UNITED STATES OF AMERICA
In the Matter of
RICHARD T. HAMMACK,
|ORDER INSTITUTING PROCEEDINGS,|
MAKING FINDINGS AND IMPOSING
REMEDIAL SANCTIONS PURSUANT TO
SECTIONS 15(b) and 19(h) OF THE
SECURITIES EXCHANGE ACT OF 1934
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 against Richard T. Hammack ("Hammack") pursuant to Sections 15(b) and 19(h) of the Securities Exchange Act of 1934 ("Exchange Act").
In anticipation of the institution of these proceedings, Hammack has submitted an Offer of Settlement ("Offer"), 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 to which the Commission is a party, and without admitting or denying the Commission's findings contained herein, except to as the Commission's jurisdiction and to the Commission's findings set forth in Paragraphs III.A. and III.B., which are admitted, Hammack consents to the entry of this Order Instituting Proceedings, Making Findings and Imposing Remedial Sanctions pursuant to Sections 15(b) and 19(h) of the Exchange Act ("Order").
Accordingly, IT IS HEREBY ORDERED that proceedings pursuant to Sections 15(b) and 19(h) of the Exchange Act be and hereby are instituted.
On the basis of this Order and Hammack's Offer, the Commission finds that:
A. Hammack has been a registered representative for various broker-dealers registered with the Commission since 1983.
B. On March 1, 2001, in the case of SEC v. Richard T. Hammack, (Case No. 00C-7623), the Honorable Ruben Castillo, United States District Court Judge for the Northern District of Illinois, entered an Order of Permanent Injunction against Hammack, pursuant to his consent and without Hammack admitting or denying the allegations in the Commission's Complaint, enjoining Hammack from violating Sections 17(a) of the Securities Act of 1933, Section 10(b) of the Exchange Act, and Rule 10b-5 promulgated thereunder. The Order also requires Hammack to, among other things, pay disgorgement and, if appropriate, a civil penalty in amounts to be determined by the Court at a later date.
C. In its Complaint, the Commission alleged that from in about January 1999 through October 2000, Hammack misappropriated more than $1,923,000 from at least 56 of his customers' variable annuity accounts. The Complaint also alleged that, as part of his scheme, Hammack forged his customers' names on annuity distribution request forms to cause the insurance companies to send out distribution checks to investors. The Complaint further alleged that Hammack called investors before they received these distribution checks and told them that they would soon be receiving distributions by mistake. The Complaint further alleged that Hammack then drove to each of his customers' residences and persuaded them to give him the checks, assuring them that he would redeposit the checks into their annuity accounts. According to the allegations set forth in the Complaint, however, contrary to what Hammack told his customers, Hammack endorsed and deposited the distribution checks into his own personal bank account or into a business account under his control at Northern Trust Bank. The Complaint alleged that Hammack used the misappropriated funds to finance his life style, which included sizable mortgage payments and the purchase of several horses and related horse expenses. The Complaint further alleged that Hammack attempted to conceal his scheme by, among other things, drafting and mailing letters to customers which falsely stated that the funds in question had been returned to the insurance companies.
In light of the foregoing, it is appropriate in the public interest and for the protection of investors to impose the sanctions specified in the Offer submitted by Hammack.
Accordingly, IT IS HEREBY ORDERED that Richard T. Hammack be, and hereby is, barred from association with any broker or dealer.
By the Commission.
Jonathan G. Katz
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