UNITED STATES OF AMERICA
In the Matter of
JAMES A. NIES,
|ORDER MAKING FINDINGS AND |
IMPOSING SANCTIONS BY DEFAULT
This Order bars James A. Nies from association with a broker-dealer. Nies had been enjoined from violations of the antifraud provisions of the federal securities laws after he engaged in a fraudulent scheme that involved the stock of banks that were converting from mutually owned thrifts to publicly traded companies. His wrongdoing occurred during his employment with a broker-dealer that was a predecessor to Wachovia Securities, Inc.
The Securities and Exchange Commission (Commission) issued its Order Instituting Proceedings (OIP) in this matter on July 15, 2002, pursuant to Section 15(b) of the Securities Exchange Act of 1934 (Exchange Act). The OIP alleges that James A. Nies was associated with a broker-dealer from January 1995 until August 1997, and was permanently enjoined from violating Section 10(b)(5) of the Exchange Act and Rule 10b-5 thereunder. Nies was served with the OIP on July 18, 2002. On July 30, 2002, Nies affirmatively stated that he would not defend the proceeding, based on his understanding that the Division of Enforcement (Division) is seeking to bar him from the securities industry and is not seeking any monetary sanction. On August 2, 2002, the Division asked that the proceeding by resolved by default, pursuant to 17 C.F.R. § 201.155(a)(2). The Division seeks a broker-dealer bar, the maximum sanction authorized in the OIP.
Nies is in default within the meaning of 17 C.F.R. § 201.155(a)(2) in that he affirmatively declined to defend the proceeding. Accordingly, the undersigned finds that the allegations in the OIP are true.
II. FINDINGS OF FACT
Nies was associated as a registered representative from January 1995 until August 1997 in the Charlotte, North Carolina, office of Interstate Johnson/Lane, now Wachovia Securities, Inc., a registered broker-dealer. He was associated with PaineWebber Incorporated from February 1993 until January 1995. From early 1995 to early 1997 Nies and others engaged in acts, practices, and courses of business that operated as a fraud and deceit on at least seventeen mutual thrift banks and their account holders. In their fraudulent scheme Nies and others orchestrated the purchase of stock issued by the banks as part of the banks' conversion from mutually owned thrifts to publicly traded companies. They purchased the conversion stock by submitting stock order forms to the thrifts in the names of eligible thrift depositors. They did not disclose the fact that Nies, or other ineligible persons, were funding the stock purchase and would retain sole discretion to sell the stock, violating federal and state banking regulations. Thus, Nies violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Nies was permanently enjoined from violating Section 10(b)(5) of the Exchange Act and Rule 10b-5 on November 1, 2001. See SEC v. James A. Nies, Civil Action No. 3:00-CV-465-MU (W.D. N.C. Nov. 1, 2001).
III. CONCLUSIONS OF LAW
Nies has been enjoined, within five years of the commencement of this proceeding, "from engaging in or continuing any conduct or practice in connection with" his association with a broker-dealer within the meaning of Sections 15(b)(4)(C) and 15(b)(6)(A)(iii) of the Exchange Act. His unlawful conduct was recurring and egregious. There are no mitigating circumstances.
The Division requests that Nies be barred from association with any broker or dealer. This sanction will serve the public interest and the protection of investors, pursuant to Sections 15(b) of the Exchange Act. It accords with Commission precedent and the sanction considerations set forth in Steadman v. SEC, 603 F.2d 1126, 1140 (5th Cir. 1979).
IT IS ORDERED that JAMES A. NIES IS BARRED from association with any broker or dealer.
Carol Fox Foelak
Administrative Law Judge
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