INVESTMENT ADVISERS ACT OF 1940
RELEASE NO. 1987 / September 28, 2001
ADMINISTRATIVE PROCEEDING NO. 3-10611
IN THE MATTER OF ROBERT BRUCE LOHMANN
COMMISSION INSTITUTES CEASE-AND-DESIST AND ADMINISTRATIVE PROCEEDINGS AGAINST ROBERT LOHMANN, A REGISTERED SECURITIES PROFESSIONAL
On September 28, 2001, the Commission issued an order instituting public cease-and-desist and administrative proceedings against Robert B. Lohmann pursuant to Sections 15(b)(6) and 21C of the Securities Exchange Act of 1934 ("Exchange Act"), and Section 203(f) of the Investment Advisers Act of 1940 ("Advisers Act").
In the order, the Division of Enforcement alleges that Lohmann engaged in insider trading violations prior to the November 24, 1997 public announcement that Mapco Incorporated would be acquired by The Williams Companies in a deal worth approximately $3.46 billion. At the time of the alleged conduct, Lohmann was a registered securities professional and employed as a supervisor of equity trading at Royal Alliance Associates, Inc., a registered broker-dealer and investment adviser. The Division alleges that Lohmann illegally tipped other persons, including a co-worker who traded Mapco stock based on Lohmann's tip. The Division alleges that Lohmann thereby violated the antifraud prohibitions contained within Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
The Division further alleges that Lohmann learned material, nonpublic information concerning the Mapco acquisition from a childhood friend, John Doherty, who himself obtained the inside information from a Mapco employee. In a series of conversations beginning the morning of November 20, 1997, Doherty told Lohmann about the merger, including when the merger might occur and the $46 per share buy out price of the Mapco stock. In one such conversation, Doherty explicitly told Lohmann that the information came from "one of the head guys at Mapco." After that point, Lohmann tipped others about the merger, including a co-worker who purchased Mapco stock and made a profit.
A hearing will be scheduled before an administrative law judge to determine whether the allegations in the order are true, to provide Lohmann an opportunity to dispute these allegations, and to determine what, if any, remedial actions or sanctions are appropriate, including the issuance of a cease-and-desist order and the imposition of a civil penalty pursuant to Section 21B of the Exchange Act and Section 203(i) of the Advisers Act.