UNITED STATES OF AMERICA
In the Matter of
ROBERT E. GLAZEWSKI,
|ORDER INSTITUTING ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS AND A CEASE-AND-DESIST ORDER PURSUANT TO SECTION 8A OF THE SECURITIES ACT OF 1933, SECTIONS 15(b) AND 21C OF THE SECURITIES EXCHANGE ACT OF 1934 AND SECTION 203(f) OF THE INVESTMENT ADVISERS ACT OF 1940|
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act of 1933 ("Securities Act"), Sections 15(b) and 21C of the Securities Exchange Act of 1934 ("Exchange Act"), and Section 203(f) of the Investment Advisers Act of 1940 ("Advisers Act") against Robert E. Glazewski ("Respondent").
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, Respondent consents to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order Pursuant to Section 8A of the Securities Act of 1933, Sections 15(b) and 21C of the Securities Exchange Act of 1934 and Section 203(f) of the Investment Advisers Act of 1940, ("Order"), as set forth below.
On the basis of this Order and Respondent's Offer, the Commission finds1 that:
A. Respondent sold securities issued by Robert L. Bentley ("Bentley") of Paoli, Pennsylvania. Bentley held himself out to his customers, most of whom were financial institutions, as a broker of bank-issued, federally-insured certificates of deposit ("CDs"). Bentley in fact bought CDs with customer funds. However, Bentley's customers did not acquire a direct ownership interest in these CDs. Instead, beginning in 1996, Bentley issued to the customers separate instruments, which were securities in the form of notes or investment contracts. These securities promised to pay interest rates and had maturity dates that varied from those terms in the underlying CDs. In many instances, Bentley bought long-term CDs and issued shorter-term securities to his customers. Consequently, buyers of Bentley's securities depended upon Bentley, rather than the bank that issued the underlying CD, for the return of their principal.
B. Bentley Financial Services, Inc. ("BFS") was the selling arm of Bentley's operation and the employer of Respondent.
C. From 1993 until August 1998 and from March 2001 until October 2001, BFS was a branch office of Traders & Dealers, Inc. ("TDI"), a Denver broker-dealer formerly registered with the Commission. From July 1998 until August 2000, BFS was a branch office of Southeastern Securities, Inc. ("Southeastern"), a Miami broker-dealer registered with the Commission. However, Respondent did not sell Bentley's securities through TDI, Southeastern or any other registered broker-dealer.
D. BFS was registered as an investment adviser with the State of Pennsylvania from October 1987 through December 2001.
E. Respondent, age 38, lives in Wayne, Pennsylvania. He worked for BFS from 1997 until October 2001. He was an associated person of TDI and Southeastern during the times BFS was a branch office of those firms. From 1997 until October 2001, Respondent sold Bentley's securities.
F. Respondent represented to customers that BFS was a CD broker and that the customers would be buying bank-issued, federally-insured CDs.
G. What customers had bought in fact was a security issued by Bentley. Respondent knew or should have known that the maturities of the CDs bought by Bentley with customer funds were frequently longer than those of the instruments he was selling to customers. Respondent also knew or should have known that, from time to time, Bentley paid interest rates on the instruments he issued that were higher than the rates paid by the CDs he bought with customer funds. However, Respondent did not disclose these facts to customers when he sold Bentley's securities.
H. Customers were led to believe that their transactions were being made through a registered broker-dealer, TDI. A sales brochure provided to and used by Respondent to solicit new customers prominently stated "Securities offered through TDI, Inc. a member of NASD [and] SIPC." This brochure further stated that "Every investment advisor at Bentley Financial Services is a registered representative of TDI, Inc., and as such has Series 7 and Series 63 financial licenses. These licenses are held under NASD and SEC regulations." Although these statements in the brochure were literally true, they created the mis-impression that Respondent's customers were making transactions through a registered broker-dealer.
I. As a result of the conduct described above, Respondent willfully violated Sections 17(a)(2) and (3) of the Securities Act.
J. As a result of the conduct described above, Respondent willfully violated Section 15(a) of the Exchange Act.
Disgorgement and Civil Penalties
K. Respondent has submitted a sworn Statement of Financial Condition dated October 7, 2002 and other evidence and has asserted his inability to pay disgorgement plus prejudgment interest or a civil penalty beyond the amount of disgorgement Respondent is ordered to pay below.
