UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
RELEASE NO. 49606 / April 23, 2004
INVESTMENT ADVISERS ACT OF 1940
Release No. 2229 / April 23, 2004
FILE NO. 3-11463
SEC INSTITUES ADMINISTATIVE PROCEEDINGS AGAINST CDH & AFFILIATES, INC., AND C. DAVID HALLMAN
On April 23, 2004, the Commission instituted administrative proceedings against CDH & Affiliates, Inc. ("CDH") and C. David Hallman, based on the entry, on October 23, 2003, of an injunction by the United States District Court for the Northern District of Georgia, Newnan Division. Subsequently, on April 1, 2004, the Court entered a Final Judgment of Permanent Injunction in that civil action, entitled SEC v. CDH & Affiliates, Inc., and C. David Hallman, Civil Action File Number 3:02-CV-17-JTC (N.D. Ga.), which enjoined CDH and Hallman from future violations of Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and set disgorgement and prejudgment interest at $4,207,616.95 and ordered CDH and Hallman to pay civil penalties in the amount of $110,000 each. See Litigation Release Nos. 18431 (Oct. 29, 2003); 18662 (April 7, 2004).
The Commission's complaint alleged that Hallman controlled CDH and that from September 1997 through at least June 1999, Hallman and CDH engaged in the business of effecting transactions in securities and fraudulently raised more than $2.2 million in transaction-related fees from at least 27 customers, purportedly to prepare corporate bond offerings for those customers and then to sell those bonds for the customers. The complaint further alleged that in an effort to avoid detection of their scheme, until at least July 2001, Hallman and CDH continually told their victims that their bond issues would be funded and made other misrepresentations to encourage the victims to believe that funding was imminent. The complaint alleges that CDH never sold bonds for any customer and that no such high-yield investment program exists. Hallman made numerous misrepresentations to his victims, including false claims that some victims' bonds had been successfully sold, that bond sales were imminent and that the proceeds of the bond sales would be invested in a high-yield investment program that would pay 30%-40% every ten days.
A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide the Respondents an opportunity to dispute these allegations, and to determine what, if any, remedial sanctions are appropriate and in the public interest.
The Order requires the Administrative Law Judge to issue an initial decision no later that 210 days from the date of service of this Order, pursuant to Rule 360(a)(2) of the Commission's Rules of Practice.
See also, Litigation Releases No. 18662 (April 7, 2004), No. 18431 (October 29, 2003), and No. 17386 (February 27, 2002).
See also the Order in this matter