UNITED STATES OF AMERICA
SECURITIES EXCHANGE ACT OF 1934
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act"), against Dudley Mihran Freeland ("Freeland"). Accordingly, it is hereby ordered that proceedings pursuant to Section 15(b) of the Exchange Act be, and hereby are, instituted.
In anticipation of the institution of these public administrative proceedings, Freeland has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. Solely for the purposes of these proceedings, 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,1 except with respect to service and jurisdiction over Freeland and over the subject matter of these proceedings and the entry of the injunction set forth in paragraph III.B. below, which are admitted, Freeland consents to the entry of the findings and the imposition of the sanction set forth herein.
On the basis of this Order and the Offer submitted by Freeland, the Commission finds that:
A. Freeland is 36 years old and resides in Lakewood, California. During the period between September 1989 and September 1990, Freeland was a Vice President and 25% shareholder of H.K. Freeland and Company, Inc. ("Freeland Co."), a broker-dealer that was registered with the Commission pursuant to Section 15(b) of the Exchange Act.
B. On April 12, 2001, the United States District Court for the Southern District of New York, in an action captioned SEC v. U.S. Environmental, Inc., et al., 94 Civ. 6608 (PKL) (AJP) ("USE Injunctive Action"), permanently enjoined Freeland from violating Section 17(a) of the Securities Act of 1933 ("Securities Act"), and Sections 10(b) and 15(c)(1) of the Exchange Act and Rules 10b-3, 10b-5, and 15c1-2 and Section 101 of Regulation M and Rules 101 and 102 thereunder. The Court entered the injunction pursuant to Freeland's offer of settlement to the Commission, in which Freeland neither admitted or denied the allegations in the Commission's Amended Complaint, dated October 20, 1995 ("Amended Complaint").
C. The Commission's Amended Complaint in the USE Injunctive Action alleges, in relevant part, that Freeland Co. received undisclosed compensation from defendant Mark D'Onofrio and other defendants ("the D'Onofrio Group") for retailing shares of common stock of U.S. Environmental, Inc. ("USE") to Freeland Co.'s customers. The Amended Complaint alleges that the D'Onofrio Group and other defendants manipulated the price of shares of USE common stock from $.05 to over $5.00 per share during the period from September through December 1989, and that between January 1990 and September 1990, over 300 Freeland Co. customers purchased more than 200,000 shares of USE stock at prices ranging from approximately $4.25 to $7.25 per share. The Amended Complaint alleges that at no time during this period did Freeland or Freeland Co. disclose the existence of the undisclosed payments to Freeland. Co.'s customers.
D. Previously, in the related action SEC v. H. K. Freeland et al., 91 Civ. 7986 (S.D.N.Y.) (CSH), Freeland Co. and Freeland disgorged all gains that they obtained as a result of the conduct alleged in the USE Injunctive Action.
E. By offering and selling USE securities, Freeland participated in an offering of penny stock.
In view of the foregoing, it is in the public interest to impose the sanction specified in the Offer of Settlement. Accordingly, IT IS HEREBY ORDERED that Freeland be, and hereby is, barred from associating with any broker or dealer, and from participating in any offering of a penny stock, including: acting as a promoter, finder, consultant, agent, or other person who engages in activities with a broker, dealer or issuer for purposes of the issuance or trading in any penny stock; or inducing or attempting to induce the purchase or sale of any penny stock.
By the Commission.
1 Any findings contained herein are solely for the purpose of these proceedings and are not binding on any other person or entity named as a respondent in any other proceeding.