SECURITIES AND EXCHANGE COMMISSION
SECURITIES ACT OF 1933
RELEASE NO. 7744 / September 27, 1999
SECURITIES EXCHANGE ACT OF 1934
RELEASE NO. 41919 / September 27, 1999
ADMINISTRATIVE PROCEEDING File No. 3-10033
ORDER INSTITUTING PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS
PURSUANT TO SECTION 8A OF THE SECURITIES ACT OF 1933 AND SECTIONS 15(b)(6),
19(h) AND 21C OF THE SECURITIES EXCHANGE ACT OF 1934 FOR ALLEGED VIOLATIONS OF
THE COMMISSION'S ANTIFRAUD PROVISIONS BY REGISTERED REPRESENTATIVES FOR FAILING
TO DISCLOSE COMPENSATION TO CLIENTS
The Securities and Exchange Commission today announced that it instituted
public administrative and cease-and-desist proceedings pursuant to Section 8A of
the Securities Act of 1933 ("Securities Act") and Sections 15(b)(6),
19(h) and 21C of the Securities Exchange Act of 1934 ("Exchange Act"),
against Respondents Steven J. Erlsten, Jr., William H. Clark, Derek L. DuBois
and Aaron Finkelstein (the "Order") for willfully violating, and
committing or causing violations of, Sections 17(a) of the Securities Act,
Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
The Division of Enforcement ("Division") alleges in the Order that
Respondents, each of whom was a registered representative during the relevant
time, recommended and/or sold shares of common stock of The Tracker Corporation
of America ("Tracker") to their customers and failed to disclose the
material information that they had been or would be paid by Corporate Relations
Group, Inc. ("CRG"), a public relations firm located in Winter Park,
Florida, which was promoting Tracker at the time, for inducing their clients to
buy this stock.
The Division alleges that, in February 1994, Tracker retained CRG to provide
corporate relations and promotional services through a variety of publications
and by direct promotion to the broker-dealer community. CRG began promoting
Tracker in the summer of 1994.
The Division further alleges that, in November 1994, CRG obtained more than
500,000 shares of Tracker common stock and deposited the stock in at least 10 of
its securities accounts. CRG then paid brokers to induce their clients to buy
Tracker stock on the open market or from CRG's accounts. CRG paid Erlsten,
Clark, Finkelstein and DuBois a total of more than $46,000 for causing their
customers to buy Tracker common stock. None of these brokers disclosed their
arrangement with CRG to their clients or prospects.
The Division alleges that CRG paid Erlsten $5,000 for inducing three of his
clients to buy a total of 25,000 shares of Tracker stock in November 1994. From
December 1994 through February 1995, CRG paid Clark, who had induced at least
one client to buy Tracker stock, a total of $35,300. In early December 1994,
DuBois caused six of his clients to buy a total of 5,000 shares of Tracker, and
CRG paid him $2,562. Finally, in January and February 1995, CRG paid Finkelstein
a total of $3,743.75 for having placed clients in Tracker stock.
The Order institutes public administrative and cease-and-desist proceedings
to determine: what, if any, remedial action is necessary and appropriate in the
public interest for the protection of investors; whether Respondents should be
ordered to pay disgorgement, including prejudgment interest, and whether a civil
money penalty should be imposed; and whether Respondents should be ordered to
cease and desist from committing or causing a violation and any future
violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange
Act and Rule 10b-5 thereunder.
A hearing will be held before an Administrative Law Judge to determine
whether the staff's allegations are true, to provide the Respondents with an
opportunity to respond to the charges and to determine what, if any , relief is
appropriate in the public interest.