UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 42530 / March 15, 2000
File No. 3-10156
: ORDER INSTITUTING PUBLIC
In the Matter of : ADMINISTRATIVE PROCEEDINGS
: PURSUANT TO SECTION 15(b) OF
STEVEN P. ERLICH, : THE SECURITIES EXCHANGE ACT
: OF 1934, MAKING FINDINGS AND
: IMPOSING REMEDIAL SANCTIONS
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be instituted against Steven P. Erlich ("Erlich" or "Respondent") pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act").
In anticipation of the institution of these proceedings, Erlich has submitted an Offer of Settlement (the "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 any of the findings contained herein, except as to the jurisdiction of the Commission over him and over the subject matter of these proceedings, and the matters set forth in paragraph III.1. below, and the entry of the injunction set forth in paragraph III.4. below, which are admitted, Erlich consents to the entry of this Order Instituting Public Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions ("Order"), by the Commission.
Accordingly, IT IS HEREBY ORDERED that proceedings pursuant to Section 15(b) of the Exchange Act be, and hereby are, instituted.
On the basis of this Order and the Respondent's Offer, the Commission finds that:
1. At all relevant times, Respondent Erlich was associated as an officer and director of LGS, Inc. ("LGS"), an unregistered broker-dealer, and was associated with Rich Management Corp. ("Rich Management"), an unregistered broker-dealer.
2. On September 29, 1999, the Commission filed a complaint ("Complaint") in the United States District Court for the Southern District of Florida, SEC v. Jeffrey S. Richman, et ano., No. 99-2620-CIV-KING (S.D. Fla.). Among other things, the Complaint charged Respondent with violations of Sections 5(a), 5(c), 17(a)(1), 17(a)(2) and 17(a)(3) of the Securities Act of 1933 ("Securities Act") and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder.
3. The Commission's Complaint alleged, among other things, that between November 1997 and July 17, 1998, Respondent made material misrepresentations and omissions in connection with the offer and sale of unregistered securities in Friendly Power Company. Erlich's misrepresentations concerned: the potential profitability of an investment in Friendly Power securities; the availability of the securities (in a manner designed to create a false sense of urgency in the investor); and the risk of an investment in Friendly Power securities. The Commission's Complaint also alleged that Erlich received ill-gotten gains in the form of commission payments from his sale of Friendly Power securities.
4. On March 8, 2000, the Court permanently enjoined Respondent from future violations of Sections 5(a), 5(c), 17(a)(1), 17(a)(2) and 17(a)(3) of the Securities Act and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder. Erlich consented to the entry of the permanent injunction without admitting or denying the allegations of the Commission's complaint.
On the basis of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified in the Respondent's Offer.
ACCORDINGLY, IT IS ORDERED that Erlich be, and hereby is, barred from association with any broker or dealer, with the right to reapply for association after three (3) years to the appropriate self-regulatory organization, or if there is none, to the Commission.
By the Commission.
Jonathan G. Katz