L. Respondent undertakes to provide to the Commission, within 15 days after the end of the two concurrent six-month suspension periods described below, and within 15 days of the disgorgement payments described below in paragraphs III. M and IV. D, affidavits that he has complied fully with the sanctions and undertakings set forth below.
M. Respondent further undertakes, within 30 days of the entry of this Order, to: 1) liquidate securities accounts controlled by him and/or his wife or denominated in the name of him and/or his wife; 2) liquidate IRA and/or retirement plans controlled by him and/or his wife or denominated in the name of, directly or indirectly, him and/or his wife; and 3) pay the proceeds from the liquidation of the securities accounts and the after-tax and penalty proceeds of the IRA and/or retirement plans to the receiver in a related civil case (SEC v. Robert L. Bentley, et al., E.D. Pa., Civil Action No. 01-CV-5366). 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 David H. Marion, Receiver; (C) hand-delivered or mailed to David H. Marion, Receiver c/o Frank A. Mayer, III, Esquire, Montgomery, McCracken, Walker & Rhoads, LLP, 123 South Broad Street, Philadelphia, PA 19109-1030; and (D) submitted under cover letter that identifies Robert E. Glazewski as a Respondent in these proceedings and the file number of these proceedings, a copy of which cover letter and money order or check shall be sent to Robert Fusfeld, Chief Trial Counsel, Securities and Exchange Commission, Central Regional Office, 1801 California Street, Suite 1500, Denver, Colorado, 80202.
In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified in Respondent's Offer.
Accordingly, it is hereby ORDERED:
A. Pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, that Respondent cease and desist from committing or causing any violations and any future violations of Sections 17(a)(2) and (3) of the Securities Act and Section 15(a) of the Exchange Act.
B. Pursuant to Section 15(b)(6) of the Exchange Act, that Respondent be, and hereby is, suspended from association with any broker or dealer for a period of six months, effective on the second Monday following the entry of this Order.
C. Pursuant to Section 203(f) of the Advisers Act, that Respondent be, and hereby is, suspended from association with any investment adviser for a period of six months, effective on the second Monday following the entry of this Order.
D. That Respondent pay, within 30 days of the entry of this Order, disgorgement of $672,147 plus prejudgment interest, but payment of all but $20,000 and the amount described in paragraph III. M. is waived, and penalties are not imposed, based upon Respondent's sworn representations in his Statement of Financial Condition dated October 7, 2002 and other documents submitted to the Commission. With respect to the $20,000 payment noted above 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 David H. Marion, Receiver; (C) hand-delivered or mailed to David H. Marion, Receiver c/o Frank A. Mayer, III, Esquire, Montgomery, McCracken, Walker & Rhoads, LLP, 123 South Broad Street, Philadelphia, PA 19109-1030; and (D) submitted under cover letter that identifies Robert E. Glazewski as a Respondent in these proceedings and the file number of these proceedings, a copy of which cover letter and money order or check shall be sent to Robert Fusfeld, Chief Trial Counsel, Securities and Exchange Commission, Central Regional Office, 1801 California Street, Suite 1500, Denver, Colorado, 80202.
E. The Division of Enforcement ("Division") may, at any time following the entry of this Order, petition the Commission to: (1) reopen this matter to consider whether Respondent provided accurate and complete financial information at the time such representations were made; and (2) seek an order directing payment of disgorgement, pre-judgment interest and the maximum civil penalty allowable under the law. No other issue shall be considered in connection with this petition other than whether the financial information provided by Respondent was fraudulent, misleading, inaccurate, or incomplete in any material respect. Respondent may not, by way of defense to any such petition: (1) contest the findings in this Order; (2) assert that payment of disgorgement, interest and penalties should not be ordered; (3) contest the amount of disgorgement, interest and penalties to be ordered; or (4) assert any defense to liability or remedy, including, but not limited to, any statute of limitations defense.
F. Respondent shall comply with the undertakings enumerated in Section III. L. and III. M. above.
By the Commission.
Jonathan G. Katz
1 The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding on any other person or entity in this or any other proceeding.
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