UNITED STATES OF AMERICA
In the Matter of
DONALD J. MARTINEAU,
|ORDER INSTITUTING PROCEEDINGS|
PURSUANT TO SECTIONS 15(b) AND 19(h)
OF THE SECURITIES EXCHANGE
ACT OF 1934, MAKING FINDINGS
AND IMPOSING REMEDIAL SANCTIONS
ORDER MAKING FINDINGS AND
IMPOSING REMEDIAL SANCTIONS
The Securities and Exchange Commission deems it appropriate and in the public interest that administrative proceedings be instituted pursuant to Sections 15(b) and 19(h) of the Securities Exchange Act of 1934 ("Exchange Act") against Donald J. Martineau ("Martineau").
In anticipation of the institution of these administrative proceedings, Martineau has submitted an Offer of Settlement ("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 that as to the jurisdiction of the Commission over him and over the subject matter of these proceedings and the entry of the injunction set forth in paragraph 5 in Section III, which he admits, Martineau, consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Sections 15(b) and 19(h) of the Securities Exchange Act, Making Findings and Imposing Remedial Sanctions.
Accordingly, IT IS ORDERED that public administrative proceedings be, and hereby are, instituted against Martineau pursuant to Sections 15(b) and 19(h) of the Exchange Act.
On the basis of this Order and the Offer submitted by Martineau, the Commission finds that:
1. Martineau, age 56 and a resident of Tewksbury, Massachusetts, was at all relevant times an associated person of a broker-dealer registered with the Commission pursuant to Section 15(b) of the Exchange Act.
2. On January 10, 2000, the Commission filed a Complaint for Injunctive and Other Relief against Martineau in the United States District Court for the District of Massachusetts captioned SEC v. DONALD J. MARTINEAU, Civil Action No. 00-CV-10044 (RGS) (D. Massachusetts).
3. In its Complaint, the Commission alleged that from at least November 1989 through June 1998, Martineau defrauded at least nine of his brokerage customers of approximately $9,224,300. According to the Complaint, Martineau fraudulently induced his customers to: (i) purchase promissory notes by falsely claiming that the proceeds from the sale of those promissory notes would be used to make secured, essentially riskless loans to other customers; and (ii) sell their existing securities based on false promises that the proceeds would be used to purchase higher yielding and/or less risky financial instruments, including commercial paper, which in fact, did not exist.
4. The Commission alleged that, in fact, Martineau used the fraudulently obtained funds to finance his own unsuccessful options trading and for other personal uses, as well as, to make ponzi-like payments of interest and repayments of principal to certain victims in order to perpetuate his scheme.
5. On January 4, 2000, without admitting or denying any of the allegations contained in the Commission's complaint, Martineau consented to the entry of a final judgment of permanent injunction. On January 13, 2000, the District Court permanently enjoined Martineau from violating Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
In view of the foregoing, the Commission deems it appropriate and in the public interest to accept the Offer of Settlement submitted by Martineau and to impose the sanction specified in the Offer.
Accordingly, IT IS HEREBY ORDERED that Donald J. Martineau be, and hereby is, barred from association with any broker or dealer.
By the Commission.
Jonathan G. Katz
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