Kenzie and has been with the company since its inception. He is not registered with the Commission, nor is he associated with any entity currently registered with the Commission.
G. Daniel H. Spitzer is also a principal of Kenzie and has been with the company since its inception. He is not currently registered with the Commission or associated with any entity currently registered with the Commission.
Kenzie's Operations
H. Kenzie manages funds which were organized to invest in, among other things, forward currency transactions.
I. As principals of Kenzie, Gerebizza and Spitzer established the Three Oaks Funds. Kenzie is the trading manager for the Three Oaks Funds, and Kenzie offers and sells shares of the Three Oaks Funds to the public.
J. There are some restrictions and/or penalties imposed on an investor's ability to redeem his or her shares in the Three Oaks Funds which vary based upon the timing of the redemption.
Respondents Used General Solicitations to Offer and Sell Three Oaks Funds Shares to the Public
K. From in or about October 1997 through in or about December 1998, the Respondents mailed general solicitations ("mailings") to investors and potential investors offering them the opportunity to purchase shares of the Three Oaks Funds. These mailings, signed by Gerebizza and Spitzer, offered minimum $100,000 investments to be invested in forward currency transactions.
L. Some of these mailings were unsolicited and the Respondents sent them to individuals with whom the Respondents apparently had no prior relationship.
M. Combined, approximately 180 investors from at least 20 different states have invested approximately $17.3 million in the Three Oaks Funds.
N. No registration statement was filed or in effect with the Commission for the offering of securities in the Three Oaks Funds.
Shares of the Three Oaks Funds are Securities
O. Shares of the Three Oaks Funds sold to investors are investment contracts and, therefore, securities under Section 2(1) of the Securities Act and Section 3(a)(10) of the Securities Exchange Act of 1934.
Registration Violations
P. From in or about July 1997 through in or about June 2000, Respondents violated Sections 5(a) and 5(c) of the Securities Act of 1933 in that they offered and sold securities through the use of any means or instrument of transportation or communication in interstate commerce or the mails, or carried or caused to be carried through the mails or in interstate commerce securities for the purpose of sale or delivery after sale, without having previously filed a registration statement as to those securities. As part of their conduct, the Respondents offered and sold unregistered shares of the Three Oaks Funds to the public through mailings to investors and potential investors. In furtherance of their conduct, the Respondents engaged in the activities described in Paragraphs III.A. through III.N. above. There are no exemptions from registration available to Respondents as a result of these actions.1
IV.
In view of the foregoing, the Commission deems it appropriate to impose the sanctions that are set forth in the Offer submitted by Respondents.
Accordingly, IT IS ORDERED that:
A. Pursuant to Section 8A of the Securities Act, Respondents shall cease and desist from committing or causing any violation and any future violation of Sections 5(a) and 5(c) of the Securities Act; and
B. Respondents shall undertake to provide all current shareholders of the Three Oaks Fund, L.P. and the Three Oaks Advanced Fund, L.L.C. with a copy of the Cease-and-Desist Order within forty-five (45) days of its entry by the Commission.
By the Commission.
Jonathan G. Katz,
Secretary
Footnotes
1 Pursuant to Section 12 of the Securities Act, any person who purchases a security sold in violation of the Securities Act may be able to recover in court the consideration paid for the security with interest thereon, less the amount of any income received thereon, upon the tender of such security, or for damages if he no longer owns the security.