UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Securities Act of 1933
Release No. 8252 / July 15, 2003
Securities Exchange Act of 1934
Release No. 48178 / July 15, 2003
Investment Advisers Act of 1940
Release No. 2147 / July 15, 2003
File No: 3-11179
SEC Charges Three Registered Representatives And An Investment Adviser With Fraud In Connection With The Sale Of Class B Shares Of Mutual Funds, And A Broker Dealer And Its Former President With Failing To Supervise Those Registered Representatives Reasonably
On July 15, 2003 the Commission instituted public administrative and cease-and-desist proceedings alleging that William I. Kissinger, Kissinger Advisory, Inc., Bert E. Miller, and Glenn F. Wilkinson defrauded twenty-nine of their customers and clients by omitting material facts in connection with the sale of Class B shares of mutual funds. The Division of Enforcement ("the Division") alleges that between 1998 and 2001, Kissinger, Kissinger Advisory, Miller, and Wilkinson repeatedly recommended that their customers invest $250,000 or more in Class B shares of a single family of mutual funds, which paid higher commissions than Class A shares of the same mutual funds, without disclosing, among other things, that Class A shares of those mutual funds would outperform Class B shares for investments of $250,000 or more. The Commission is also alleging that IFG Network Securities, Inc., the broker-dealer with whom Kissinger, Miller, and Wilkinson were formerly associated and its former president, David Ledbetter, failed to supervise Kissinger, Miller, and Wilkinson reasonably.
The Division alleges that Miller, Wilkinson, Kissinger and Kissinger Advisory violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, that Kissinger Advisory violated Sections 206(1) and 206(2) of the Investment Advisers Act of 1940, and that Kissinger aided and abetted Kissinger Advisory's violations of the Advisers Act. The Division further alleges that IFG and Ledbetter violated the supervisory provisions of the Exchange Act, Section 15(b)(4)(E) and 15(b)(6)(A). A hearing will be scheduled before an administrative law judge to determine whether the Division's allegations are true, to provide the respondents an opportunity to dispute these allegations, and to determine what sanctions, if any, are in the public interest.