UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 46837 / November 14, 2002
File No. 3-10935
In the Matter of
DAVID E. MORRIS,
|ORDER INSTITUTING PROCEEDINGS PURSUANT TO SECTION 15(b) 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 pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act") be instituted against David E. Morris ("Morris").
In anticipation of the institution of these proceedings, Morris has submitted an Offer of Settlement ("Offer") which the Commission has determined to accept. In his Offer, Morris admits the jurisdiction of the Commission over him and over the subject matter of the administrative proceedings to be instituted against him. Solely for the purpose of these proceedings and any other proceedings 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, except the findings in paragraph III. A. and E. below, which he admits, Morris consents to the entry of this Order Instituting Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions ("Order").
Accordingly, IT IS ORDERED that proceedings pursuant to Section 15(b) of the Exchange Act be, and they hereby are, instituted.
On the basis of this Order and Morris' Offer, the Commission makes the following findings:
- On January 7, 2000, the Commission filed a Complaint ("Complaint") against Morris, among others, in SEC v. Petro Resources Corp., et al., Civil Action No. SA CV 00-17 AHS (EEX) (C.D. Cal.). The complaint alleges that Morris violated Section 17(a) of the Securities Act of 1933 ("Securities Act"), Sections 10(b) and 15(a) of the Exchange Act, and Rule 10b-5 thereunder.
- The Complaint alleges that during 1997, Morris was a supervisor at ITS Consulting, Inc. ("ITS"), a telemarketing operation in Newport Beach, California that offered and sold securities to the public in the form of fractional interests in oil and gas drilling programs.
- The Complaint further alleges that, while such sales of securities were ongoing, neither Morris nor ITS was registered with the Commission as a broker or dealer, and the securities were not registered with the Commission or exempt from registration.
- The Complaint further alleges that, in connection with the offer and sale of the securities, Morris and persons subject to his supervision misrepresented material facts and made statements that omitted material facts necessary to make the statements made, in the light of the circumstances under which they were made, not misleading to investors or prospective investors. The false and misleading statements and omissions concerned, among other things: commissions that would be paid to salespersons of the securities and to control persons of ITS; risks and potential returns of the oil and gas drilling programs; backgrounds and experience of operators of the programs; uses of investor proceeds; characteristics of the oil and gas leases and the proposed wells involved in the programs; tax benefits available to investors in the programs; success of prior programs and of initial drilling efforts; and the existence of state regulatory action against the programs.
- On October 31, 2002, the United States District Court for the Central District of California issued a final judgment against Morris permanently enjoining him from further violations of Section 17(a) of the Securities Act, Sections 10(b) and 15(a) of the Exchange Act, and Rule 10b-5 thereunder. Morris consented to the entry of the injunctive order without admitting or denying any of the allegations of the Complaint.
In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified in Morris' Offer.
Accordingly, IT IS ORDERED pursuant to Section 15(b) of the Exchange Act that Morris be, and hereby is, barred from association with any broker or dealer, with the right to reapply for association after two years to the appropriate self-regulatory organization, or if there is none, to the Commission.
By the Commission.
Jonathan G. Katz