Securities Exchange Act of 1934
Release No. 42919 / June 12, 2000

Administrative Proceeding
File No. 3-10222


In the Matter of

CITY INVESTMENT GROUP, LLC,
JOHN BARRIS, and
TIGRAN PAPAZIAN,

Respondents.


:
:
:
:
:
:
:
:

 
ORDER INSTITUTING PROCEEDINGS
PURSUANT TO SECTION 21C OF THE
SECURITIES EXCHANGE ACT OF 1934,
MAKING FINDINGS, AND IMPOSING
A CEASE-AND-DESIST ORDER


I.

The Commission deems it appropriate that public cease-and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities Exchange Act of 1934 ("Exchange Act") against City Investment Group, LLC ("CIG"), John Barris ("Barris") and Tigran Papazian ("Papazian").

II.

In anticipation of the institution of these proceedings, CIG, Barris and Papazian have submitted Offers of Settlement that 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 to which the Commission is a party, and prior to hearing and without admitting or denying the findings set forth herein, except that Respondents admit the jurisdiction of the Commission over them and over the subject matter of these proceedings, CIG, Barris and Papazian consent to the entry of this Order Instituting Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order ("Order"). The Commission has determined that it is appropriate to accept the Offers of Settlement from CIG, Barris and Papazian, and accordingly is issuing this Order.

III.

SUMMARY

This proceeding involves a mini-tender offer made by Respondents for up to 2% of the outstanding shares of Tellabs, Inc. ("Tellabs"). Mini-tender offers are tender offers for less than 5% of a class of securities. These offers are not subject to the filing, disclosure and procedural requirements of Section 14(d) of the Exchange Act and Regulation 14D. However, all tender offers, including mini-tender offers, are subject to the antifraud provisions of the federal securities laws, including Section 14(e) of the Exchange Act and Regulation 14E.

Respondents violated Section 14(e) of the Exchange Act because they knowingly or recklessly disseminated materially false and misleading offering materials regarding the Tellabs tender offer. Among other things, Respondents failed to disclose that CIG did not have the financial ability to complete the tender offer, that the offer was contingent on financing, and that the offer would be cancelled if the market price did not exceed the offering price when the offer concluded.

IV.

FACTS

Based on the foregoing, the Commission finds that:

A. Respondents

City Investment Group, LLC is a Massachusetts limited liability corporation located in Boston, Massachusetts.

Tigran Papazian, 42, resides in Boston, Massachusetts and is one of two principals of CIG. Papazian is currently unemployed.

John Barris, 32, resides in Hopkindon, Massachusetts and is one of two principals of CIG. Barris is currently unemployed.

B. The Tender Offer

On October 1, 1999, CIG commenced a mini-tender offer for up to 2% of the outstanding shares of Tellabs. This was the first tender offer by CIG or its principals. The company offered to pay $62.50 per share -- a 12% premium over the closing share price of $55.875 on that date. Respondents Papazian and Barris drafted the offering documents, which provided that tendering shareholders would be paid "in cash promptly at the close of the offer." However, Respondents failed to include certain material information in the offering materials. Among other things, Respondents failed to disclose that CIG did not have the financial ability to complete the tender offer at that time, that the offer was contingent on financing, and that the offer would be cancelled if the market price did not exceed the offering price when the offer concluded.

During the offering period, Tellabs shareholders tendered approximately 1.2 million shares in response to Respondents' offer (approximately $75 million of Tellabs stock, based on the offering price). CIG, with assets of less than $10,000, did not have the financial ability to pay for the tendered shares. Moreover, Barris and Papazian took no significant steps to obtain financing until early November 1999 -- after the market price had increased to a level substantially above the offering price.

Respondents terminated the offer on November 19, 1999, prior to purchasing any shares from Tellabs shareholders.

V.

LEGAL ANALYSIS

Section 14(e) of the Exchange Act provides that it is unlawful for any person to "engage in any fraudulent, deceptive, or manipulative acts or practices, in connection with any tender offer or request or invitation for tenders." CIG, Barris and Papazian violated this provision because they knew or were reckless in not knowing that they disseminated materially false and misleading offering materials regarding the Tellabs tender offer. Among other things, Respondents failed to disclose that CIG did not have the financial ability to complete the tender offer, that the offer was contingent on financing, and that the offer would be cancelled if the market price did not exceed the offering price when the offer concluded. This information was material because a reasonable investor would consider it to be important in determining whether to tender.

VI.

FINDINGS

Based on the above, the Commission finds that CIG, Barris and Papazian violated Section 14(e) of the Exchange Act.

VII.

ORDER

Accordingly, IT IS HEREBY ORDERED that CIG, Barris and Papazian, pursuant to Section 21C of the Exchange Act, cease and desist from committing or causing any violation of, and committing or causing any future violation of, Section 14(e) of the Exchange Act.

By the Commission.

_________________________
Jonathan G. Katz
Secretary