UNITED STATES SECURITIES AND EXCHANGE COMMISSION
SECURITIES ACT OF 1933
Release No. 8046 / December 20, 2001
SECURITIES EXCHANGE ACT OF 1934
Release No. 45175 / December 20, 2001
INVESTMENT ADVISERS ACT OF 1940
Release No. 2003 / December 20, 2001
INVESTMENT COMPANY ACT OF 1940
Release No. 25322 / December 20, 2001
File No. 3-10659
PROCEEDINGS INSTITUTED AGAINST ZION CAPITAL MANAGEMENT LLC AND RICKY A. LANG
The Securities and Exchange Commission (the "Commission") announced today that it instituted administrative and cease-and-desist proceedings against Zion Capital Management LLC ("Zion") and Ricky A. Lang, Zion's president, owner, and sole employee. In the Order Instituting Proceedings, the Division of Enforcement (the "Division"), alleges that, in 1998, Zion, then a Colorado limited liability company and registered investment adviser, and Lang, a resident of Lakewood, Colorado, allocated more profitable trades to an entity in which Lang had a financial interest and more unprofitable trades to Zion's sole advisory client. As a result, during a nine-month period, Zion's client lost more than sixty percent of its investment while the entity in which Lang had an interest made a substantial profit. The Division also alleges that Zion and Lang misrepresented their trading strategy and methods for resolving conflicts of interest to investors in offering materials and in the Form ADV Zion filed with the Commission. Further, the Division alleges that Zion, aided and abetted by Lang, failed to keep adequate records concerning, among other things, Zion's instructions for the allocation of trades.
The Division alleges that Zion and Lang willfully violated the antifraud provisions of the federal securities laws: Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1) and (2) of the Advisers Act. The Division also alleges that Zion and Lang willfully violated Section 207 of the Advisers Act, and that Zion willfully violated Section 204 of the Advisers Act and Rules 204-2(a)(3) and 204-2(a)(7) thereunder, and that Lang caused and willfully aided and abetted those violations. The Division is seeking a cease-and-desist order, disgorgement, civil penalties, and remedial sanctions against Zion and Lang.
A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide Zion and Lang an opportunity to dispute these allegations, and to determine what sanctions, if any, are in the public interest.