UNITED STATES OF AMERICA
|In the Matter of
THEODORE R. HUNTER
|ORDER INSTITUTING PUBLIC PROCEEDINGS, MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONS|
The Securities and Exchange Commission ("Commission") deems it appropriate in the public interest and for the protection of investors that public administrative proceedings be instituted pursuant to Sections 15(b) and 19(h) of the Securities Exchange Act of 1934 ("Exchange Act") and Section 203(f) of the Investment Advisers Act of 1940 ("Advisers Act") against Theodore R. Hunter ("Hunter").
In anticipation of the institution of these proceedings, Hunter has submitted an Offer of Settlement ("Offer") which the Commission has determined to accept. Solely for the purpose of this proceeding and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings contained herein, except for those set forth below in Section II, paragraph C., which is admitted, Hunter, by his Offer, consents to the entry of the findings and imposition of sanctions contained in this Order Instituting Public Proceedings, Making Findings and Imposing Remedial Sanctions ("Order").
Accordingly, IT IS ORDERED that proceedings, pursuant to Sections 15(b) and 19(h) of the Exchange Act and Section 203(f) of the Advisers Act, against Hunter be, and hereby are, instituted.
On the basis of this Order and the Offer submitted by Hunter, the Commission finds that:
A. Theodore R. Hunter is a resident of Kula, Hawaii. From December 1990 to the present, Hunter has been associated with a broker-dealer registered with the Commission. From September 1994 to July 1997, Hunter was registered with the Commission as an investment adviser.
B. Health Management, Inc. ("Health Management") is a former Delaware Corporation, which ceased to exist after it was purchased in October 1997. Health Management was headquartered in Holbrook, New York, and was in the business of providing outpatient drug therapies and management services to individuals, hospitals and insurance companies. Health Management's stock was registered with the Commission pursuant to Section 12(g) of the Exchange Act and traded on the National Association of Securities Dealers Automated Quotation System ("NASDAQ").
C. On September 26, 2000, a Final Judgment and Order was entered against Hunter by the United States District Court for the Eastern District of New York, in Securities and Exchange Commission v. Clifford E. Hotte, et al., Civil Action No. CV00-5704 pursuant to his consent. The Final Judgment and Order permanently enjoined Hunter from future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; ordered him to disgorge the sum of $84,918, plus prejudgment interest; and ordered Hunter to pay a civil penalty in the amount of $84,918.
D. The Commission's Complaint alleged, among other things, that on June 13, 1995, Hunter received material non-public information in a telephone call from one of his clients, who was then Chief Financial Officer of Health Management, in which Hunter was told that Health Management would the following day announce lower than expected earnings for the fourth quarter ended April 30, 1995. After the telephone conversation, Hunter immediately began selling Health Management stock in his own and many of his client accounts.
E. The Complaint further alleged that, on June 14, 1995, after the close of the market, Health Management issued a press release in which it announced that it expected earnings for the fourth quarter, ended April 30, 1995, to be in the range of $0.15 to $0.16 per share, well below Wall Street analysts' estimates of $0.23 per share. Following the announcement, the price of Health Management stock dropped more than 28 percent, from $17.50 to $12.50 per share. As a result of his sales of Health Management stock, Hunter personally avoided losses of $16,037 and Hunter's clients avoided losses of $68,881.
On the basis of the foregoing, the Commission deems it appropriate in the public interest and for the protection of investors to accept the Offer submitted by Hunter and to impose the sanctions specified therein.
Accordingly, IT IS HEREBY ORDERED that Hunter be, and hereby is, barred from association with any broker, dealer or investment adviser.
By the Commission.
Jonathan G. Katz
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