United States of America
In the Matter of
SILVERADO STOCK TRANSFER, INC. AND SHANNON L. BALDINO,
|ORDER INSTITUTING ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS AND A CEASE-AND-DESIST ORDER PURSUANT TO SECTIONS 17A(c) and 21C OF THE SECURITIES EXCHANGE ACT OF 1934|
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be, and hereby are, instituted pursuant to Sections 17A(c) and 21C of the Securities Exchange Act of 1934 ("Exchange Act") against Respondents Silverado Stock Transfer, Inc. ("Silverado") and Shannon L. Baldino ("Baldino")(collectively, "Respondents").
In anticipation of the institution of these proceedings, Respondents have submitted an Offer of Settlement (the "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, Respondents consent to the entry of this Order Instituting Administrative and Cease-And-Desist Proceedings, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order Pursuant to Sections 17A(c) and 21C of the Securities Exchange Act of 1934 ("Order"), as set forth below.
On the basis of this Order and Respondents' Offer, the Commission finds that:
1. Silverado, a Nevada corporation with its principal place of business in Las Vegas, Nevada, has been registered as a transfer agent with the Commission (File No. 84-5718) since October 27, 1997, pursuant to Section 17A(c)(2) of the Exchange Act.
2. Baldino, a resident of Nevada, has been the sole owner, officer, director and employee of Silverado since its inception, and has performed all transfer agent functions for Silverado since it registered as a transfer agent with the Commission.
1. In June 1999, the Commission's examination staff conducted an examination of Silverado. In June and July 1999, the examination staff, orally and in writing, advised the Respondents that they were violating the transfer agent recordkeeping rules under the Exchange Act specified below in paragraphs III.B.3 and III.B.4. Further, the examination staff orally advised Baldino of the steps necessary to comply with these rules. Baldino stated that she had corrected or would correct the violations.
2. In February 2003, the Commission's examination staff conducted another examination of Silverado. The examination staff found that Silverado and Baldino were still in violation of the transfer agent recordkeeping rules specified in paragraphs III.B.3 and III.B.4. The Commission's examination staff found that the Respondents were also violating the transfer agent recordkeeping rules specified in paragraphs III.B.5 through III.B.11.
3. Rule 17Ad-4(c) requires a registered transfer agent that has received fewer than 500 items for transfer and processing during any six consecutive months to calculate the number of items received during the preceding six months within five business days following the close of each month. Since June 1999, Respondents claimed receipt of fewer than 500 items for transfer in any six-month period but failed to prepare the required calculations.
4. Rule 17f-2 requires registered transfer agents to maintain processed fingerprint cards, or appropriate substitute records, of officers and employees. Since June 1999, Respondents did not maintain such records.
5. Rule 17Ac2-2 requires registered transfer agents to file reports annually with the Commission on Form TA-2 concerning their activities. Respondents failed to file reports on Form TA-2 for the years 1998, 1999, 2000, 2001 and 2002.
6. Rule 17Ad-5 requires registered transfer agents to respond to written inquiries and requests for account information received from issuer clients. Respondents failed to respond to written inquiries and requests for account information from two of their issuer clients.
7. Rule 17Ad-6(a)(1) requires registered transfer agents to make and keep current a receipt, ticket, schedule, log or other record showing the business day that each item is received from a presentor and made available to a presentor. Respondents did not maintain complete item logs reflecting all the presentors for two of their active issuer clients.
8. Rule 17Ad-6(a)(10) requires registered transfer agents to make and keep current a copy of any transfer journal. Respondents failed to make and keep current copies of transfer journals for each issuance of securities by companies for which they performed stock transfer functions.
9. Rule 17Ad-6(c) requires transfer agents to retain cancelled certificates and accompanying documentation related to the transfer of securities. Respondents failed to retain these documents.
10. Rule 17Ad-10(e) requires registered transfer agents to make and keep current an accurate control book for each issue of securities for which they perform transfer functions. Respondents failed to make and keep such control books.
11. Rule 17Ad-12 requires registered transfer agents to maintain reasonable safeguards for funds and securities for each issue of securities for which they perform stock transfer functions. Respondents failed to maintain such reasonable safeguards.
1. Taken together, Sections 17(a)(1), 17(a)(3), and 17(b)(1) of the Exchange Act require transfer agents to furnish records to the Commission when requested. During and after a February 2003 examination, the Commission's examination staff repeatedly requested Respondents to provide copies of documents that a transfer agent is required to make, keep and provide to the Commission when requested.
2. The Respondents failed to provide the requested documents until November 2003.
1. As a result of the conduct described above in paragraphs III.B.3 through III.B.11, Silverado and Baldino willfully violated Sections 17(a)(1), 17(a)(3), and 17A(d)(1) of the Exchange Act and Rules 17Ac2-2, 17Ad-4(c), 17Ad-5, 17Ad-6(a)(1), 17Ad-6(a)(10), 17Ad-6(c), 17Ad-10(e), 17Ad-12, and 17f-2 thereunder.
2. As a result of the conduct described above in paragraphs III.C.1 through III.C.2, Silverado and Baldino willfully violated Sections 17(a)(1), 17(a)(3), and 17(b)(1) of the Exchange Act.
In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified in Silverado's and Baldino's Offer:
Accordingly, it is hereby ORDERED:
A. Pursuant to Section 17A(c) of the Exchange Act, that Silverado's registration is revoked; and
B. Baldino is barred from association with any transfer agent;
C. Any reapplication for association by Baldino will be subject to the applicable laws and regulations governing the reentry process, and reentry may be conditioned upon a number of factors, including, but not limited to, the satisfaction of any or all of the following: (a) any disgorgement ordered against the Respondent, whether or not the Commission has fully or partially waived payment of such disgorgement; (b) any arbitration award related to the conduct that served as the basis for the Commission order; (c) any self-regulatory organization arbitration award to a customer, whether or not related to the conduct that served as the basis for the Commission order; and (d) any restitution order by a self-regulatory organization, whether or not related to the conduct that served as the basis for the Commission order;
D. Pursuant to Section 21C of the Exchange Act, that Respondents cease and desist from committing or causing any violations and any future violations of Sections 17(a)(1), 17(a)(3), 17(b)(1) and 17A(d)(1) of the Exchange Act and Rules 17Ac2-2, 17Ad-4(c), 17Ad-5, 17Ad-6(a)(1), 17Ad-6(a)(10), 17Ad-6(c), 17Ad-10(e), 17Ad-12, and 17f-2 thereunder;
E. It is further ordered that Baldino shall, within 180 days of the entry of this Order, pay a civil money penalty in the amount of $25,000 to the United States Treasury. Such payment shall be: (A) made by United States postal money order, certified check, bank cashier's check or bank money order; (B) made payable to the Securities and Exchange Commission; (C) hand-delivered or mailed to the Office of Financial Management, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Stop 0-3, Alexandria, VA 22312; and (D) submitted under cover letter that identifies Shannon L. Baldino as a Respondent in these proceedings, the file number of these proceedings, a copy of which cover letter and money order or check shall be sent to Sandra J. Harris, Associate Director, Office of Enforcement, Securities and Exchange Commission, 5670 Wilshire Boulevard, 11th Floor, Los Angeles, CA 90036.
By the Commission.
Jonathan G. Katz
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