Securities Exchange Act of 1934
Release No. 46969 / December 9, 2002
Investment Advisers Act of 1940
Release No. 2089 / December 9, 2002
Administrative Proceeding
File No. 3-10966
In the Matter of CRAIG A. HERL Respondent. |
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ORDER INSTITUTING ADMINISTRATIVE PROCEEDINGS, MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONS PURSUANT TO SECTIONS 203(e) AND 203(f) OF THE INVESTMENT ADVISERS ACT OF 1940 |
I.
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 Sections 203(e) and 203(f) of the Investment Advisers Act of 1940 (Advisers Act) against Craig A. Herl (Herl).
II.
In anticipation of the institution of these proceedings, the Respondent 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 findings herein, except as to the Commission's jurisdiction over them and the subject matter of these proceedings and the findings contained in Sections III.A. and III.B. herein, which are admitted, the Respondent consents to the entry of this Order Instituting Administrative Proceedings, Making Findings and Imposing Remedial Sanctions pursuant to Sections 203(e) and 203(f) of the Adviser's Act (Order).
III.
On the basis of this Order and Respondent's Offer, the Commission makes the following findings:
A. At all relevant times, Herl, age 42, was the president, a director, and a 5% shareholder of USA Financial Network (USA Financial), a company registered with the Commission as an investment adviser since January 1997.
B. On , the United States District Court for the Southern District of Ohio, in the case of Securities and Exchange Commission v. Mark May, et. al., Civil Action No. C-3-98-468, entered an order of permanent injunction against Herl enjoining him from future violations of Sections 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act.
C. The Commission's complaint alleged that since December 31, 1994, Herl, along with Mark May (May), used two investment advisory firms, Maranatha Financial Group and USA Financial, to offer and sell approximately $3.6 million in unsecured promissory notes to approximately 33 advisory clients. The Commission's Complaint alleged that the promissory notes were issued by USA Financial and their affiliated companies, which Herl and May controlled and operated. The Complaint further alleged that, in connection with the offer and sale of the promissory notes, Herl and May, through their corporations, made material misrepresentations to investors regarding the use of investors funds.
IV.
In view of the foregoing, the Commission deems it appropriate in the public interest to impose the sanction specified in Herl's Offer. Accordingly, IT IS ORDERED THAT pursuant to Sections 203(e) and 203(f) of the Adviser's Act, Herl is barred from association with any investment adviser with the right to reapply for association after (5) five years to the appropriate self-regulatory organization, or if there is none, to the Commission.
By the Commission.
Jonathan G. Katz
Secretary