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U.S. Securities and Exchange Commission

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

Securities Exchange Act of 1934
Release No. 41656 / July 27, 1999

Administrative Proceeding
File No. 3-9939

In the Matter of

Hartley T. Bernstein,Respondent.

ORDER INSTITUTING PUBLIC
ADMINISTRATIVE PROCEEDINGS,
AND OPINION AND ORDER
PURSUANT TO SECTION 15(b)(6) OF
THE SECURITIES EXCHANGE ACT
OF 1934 AND RULE 102(e) OF THE
RULES OF PRACTICE OF THE
SECURITIES AND EXCHANGE
COMMISSION

I.

The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest to institute public administrative proceedings against Hartley T. Bernstein ("Bernstein" or "Respondent"), an attorney, pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 102(e)(1)(iii) and 102(e)(3)(i)(A) of the Commission's Rules of Practice, 17 C.F.R. 201.102(e)(1)(iii) and 201.102(e)(3)(i)(A).1

II.

In anticipation of the institution of the administrative proceedings, Respondent has submitted an Offer of Settlement ("Offer") which the Commission has determined is in the public interest to accept. Solely for the purpose of this proceeding, and any other proceeding brought by or on behalf of the Commission or in which the Commission is a party, prior to a hearing and without admitting or denying the findings set forth herein, except as to jurisdiction and the issuance of the injunction set forth in Section IV.M, below, which he admits, Respondent consents to the issuance of this Order Instituting Public Administrative Proceedings, and Opinion and Order Pursuant to Section 15(b)(6) of the Exchange Act and Rule 102(e) of the Rules of Practice of the Securities and Exchange Commission ("Order") and to the entry of the findings and the imposition of the remedial sanctions as set forth below.

III.

Accordingly, IT IS ORDERED that said proceedings be, and hereby are, instituted.

IV.

On the basis of this Order and the Offer, the Commission finds that:2

A. Bernstein, age 49, resides in Armonk, New York and New York, New York. During all relevant times, Bernstein was a partner in Bernstein & Wasserman LLP, a law firm which was located in New York, New York.

B. Advanced Voice Technologies, Inc. ("Advanced Voice") is a Delaware corporation. During all relevant times, Advanced Voice maintained offices in New York, New York and its securities were approved for trading on the National Association of Securities Dealers Automated Quotation System ("NASDAQ") SmallCap Market. Advanced Voice's only product was a voice-mail system designed to allow teachers and school administrators to have daily telephone contact with students' parents.

C. Com/Tech Communications Technologies, Inc. ("Com/Tech") is a New York corporation. During all relevant times, Com/Tech maintained offices in New York, New York and its securities were approved for trading on the NASDAQ SmallCap Market. Com/Tech was in the business of developing interactive video programs and video teleconferencing systems through private satellite networks.

D. Embryo Development Corp. ("Embryo") is a Delaware corporation. During all relevant times, Embryo maintained offices in New York, New York and its securities were approved for trading on the NASDAQ SmallCap Market. Embryo was in the business of developing, acquiring, manufacturing, and marketing various bio-medical devices.

E. Applewoods, Inc. ("Applewoods") is a Delaware corporation. During all relevant times, Applewoods maintained offices in New York, New York and its securities were approved for trading on the NASDAQ SmallCap Market. Applewoods was in the business of selling natural soaps, oils, lotions, and other toiletries through licensed retail stores and distributors.

F. Perry's Majestic Beer, Inc. ("Perry's Majestic") is a Delaware corporation. During all relevant times, Perry's Majestic maintained offices in Brooklyn, New York and its securities were traded on the OTC Bulletin Board. Perry's Majestic was in the business of marketing its own brand of microbrewed beer. Respondent was, at all relevant times, a director of Perry's Majestic's parent company, Bev-Tyme, Inc.

G. Bernstein & Wasserman, LLP ("Bernstein & Wasserman") was, during all relevant times, a law firm located in New York, New York, which acted as counsel to all five of the issuers described in Paragraphs B to F, above. Respondent was, at all relevant times, a partner in Bernstein & Wasserman.

H. Sterling Foster & Co., Inc. ("Sterling Foster") is a broker-dealer registered with the Commission pursuant to Section 15(b) of the Exchange Act. The firm ceased business in March 1997. Sterling Foster, which had offices in Uniondale, New York, underwrote the IPOs of Advanced Voice, Com/Tech, Embryo, and Applewoods.

