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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. 50223 / August 20, 2004

ADMINISTRATIVE PROCEEDING
File No. 3-11592


In the Matter of

STEVEN E. MUTH,

Respondent.


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ORDER INSTITUTING ADMINISTRATIVE PROCEEDINGS PURSUANT TO SECTION 15(b) OF THE SECURITIES EXCHANGE ACT OF 1934, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS

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 Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act") against Steven E. Muth ("Muth" or "Respondent").

II.

In anticipation of the institution of these proceedings, Respondent has 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 him and the subject matter of these proceedings, and the findings contained in Section III.2 below, which are admitted, Respondent consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions ("Order"), as set forth below.

III.

On the basis of this Order and Respondent's Offer, the Commission finds that:

1. Muth, age 43, is a resident of Aurora, Colorado. During the relevant period of time, November 17, 1999 through June 15, 2000, Muth was a registered representative at the Englewood, Colorado branch office of registered broker-dealer and NASD member Kirkpatrick, Pettis, Smith, Polian Inc. ("Kirkpatrick").

2. On August 9, 2004, a final judgment was entered by consent against Muth, permanently enjoining him from future violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in the civil action entitled Securities and Exchange Commission v. Steven E. Muth, et al., Case Number 03 CV 2178 WQH (JFS), in the United States District Court for the Southern District of California.

3. The Commission's complaint in the action described in paragraph III.2 above alleged that from June 1999 until May 29, 2000, Kirkpatrick made a market in the stock of Creative Host Services, Inc. ("Creative Host"). The complaint further alleged that Muth, in concert with others, fraudulently manipulated Creative Host's stock price from $0.78 to $29.00 between November 17, 1999 and June 15, 2000, a gain of 3,618%, even though Creative Host operated at a net loss during this time period. Muth allegedly manipulated Creative Host's stock price by restricting supply and artificially creating demand for the stock. Specifically, the complaint alleged that Muth caused Kirkpatrick's clients to buy and control 90% of Creative Host's free trading shares; engaged in high-pressure sales tactics; refused to execute client sell orders; encouraged customers to use margin without explaining the associated risks; hired promoters to tout the shares on the Internet; delayed submitting orders to buy Creative Host stock; facilitated price leadership by Kirkpatrick; and prearranged trades. Finally, the complaint alleged that as a result of his fraudulent scheme, Muth received ill-gotten commissions of $950,562 from Kirkpatrick and trading profits of $83,751.

IV.

In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified in Respondent Muth's Offer.

Accordingly, it is hereby ORDERED:

Pursuant to Section 15(b)(6) of the Exchange Act, that Respondent Muth be, and hereby is barred from association with any broker or dealer.

Any reapplication for association by the Respondent 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.

For the Commission, by its Secretary, by delegated authority.

Jonathan G. Katz
Secretary

 

http://www.sec.gov/litigation/admin/34-50223.htm


Modified: 08/20/2004