David J. Naughton

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 44081 / March 15, 2001

ADMINISTRATIVE PROCEEDING
File No. 3-10443

I.

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 instituted against Respondent David J. Naughton ("Respondent").

II.

In anticipation of the institution of this administrative proceeding, Respondent has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. Solely for the purpose of this proceeding and any other proceeding 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 that Respondent admits the entry of the permanent injunction against him referred to in paragraph III.B. below and the jurisdiction of the Commission over him and over the subject matter of this proceeding, Respondent by his Offer of Settlement consents to the entry of this Order Instituting Public Administrative Proceeding, Making Findings and Imposing Remedial Sanction ("Order"), and to the entry of the findings and remedial sanction set forth below.

Accordingly, IT IS ORDERED that a proceeding pursuant to Sections 15(b) and 19(h) of the Exchange Act be, and hereby is, instituted.

III.

On the basis of this Order and the Offer submitted by the Respondent, the Commission finds that:

A. Respondent resides in Hailey, Hertfordshire, England. Respondent has held Series 22 and 63 securities licenses. Respondent has not been associated with a registered broker-dealer since 1994, but was associated with an unregistered broker-dealer during the relevant period.

B. On March 13, 2001, Respondent was permanently enjoined from violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder by the United States District Court for the Central District of California [SEC v. Naughton, et al., CV 00-07531 R (Ex)]. Respondent consented to the entry of the permanent injunction without admitting or denying the allegations in the Commission's Complaint.

C. The Commission's Complaint filed in the action described above alleges that the defendants therein, including Respondent, at various times engaged in the offer and sale of securities in the form of preferred stock in Papa Holdings, Inc. and/or four of its restaurant subsidiaries in violation of the registration, antifraud and broker-dealer registration provisions of the federal securities laws. The Complaint further alleges that in connection with the offer and sale of these securities, the defendants, including Respondent, made material misrepresentations or omissions of material fact concerning the amount of commissions and/or overrides paid to them.

IV.

Based on the foregoing, the Commission deems it appropriate in the public interest and for the protection of investors to accept the Offer submitted by the Respondent and impose the sanction specified in the Offer.

Accordingly, IT IS HEREBY ORDERED that Respondent be, and hereby is, barred from association with any broker or dealer, with the right to reapply for association after two years to the appropriate self-regulatory organization, or if there is none, to the Commission.

By the Commission.

Jonathan G. Katz
Secretary