UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 42513 / March 9, 2000
File No. 3-10025
In the Matter of : ORDER MAKING FINDINGS AND
: IMPOSING REMEDIAL SANCTIONS
DAVID SCOTT HEREDIA : PURSUANT TO SECTION 15(b)(6)
: OF THE SECURITIES
: EXCHANGE ACT OF 1934
In these public administrative proceedings ordered pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934 ("Exchange Act"), Respondent David Scott Heredia ("Heredia") has submitted an Offer of Settlement, which the Commission has determined to accept. Solely for the purposes of these proceedings and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or deny the findings herein, except for those findings contained in paragraphs II.A and B below and the jurisdiction of the Commission over this matter, which are admitted, Respondent consents to the entry of the Order Making Findings and Imposing Remedial Sanctions Pursuant to Section 15(b)(6) of the Exchange Act ("Order").
On the basis of this Order, the Order Instituting Proceedings1, and the Respondent's Offer of Settlement, the Commission makes the following findings:
A. From October 4, 1993 until March 17, 1995, David Scott Heredia ("Heredia") was employed as a registered representative associated with Stratton Oakmont, Inc. ("Stratton"), a now defunct broker-dealer that was registered with the Commission pursuant to Section 15(b) of the Exchange Act.
B. On April 20, 1998, the United States District Court for the Eastern District of New York, in an action captioned Securities and Exchange Commission v. David Scott Heredia, CV-97-6091 (JM) ("Injunctive Action"), permanently enjoined Heredia from violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
C. The Commission's Complaint in the Injunctive Action alleged, inter alia, that from at least May 1994 through at least March 17, 1995, while Heredia was a registered representative of Stratton, Heredia repeatedly and fraudulently made material misrepresentations and omitted to disclose material facts to customers in an effort to solicit transactions in at least three securities. Heredia made baseless price predictions with respect to these securities and he fraudulently claimed to possess material nonpublic information about the issuers of the securities. Heredia also made unauthorized purchases of certain of these securities in customer accounts and failed to execute customer sell orders. As a result of his fraudulent activities, Heredia's customers suffered combined net losses of at least $250,000.
D. From at least May 1994 through at least March 17, 1995, Heredia was a person participating in an offering of penny stock. For instance, Heredia induced, or attempted to induce, the purchase or sale of the stock of Octagon, Inc., a penny stock.
In view of the foregoing, it is in the public interest to impose the sanctions specified in the Offer of Settlement.
Accordingly, IT IS ORDERED:
A. Effective immediately, Heredia be, and hereby is, barred from association
with any broker or dealer; and
B. Effective immediately, Heredia be, and hereby is, barred from participating in any offering of penny stock.
By the Commission.
Jonathan G. Katz
1 On September 23, 1999, the Commission issued an Order Instituting Proceedings against Heredia.