I. Investors Associates, Inc. ("Investors Associates") was a broker-dealer registered with the Commission pursuant to Section 15(b) of the Exchange Act since 1969. The firm ceased business in June 1997. Investors Associates, which was headquartered in Hackensack, New Jersey, co-underwrote the IPO of Perry's Majestic with VTR.

J. Bernstein acquired unregistered securities of Advanced Voice, Com/Tech, Embryo, Applewoods, and Perry's Majestic (collectively, the "Issuers") before the IPO of each of those Issuers' securities. The securities that Bernstein acquired in each of the issuers were registered along with the securities that were to be sold in the five IPOs. In all of the IPOs except Applewoods, Bernstein knew or was reckless in not knowing that Sterling Foster, and, in the case of Perry's Majestic, Investors Associates, would buy back the securities that he owned of the issuer that was being taken public at below-market prices. Prior to the commencement of the Applewoods IPO, Bernstein and Sterling Foster had agreed that Bernstein would sell his Applewoods securities to Sterling Foster, through another broker-dealer, immediately upon the opening of the first day of aftermarket trading. Bernstein's sales of securities to Sterling Foster and, in the case of Perry's Majestic, Investors Associates, provided those underwriters with ready sources of cheap stock to sell aggressively to their retail clients at inflated prices.

K. Bernstein & Wasserman prepared and filed with the Commission the registration statements and prospectuses for all of the Issuers. Bernstein knew or was reckless in not knowing that the prospectuses for Advanced Voice, Com/Tech, Embryo, Applewoods, and Perry's Majestic were materially false and misleading in that they did not disclose Bernstein's pre-offering agreements to sell securities to Sterling Foster and, in the case of Perry's Majestic, Investors Associates.

L. The Perry's Majestic stock that Bernstein offered and sold to Investors Associates was a penny stock within the meaning of Section 3(a)(51) of the Exchange Act and Rule 3a51-1 thereunder.

M. On May 27, 1999, the Commission commenced a civil action by filing a Complaint against Bernstein, SEC v. Hartley T. Bernstein, 99 Civ. 3885 (S.D.N.Y. May 27, 1999), alleging, among other things, that Bernstein engaged in the conduct described above. In that civil action, on June 2, 1999, Bernstein was permanently enjoined on consent by the United States District Court for the Southern District of New York from violating Section 17(a) of the Securities Act of 1933 ("Securities Act"), and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Bernstein neither admits nor denies the allegations in the Complaint.

N. Based on the foregoing, the Commission finds that Bernstein willfully violated Section 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder while participating in an offering of penny stock. The Commission also finds that Bernstein has been permanently enjoined by a court of competent jurisdiction by reason of his misconduct in an action brought by the Commission from violating the provisions of the federal securities laws or the rules and regulations thereunder.

V.

In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanction specified by Respondent in his Offer.

Accordingly, IT IS HEREBY ORDERED, effective immediately, that Hartley T. Bernstein be and hereby is denied the privilege of appearing or practicing before the Commission as an attorney; and

IT IS FURTHER HEREBY ORDERED, effective immediately, that Hartley T. Bernstein be and hereby is barred from participating in any offering of penny stock.

By the Commission.

Jonathan G. Katz

Secretary


FOOTNOTES

1

Rule 102(e) of the Commission's Rules of Practice, 17 C.F.R. 201.102(e), provides in pertinent part that:

(1) The Commission may censure a person or deny, temporarily or permanently, the privilege of appearing or practicing before it in any way to any person who is found by the Commission after notice and opportunity for hearing in the matter . . . (iii) to have willfully violated, or willfully aided and abetted the violation of any provision of the Federal securities laws or the rules and regulations thereunder. . . .

(3)(i) The Commission, with due regard to the public interest and without preliminary hearing, may, by order, temporarily suspend from appearing or practicing before it any attorney, accountant, engineer, or other professional or expert who has been by name: (A) permanently enjoined by any court of competent jurisdiction, by reason of his or her misconduct in an action brought by the Commission, from violating or aiding and abetting the violation of any provision of the Federal securities laws or of the rules and regulations thereunder.

2

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.

http://www.sec.gov/litigation/admin/34-41656.htm


Modified:07/27/1999