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U.S. Securities and Exchange Commission

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 49778 / May 27, 2004

ADMINISTRATIVE PROCEEDING
File No. 3-11459


In the Matter of

MICHAEL BOSTON


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ORDER MAKING FINDINGS
AND IMPOSING SANCTION
BY DEFAULT

The Securities and Exchange Commission (Commission) issued its Order Instituting Proceedings (OIP) on April 15, 2004, pursuant to Section 15(b) of the Securities Exchange Act of 1934 (Exchange Act). The Division of Enforcement (Division) has provided evidence that Respondent Michael Boston (Boston) received the OIP on May 5, 2004.

Under the terms of the OIP and Rule 220 of the Commission's Rules of Practice, Boston's Answer was due no later than May 25, 2004. No Answer has been filed. Boston is therefore in default. As authorized by Rule 155(a) of the Commission's Rules of Practice, I find the following allegations of the OIP to be true:

Boston, age 29, is a former registered representative who was associated with Baxter, Banks & Smith, Ltd. (BBS), a defunct broker and dealer. From November 1997 through January 1999, Boston supervised a New York branch office of BBS.

On January 14, 2002, the Commission brought an action in federal district court against Boston and others. The Commission alleged that Boston violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Section 10(b) of the Exchange Act, and Exchange Act Rule 10b-5, in connection with trading the stock of Maid Aide, Inc. (MDAN), a thinly traded shell company. SEC v. Tanner, 02 Civ. 0306 (S.D.N.Y.) (WHP).

The Commission's complaint alleged, among other things, that Boston participated in a scheme to manipulate the public trading market for MDAN stock. To facilitate the scheme, the defendants gained control of MDAN and set up two boiler room operations at BBS. Boston was the supervisor of one of the boiler rooms through which unlicensed brokers sold unregistered MDAN stock at artificially inflated prices, using high-pressure sales tactics, in exchange for undisclosed kickbacks. Boston allowed the unregistered brokers to assume his identity during calls they made to investors to solicit purchases of MDAN, in order to conceal the fact that the brokers were not registered with the Commission or licensed by the National Association of Securities Dealers. Through this scheme, Boston and the other defendants defrauded investors out of more than $3.7 million.

On October 10, 2002, the district court entered a default judgment that permanently enjoined Boston from violating the federal securities laws. The court also ordered Boston to disgorge $150,000 that he obtained as a result of the fraudulent scheme, plus $53,745.49 in prejudgment interest, and to pay a civil penalty of $175,000.

In view of the above, I find that remedial action is appropriate in the public interest and that Boston should be barred from association with any broker or dealer.

IT IS ORDERED THAT, pursuant to Section 15(b) of the Securities Exchange Act of 1934, Michael Boston is barred from association with any broker or dealer.

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James T. Kelly
Administrative Law Judge

 

http://www.sec.gov/litigation/admin/34-49778.htm


Modified: 05/27/2004