UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES ACT OF 1933 Release No 7519 / March 25, 1998 SECURITIES EXCHANGE ACT OF 1934 Release No. 39797 / March 25, 1998 ADMINISTRATIVE PROCEEDING File No. 3-9567 _______________________________________ : ORDER INSTITUTING In the Matter of : CEASE-AND- DESIST AND : ADMINISTRATIVE PROCEEDING : PURSUANT TO SECTION 8A OF THE : SECURITIES ACT OF 1933 AND HOLLADAY STOCK TRANSFER, INC., : SECTIONS 17A(c)(3), : 17A(c)(4)(C) and SHARON M. OWEN, : AND 21C OF THE SECURITIES : EXCHANGE ACT OF 1934, MAKING : FINDINGS, AND IMPOSING : REMEDIAL SANCTIONS Respondents. : : _______________________________________ : I. The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest to institute a public cease-and-desist and administrative proceeding pursuant to Section 8A of the Securities Act of 1933 ("Securities Act") and Sections 17A(c)(3), 17A(c)(4)(C) and 21C of the Securities Exchange Act of 1934 ("Exchange Act") against Holladay Stock Transfer, Inc. ("Holladay") and Sharon M. Owen ("Owen"), collectively referred to herein as the "Respondents." Accordingly, IT IS HEREBY ORDERED that said proceeding be, and hereby is, instituted. - 1 - II. In anticipation of the institution of this proceeding, Respondents have submitted an Offer of Settlement ("Offer") which the Commission has determined to accept. Solely for the purpose of this proceeding and any other proceedings brought by or on behalf of the Commission, or in which the Commission is a party, without admitting or denying the findings contained herein, except that Respondents admit the jurisdiction of the Commission over them and over the subject matter of this proceeding, the Respondents consent to the entry of the findings and remedial sanctions set forth below. III. On the basis of this Order and Respondents' Offer, the Commission finds that: A.Holladay is a Nevada corporation which has been registered with the Commission as a transfer agent since January 14, 1990 (File No. 84-1822), pursuant to Section 17A(c) of the Exchange Act. Owen is the president, director and controlling shareholder of Holladay, and manages the firm's day-to-day operations. B.In July 1994, Holladay and Owen improperly removed a restrictive legend from and transferred a certificate representing 100,000 shares of stock, less than one year after the shares were issued to an officer of one Holladay's corporate clients, EMS Products International Corporation ("EMS"). Thereafter, the shares were sold on the open market. Based on the foregoing, Holladay and Owen caused and willfully aided and abetted in the distribution of unregistered EMS securities in violation of Sections 5(a) and 5(c) of the Securities Act, in that they knew or were reckless in not knowing that a violation of the registration requirements would occur if the restrictive legend were removed, and provided substantial assistance by actually removing the restrictive legend from the stock certificate. C.In addition, Holladay willfully violated numerous other provisions governing the operation of registered transfer agents, as described below. Owen, similarly, caused and willfully aided and abetted in these violations, in that she knew or was reckless in not knowing that the violations would occur if certain acts were or were not taken, and provided substantial assistance in the commission or omission of the violations. Specifically, they: 1.Filed an annual report with the Commission which failed to itemize activities undertaken during the reporting year (as required by questions 5 through 8 of Form TA-2), in violation of Sections 17(a)(3) and 17A(d)(1) of the Exchange Act and Rule 17Ac2-2 thereunder; 2.Failed to file an independent accountant's report with the Commission's Pacific Regional Office evaluating the transfer agent's system of internal accounting controls and related procedures for the transfer of record ownership and the safeguarding of related securities and funds, in violation of Sections 17(a)(3) and 17A(d)(1) of the Exchange Act and Rule 17Ad-13(a) thereunder; 3.Transferred 11 certificates representing 424,000 shares of EMS stock which were not listed in the transfer agent's master securityholder file, effectively increasing the number of outstanding shares without authorization from company officials, in violation of Sections 17(a)(3) and 17A(d)(1) of the Exchange Act and Rules 17Ad-10(a)(1), 17Ad-10(b) and 17Ad-10(e) thereunder; 4.Improperly increased the number of outstanding EMS shares by 4,500, upon receiving a "gift" of 500 shares of EMS stock from the officer whose shares Holladay impermissibly removed a restrictive stock legend (as described in Paragraph III.B., above), in violation of Sections 17(a)(3) and 17A(d)(1) of the Exchange Act and Rules 17Ad-10(a)(1), 17Ad-10(b) and 17Ad-10(e) thereunder; and 5.Failed to have employees' fingerprints taken and submitted to the Attorney General of the United States for identification and appropriate processing, in violation of Section 17(f)(2) of the Exchange Act and Rule 17f-2 thereunder. IV. Based upon the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified in the Respondents' Offer. Accordingly, IT IS HEREBY ORDERED, that Respondents Owen and Holladay cease and desist from committing or causing any violation and any future violation of Sections 5(a) and 5(c) of the Securities Act; Sections 17(a)(3), 17(f)(2) and 17A(d)(1) of the Exchange Act and Rules 17f-2, 17Ac2-2, 17Ad-10(a)(1), 17Ad- 10(b), 17Ad-10(e) and 17Ad-13(a) thereunder; IT IS HEREBY FURTHER ORDERED, that Respondents Owen and Holladay be, and hereby are, censured; IT IS HEREBY FURTHER ORDERED, that Respondents Owen and Holladay shall comply with their undertaking to: A.prepare and implement a written plan within 60 days of the date of this Order (the "Planning Period"), and thereafter maintain procedures, to assure that: 1.Restrictive stock legends are placed on all certificates of stock which