UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 42674/April 13, 2000
File No. 3-10105
In the Matter of :
: ORDER MAKING FINDINGS
KENNETH R. STARNES : AND IMPOSING REMEDIAL
: SANCTIONS BY DEFAULT
Respondent Kenneth R. Starnes is in default under the Securities and Exchange Commission's ("Commission") Rules of Practice 155(a)(2) and 220(f), 17 C.F.R. §§ 201.155(a)(2), .220(f) (1996), because he failed to answer the Order Instituting Proceedings ("OIP") which the Commission issued on November 19, 1999. The records in the Commission's Office of the Secretary show that Mr. Starnes was served with the OIP by certified mail, return receipt requested, on December 15, 1999. Mr. Starnes was served with my February 28, 2000, Order To Show Cause on March 3, 2000. Mr. Starnes has also failed to respond to the Order To Show Cause. A hearing in this matter is presently set for May 5, 2000.
Accordingly, I find the allegations in the OIP are true:
A. From August 1, 1994 through September 29, 1995, Mr. Starnes was a registered representative associated with Koegler, Morgan & Company, a registered broker-dealer.
B. From October 2, 1995 through January 1, 1996, Mr. Starnes was a registered representative associated with Securities Services Network, Inc., a registered broker-dealer.
C. On July 15, 1997, the Commission commenced an injunctive action against Mr. Starnes and others. SEC v. United Fire Technology, Inc., et al., No. C97-1151R (W.D. Wash. 1997) ("Injunctive Action"). On August 31, 1999, that Court entered a Final Judgment against Mr. Starnes ("Final Judgment"). The Final Judgment permanently enjoins Mr. Starnes from future violations of Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder.
D. The Complaint in the Injunctive Action alleged, among other things, that from approximately August 1995 through October 1995, Mr. Starnes sold over 56,000 shares of United Fire Technology, Inc. ("UFT") common stock to his retail customers. From August 1995 through September 1995, Mr. Starnes received UFT common stock from UFT and/or from Beverlee Kamerling ("Kamerling"), UFT's control person, as compensation for Mr. Starnes's efforts in soliciting and selling UFT common stock to his retail customers. Mr. Starnes had a duty to disclose to his retail customers that he had received compensation from UFT and/or Kamerling as compensation for his efforts in soliciting and selling UFT common stock. However, Mr. Starnes failed to disclose to his retail customers that he had received this compensation.
I find further that it is in the public interest to bar Mr. Starnes from association with any broker or dealer pursuant to Section 15(b) of the Exchange Act.
Accordingly, it is hereby ORDERED that, pursuant to Section 15(b) of the Exchange Act, Kenneth R. Starnes is barred from association with any broker or dealer.
Lillian A. McEwen
Administrative Law Judge