UNITED STATES OF AMERICA
In the Matter of
Frank Lee Harris III
|ORDER INSTITUTING PROCEEDINGS PURSUANT TO SECTION 15(b)(6) OF THE SECURITIES EXCHANGE ACT OF 1934, MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONS|
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be and hereby are instituted pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934 ("Exchange Act"), against Frank Lee Harris, III ("Harris").
In anticipation of the institution of these proceedings, Harris has submitted an Offer of Settlement to the Commission that the Commission has determined to accept. Solely for the purposes of these proceedings and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, prior to a hearing pursuant to the Commission's Rules of Practice, 17 C.F.R. § 201.100 et seq., and, without admitting or denying the findings contained herein, except as to entry of the injunction described below and the jurisdiction of the Commission over him in this matter as set forth in paragraphs II (A) and II (B), which are admitted, Harris consents to the institution of public administrative proceedings, and the findings and remedial sanctions set forth below.
On the basis of this Order and the Offer of Settlement submitted by Harris, the Commission finds that:
A. From February 1999 until approximately March 20, 2001, Harris was associated as a registered representative with Josephthal and Co. Inc. ("Josephthal") a broker-dealer registered with the Commission and a member of the National Association of Securities Dealers, Inc. Prior to his association with Josephthal, Harris was associated with Fidelity Brokerage Services, Inc. from June 1998 through February 1999 and with H. J. Meyers & Co., Inc. from July 1995 until May 1997.
B. On February 13, 2002, Harris was permanently enjoined from violations of Sections 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, by the United States District Court for the Eastern District of Texas (Sherman Division) [SEC v. Frank Lee Harris III, Civil Action No. 4:01CV-117]. Harris consented to the entry of the permanent injunction without admitting or denying any violation of the federal securities laws, as alleged in the Commission's Complaint.
C. The Commission's Complaint in SEC v. Harris alleges that Harris engaged in a scheme to misappropriate customer funds. The Complaint alleges that Harris, since January 2000, stole at least $1.3 million from as many as 19 of his customers at the Addison, Texas, branch office of Josephthal. The Complaint further alleges that in certain instances, Harris misled customers by convincing them to invest in a bogus investment, only to transfer the funds to his personal bank accounts. In other cases, Harris either liquidated or borrowed against securities in his customers' accounts without their knowledge or approval, and then wire transferred the proceeds to bank accounts that he controlled.
D. As a result of the conduct described in the Commission's Complaint referenced in paragraph II (C) above, Harris willfully violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
In view of the foregoing, the Commission deems it appropriate and in the public interest to accept Harris's Offer of Settlement.
Accordingly, IT IS ORDERED that Frank Lee Harris, III be, and hereby is, barred from association with any broker or dealer.
By the Commission.
Jonathan G. Katz
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