UNITED STATES OF AMERICA
Securities Exchange Act of 1934
In the Matter of
DAVID M. BONROUHI,
ORDER INSTITUTING PUBLIC
PURSUANT TO SECTIONS 15(b)
AND 19(h) OF THE SECURITIES
EXCHANGE ACT OF 1934,
MAKING FINDINGS, AND
The Securities and Exchange Commission ("Commission") deems it appropriate in the public interest and for the protection of investors that a public administrative proceeding pursuant to Sections 15(b) and 19(h) of the Securities Exchange Act of 1934 ("Exchange Act") be, and hereby is, instituted against respondent David M. Bonrouhi ("Bonrouhi").
In anticipation of the institution of this proceeding, Bonrouhi has submitted an Offer of Settlement ("Offer"), which the Commission has determined is in the public interest 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 set forth below, except admitting the jurisdiction of the Commission over him and over the subject matter of this proceeding and admitting the entry of the permanent injunction referred to in Paragraph III.E. below, Bonrouhi consents to the issuance of this Order, and the findings and remedial sanction set forth below.
On the basis of this Order and the Offer, the Commission finds that:
A. Bonrouhi, 30, resides in Manhattan Beach, California. From October 1, 1996, to July 15, 1998, Bonrouhi was associated with Merrill Lynch, Pierce, Fenner & Smith, Incorporated ("Merrill Lynch"), a broker-dealer registered with the Commission. While Bonrouhi was associated with Merrill Lynch, he worked as an associate in its Investment Banking Communications Group.
B. IWL Communications Inc. ("IWL") is a Texas corporation with its principal executive offices located in Houston, Texas. At the time of the events described in Paragraph D. below, IWL's common stock was registered with the Commission pursuant to Section 12(g) of the Exchange Act, and trading in IWL's common stock was reported on the National Association of Securities Dealers Automated Quotations-National Market System.
C. On January 31, 2001, the Commission filed a Complaint in the United States District Court for the Southern District of New York against Bonrouhi. SEC v. David M. Bonrouhi, 01 Civ. 0770 (MBM) (S.D.N.Y.) (the "Civil Action").
D. The Commission's Complaint in the Civil Action alleges, among other things, that: on June 19, 1998, Bonrouhi, while he possessed material, nonpublic information concerning IWL that he obtained in the course of his employment with Merrill Lynch, sold all 600 shares of IWL common stock that he owned. By selling his shares of IWL prior to June 22, 1998 public announcement of the material, nonpublic information that he possessed, Bonrouhi avoided losses of $4,160.
E. On February 9, 2001, the United States District Court for the Southern District of New York entered a Final Judgment of Permanent Injunction and Other Relief ("Final Judgment"), permanently enjoining Bonrouhi from violating Section 17(a) of the Securities Act of 1933 ("Securities Act"), and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Bonrouhi consented to the entry of the Final Judgment against him without admitting or denying the allegations in the Complaint.
F. Bonrouhi willfully violated and has been permanently enjoined from violating Section 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
In view of the foregoing, the Commission deems it appropriate in the public interest and for the protection of investors to accept Bonrouhi's Offer and to impose the sanctions specified in the Offer.
Accordingly, IT IS HEREBY ORDERED that Bonrouhi be, and hereby is, barred from association with any broker or dealer, with a right to reapply for association after five years to the appropriate self-regulatory organization, or if there is none, to the Commission.
By the Commission.
Jonathan G. Katz
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