U.S. Securities & Exchange Commission
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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. 8152 / November 27, 2002

Investment Company Act of 1940
Release No. 25837 / November 27, 2002

Investment Advisers Act Of 1940
Release No. 2086 / November 27, 2002

Administrative Proceeding
File No. 3-10956


In the Matter of

William L. Bates,

Respondent.


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ORDER INSTITUTING PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS, MAKING FINDINGS, AND IMPOSING A CEASE-AND-DESIST ORDER AND OTHER REMEDIAL SANCTIONS PURSUANT TO SECTION 8A OF THE SECURITIES ACT OF 1933, SECTIONS 9(b) AND 9(f) OF THE INVESTMENT COMPANY ACT OF 1940, AND SECTION 203(e) OF THE INVESTMENT ADVISERS ACT OF 1940

I.

The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest to institute public administrative and cease-and-desist proceedings pursuant to Section 8A of the Securities Act of 1933 ("Securities Act"), Sections 9(b) and 9(f) of the Investment Company Act of 1940 ("Investment Company Act") and Section 203(e) of the Investment Advisers Act of 1940 ("Advisers Act") against William L. Bates ("Respondent" or "Bates").

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 contained herein, except as to the Commission's jurisdiction over Respondent and over the subject matter set forth herein and the findings set forth in Paragraphs III.A. and III.B., which are admitted, Respondent consents to the entry of this Order Instituting Public Administrative and Cease-and-Desist Proceedings, Making Findings, and Imposing a Cease-and-Desist Order and Other Remedial Sanctions Pursuant to Sections 8A of the Securities Act of 1933, Sections 9(b) and 9(f) of the Investment Company Act of 1940 and Section 203(e) of the Investment Advisers Act of 1940 ("Order").

Accordingly, IT IS ORDERED that public administrative and cease-and-desist proceedings pursuant to Section 8A of the Securities Act, Sections 9(b) and 9(f) of the Investment Company Act and Section 203(e) of the Advisers Act be, and hereby are, instituted.

III.

On the basis of this Order and the Offer, the Commission finds that:

A. Respondent Bates, age 53, is a resident of St. Louis, Missouri. In 1984, Respondent formed Jawsh Corporation ("Jawsh") under the laws of Missouri and is and was, at all times, its sole shareholder, officer and director. From 1987 to December 31, 2000, for compensation, Bates advised Jawsh, directly, as to the value of securities and as to the advisability of investing in, purchasing or selling securities. Bates is not registered with the Commission in any capacity.

B. Jawsh is a Missouri corporation formed by Bates in 1984. Its principal place of business is in St. Louis. From 1984 to the present, Jawsh has held itself as an investment company. From 1984 to September 2000, Jawsh offered and sold $16 million of its securities to the general public in unregistered transactions. Neither Jawsh nor its securities are, or have been, registered with the Commission.

C. From 1987 to September 2000, Respondent offered and sold to the general public approximately $16 million in securities issued by Jawsh in the form of promissory notes. Each note had a minimum term of three years. Investors were paid a prescribed interest rate and a pro rata percentage of the gains on Jawsh's investments, over which Respondent exercised sole control. From 1987 to the present, Jawsh has engaged in and has held itself out as being engaged primarily in the business of investing in, reinvesting in, owning, holding and trading securities. As of December 31, 2000, Jawsh had 250 investors.

D. No registration statements have been filed or are in effect with the Commission with respect to the securities offered and sold by Respondent, nor is there any registration statement in effect as to Jawsh. The offerings of securities of Jawsh were required to be registered with the Commission pursuant to Section 5 of the Securities Act. Similarly, Jawsh was required to be registered with the Commission as an investment company pursuant to Section 7(a) of the Investment Company Act.

E. As a result of the conduct described above, Respondent willfully1 violated Sections 5(a) and 5(c) of the Securities Act which prohibit any person from directly or indirectly engaging in the unregistered offer or sale of securities in interstate commerce, unless the offerings are exempt.

F. As a result of the conduct described above, Respondent caused and willfully aided and abetted Jawsh's violations of Section 7(a) of the Investment Company Act which makes it unlawful for any investment company organized or otherwise created under the laws of the United States, or of a State, to offer or sell securities, whether or not it is the issuer of such security, interstate commerce, or to engage in any business in interstate commerce, unless the investment company is registered with the Commission.

On the basis of the foregoing, it is appropriate and in the public interest to impose the sanctions which are set forth in the Offer submitted by Respondent.

IV.

Accordingly, IT IS HEREBY ORDERED that:

1. Pursuant to Section 8A of the Securities Act and Section 9(f) of the Investment Company Act, Respondent shall cease and desist from committing or causing any violation of, and any future violation of, Sections 5(a) and 5(c) of the Securities Act, and from causing any violation of, and any future violation of, Section 7(a) of the Investment Company Act; and

2. Respondent comply with his undertakings to pay the costs of the trustee appointed by the court, pursuant to Section 42(d) of the Investment Company Act, in a separate, but related civil action against Jawsh, up to $20,000, and cooperate fully, truthfully and without compensation, with the Commission and the trustee by transferring Jawsh's assets, producing documents in his possession, custody or

control, providing truthful testimony in any depositions and hearings in which his testimony may be relevant, and providing whatever other assistance is requested of him.

By the Commission.

Jonathan G. Katz
Secretary

Endnote

1 "Willfully" as used in this Order means intentionally committing the act which constitutes the violation, see Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000); Tager v. SEC, 344 F.2d 5, 8 (2d Cir. 1965). There is no requirement that the actor be aware that he is violating one of the Rules or Acts.

 

http://www.sec.gov/litigation/admin/33-8152.htm


Modified: 11/29/2002