have not been registered or are not subject to any exemption from registration under the securities laws and, in furtherance of this undertaking, Owen and Holladay shall obtain legal opinions and conduct such other due diligence and implement such other procedures as are deemed reasonable and necessary for the issuance of stock certificates without restrictive legends and the removal of such legends from outstanding shares of stock; 2.Annual reports on Forms TA-2 are current, accurate and filed with the Commission, as required by Sections 17(a)(3) and 17A(d)(1) of the Exchange Act and Rule 17Ac2-2 thereunder; 3.Documentation relied upon to make transfers of share ownership is maintained in accordance with Sections 17(a)(3) and 17A(d)(1) of the Exchange Act and Rule 17Ad-6(c) thereunder, and no transfer shall be based upon oral instruction; 4.Annual reports by an independent accountant examining Holladay's internal accounting controls and related procedures for the transfer of record ownership and the safeguarding of related securities and funds are prepared and properly filed with the Commission in Washington, D.C. and with the Commission's Pacific Regional Office in Los Angeles, California no later than November 29 each year, unless required to be filed sooner, and that any recommendations made therein are adopted, in accordance with Sections 17(a)(3) and 17A(d)(1) of the Exchange Act and Rule 17Ad- 13 thereunder; 5.Documentation setting forth the total number of shares authorized and the total number of shares issued and outstanding for each issuer for which Owen or Holladay act as transfer agent is maintained and posted to the master securityholder file and control books, in accordance with Sections 17(a)(3) and 17A(d)(1) of the Exchange Act and Rules 17Ad-10(a)(1), 17Ad-10(b) and 17Ad-10(e) thereunder; and 6.Non-exempt employees of Owen or Holladay are fingerprinted, the fingerprints are submitted to the Attorney General of the United States for identification and appropriate processing, and the processed fingerprint cards are maintained in an easily accessible place at Holladay's principal office, in accordance with Section 17(f)(2) of the Exchange Act and Rule 17f-2 thereunder. B.Owen and Holladay shall engage an independent certified public accountant who is not unacceptable to the staff ("Accountant") within 15 days of the date of this Order to perform four semi- annual reviews of the transfer agent's practices, policies and procedures which shall include: 1.Examination of compliance procedures, within 15 days of the expiration of the Planning Period described in Paragraph IV.A above and every six months thereafter (the "Examination Period"), to determine whether the transfer agent has prepared and implemented the written plan and complied with procedures necessary to satisfy requirements set forth in Paragraph IV.A; 2.Review of transfer agent procedures to identify any material inadequacies, which review shall be completed during the Examination Period; 3.Audit of the transfer agent's compliance with procedures relating to issuance and transfer of stock absent the use of restrictive stock legends (including but not limited to activities governed under Rule 144, Rule 144A, Regulation D, and Regulation S), as described in Paragraph IV.A.1., above, which audit shall be completed during the Examination Period; 4.Recommendation of improvements by Accountant immediately after the Examination Period; and 5.Preparation of a report by Accountant, which shall be delivered to the transfer agent and to the Pacific Regional Office of the Commission within 15 days of the expiration of the Examination Period, setting forth all findings and delineating all deficiencies identified during the examination, review and audit described in subparagraphs 1, 2 and 3, above; C.Owen and Holladay shall implement improvements to procedures recommended by Accountant within 60 days of delivery of the report described in Paragraph IV.B.5., above (the "Remediation Period"); D.For each failure by Owen or Holladay to comply with any of the undertakings required to be performed during the Planning Period, any Examination Period or Remediation period, as set forth in Paragraph IV above, Owen and Holladay shall be subject to one additional Accountant's review; E.If the final semi-annual Accountant's report fails to state that procedures have been designed and implemented in a manner to reasonably ensure compliance with all applicable rules and regulations of the Securities Act and Exchange Act, the provisions in Paragraph IV shall continue until one such report satisfies this standard; IT IS HEREBY FURTHER ORDERED that neither Owen nor Holladay shall assert the absence of Commission comment on the written plan described in Paragraph IV.A., or the Accountant's report described in Paragraph IV.B.5., as a defense in any future action by the Commission; IT IS HEREBY FURTHER ORDERED that Owen shall attend a continuing education seminar designed for transfer agents within 60 days of this Order, or as soon thereafter as reasonably practicable; and IT IS HEREBY FURTHER ORDERED that, within 30 days of the entry of this Order, Owen and Holladay shall pay a civil money penalty in the aggregate amount of $5,000. 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 the Securities and Exchange Commission; (C) delivered by certified mail to the Comptroller, Securities and Exchange Commission, 450 5th Street, Mail Stop 0-3, N.W., Washington, D.C. 20549; and (D) submitted under cover letter which identifies Owen and Holladay as Respondents in this proceeding, as well as the file number of the proceeding, a copy of which cover letter and money order or check shall be sent to Ronald E. Wood, Assistant Regional Director, Office of Enforcement, Securities and Exchange Commission, 5670 Wilshire Boulevard, 11th Floor, Los Angeles, California 90036. By the Commission. Jonathan G. Katz Secretary - 2 -