UNITED STATES OF AMERICA
In the Matter of
ALLAN G. SCHAEFER,
ORDER INSTITUTING PUBLIC
PURSUANT TO SECTION 15(b)(6)
OF THE SECURITIES EXCHANGE
ACT OF 1934, MAKING FINDINGS,
AND IMPOSING REMEDIAL
The Securities and Exchange Commission ("Commission") deems it appropriate in the public interest to institute public administrative proceedings pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934 ("Exchange Act") against Allan G. Schaefer ("Schaefer" or "Respondent").
In anticipation of the institution of these proceedings, Schaefer has submitted an Offer of Settlement ("Offer") to the Commission 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 in which the Commission is a party, Schaefer, by his Offer, consents to the entry of this Order Instituting Public Administrative Proceedings Pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions ("Order"), admits the jurisdiction of the Commission over him and the subject matter of these proceedings, and, without admitting or denying the findings contained in this Order, except as to the entry of the injunction as described in Section II.B. below, consents to the entry of the findings and remedial sanction set forth below.
Accordingly, IT IS ORDERED that a proceeding pursuant to Section 15(b)(6) of the Exchange Act be, and hereby is, instituted.
On the basis of this Order and Respondent's Offer, the Commission finds that:
A. Schaefer passed the Series 7 (general securities representative) examination in 1993, the Series 63 (uniform securities agent state law) examination in 1993, and the Series 65 (state investment advisor competency) examination in 1995, and during all relevant time periods was registered in a qualifying state and was associated as a securities analyst with Beneficial Capital Inc., which is a broker-dealer registered with the Commission pursuant to Section 15 of the Exchange Act and a member of the National Association of Securities Dealers, Inc.
B. On December 5, 2000, a Final Judgment as to Allan G. Schaefer was entered by the United States District Court for the Southern District of New York in an action styled SEC v. Allan G. Schaefer, et al., 00 CIV.9156, which permanently enjoins Schaefer from violating Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder orders Schaefer to pay a penalty of $50,000. Schaefer consented to the entry of the permanent injunction without admitting or denying the violations of the federal securities laws alleged in the Commission's complaint.
C. The Commission's complaint in SEC v. Allan G. Schaefer, et al. alleges that Schaefer illegally tipped two of his associates to illegally trade in the securities of Scholastic Corporation ("Scholastic") based on material, nonpublic information regarding the negative earnings of Scholastic for its third quarter in fiscal 1997, that this information was given to him by his sister, Leslye Schaefer, an officer of Scholastic Productions, a wholly-owned subsidiary of Scholastic, and that Schaefer's tipping was in violation of the antifraud provisions of the Exchange Act. According to the complaint, as a result of Schaefer's illegal tipping, his associates reaped illicit profits of approximately $141,693.
In view of the foregoing, the Commission deems it appropriate in the public interest to impose the following sanction specified in Schaefer's Offer of Settlement.
Accordingly, IT IS ORDERED that, effective immediately, Schaefer be, and hereby is, barred from association with any broker or dealer, with the right to reapply for association after one year to the appropriate self-regulatory organization, or if there is none, to the Commission.
By the Commission.
Jonathan G. Katz
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