UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 38027 / December 9, 1996 ADMINISTRATIVE PROCEEDING File No. 3-9197 -------------------------------- In the Matter of | SHANER & COMPANY, INC. and | ORDER INSTITUTING PUBLIC MARK S. SHANER | PROCEEDINGS PURSUANT TO | SECTIONS 15(b) AND 19(h) OF Respondents. | 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 to institute administrative proceedings against Shaner & Company, Inc. (Shaner & Co.) and Mark S. Shaner (Shaner), pursuant to Sections 15(b) and 19(h) of the Securities Exchange Act of 1934 (Exchange Act). In anticipation of these proceedings, Shaner & Co. and Shaner have submitted an Offer of Settlement (Offer) which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceeding brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings contained herein, except as to jurisdiction and the findings contained in paragraphs III (A) and (H) below, which are admitted, Shaner & Co. and Shaner, by their Offer of Settlement, consent to the entry of this Order Instituting Public Proceedings Pursuant to Sections 15(b) and 19(h) of the Securities Exchange Act of 1934, Making Findings and Imposing Remedial Sanctions. II. ACCORDINGLY, IT IS ORDERED that proceedings pursuant to Sections 15(b) and 19(h) of the Exchange Act be, and hereby are, instituted. III. On the basis of this Order and the Offer of Settlement submitted by Shaner & Co. and Shaner, the Commission finds that: A. From February 1994 to the present, Shaner & Co. has been registered with the Commission as a broker-dealer pursuant to Section 15 of the Exchange Act. From December 1994 to October ==========================================START OF PAGE 2====== 1995 (the "relevant period"), Shaner was associated with Shaner & Co. as its President, principal and a registered representative. B. During the relevant period, Shaner resided in Fairfield, Iowa. During the relevant period, Shaner and Shaner Trading Partners, Inc. (Shaner Trading), a company Shaner controlled, acted as the general partners of the Shaner Fund L.P. C. Shaner Fund L.P. (Shaner Fund) is an Iowa limited partnership organized in 1994 to engage in the trading of commodity futures contracts and their related options. Limited partnership units in the Shaner Fund were sold through Shaner & Co. D. During the relevant period, Shaner and Shaner & Co. willfully violated Section 17(a) of the Securities Act of 1933 in that they, in the offer or sale of securities, namely limited partnership units in the Shaner Fund, by the use of the means or instruments of transportation or communication in interstate commerce or by the use of the mails, directly or indirectly: employed devices, schemes or artifices to defraud; obtained money or property by means of untrue statements of a material fact or omitted to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or engaged in transactions, practices or courses of business which would or did operate as a fraud or deceit upon purchasers or prospective purchasers of such securities. As part of that scheme, Shaner, through Shaner & Co., misrepresented and omitted to state material facts to investors, concerning, among other things, the intended use of investor proceeds and the risks of investing. As a further part of that scheme, Shaner misappropriated more than $621,000 of Shaner Fund assets for his personal benefit. E. During the relevant period, Shaner and Shaner & Co. willfully violated Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder in that they, in connection with the purchase or sale of Shaner Fund limited partnership units, by the use of the means or instrumentalities of interstate commerce or of the mails, directly or indirectly: employed devices, schemes or artifices to defraud; made untrue statements of a material fact or omitted to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or engaged in acts, practices, or courses of business which would or did operate as a fraud or deceit. As part of this conduct, Shaner and Shaner & Co. engaged in the acts and practices described in paragraph D above. F. During the relevant period, Shaner & Co. willfully violated Section 15(c) of the Exchange Act and Rule 15c1-2 promulgated thereunder in that Shaner & Co., while acting as a ==========================================START OF PAGE 3====== broker or dealer, made use of the mails or any means or instrumentality of interstate commerce to effect transactions in, or induce or attempt to induce the purchase or sale of, any securities (other than commercial paper, bankers' acceptances or commercial bills) otherwise than on a national securities exchange of which they were members, by means of acts, practices or courses of business which operated or would operate as a fraud or deceit upon any person; or made untrue statements of a material fact or omitted to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, where such statements or omissions were made with knowledge or reasonable grounds to believe that they were untrue or misleading. As part of this conduct, Shaner & Co. engaged in the acts and practices described in paragraph D above. G. During the relevant period, Shaner willfully aided and abetted Shaner & Co.'s violations of Section 15(c) of the Exchange Act and Rule 15c1-2 promulgated thereunder, in that Shaner aided and abetted Shaner & Co. in making use of the mails or any means or instrumentality in interstate commerce to effect transactions in, or induce or attempt to induce the purchase or sale of, any securities (other than commercial paper, bankers' acceptances or commercial bills) otherwise than on a national securities exchange of which they were members, by means of acts, practices or courses of business which operated or would operate as a fraud or deceit upon any person; or making untrue statements of a material fact or omitting to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, where such statements or omissions were made with knowledge or reasonable grounds to believe that they were untrue or misleading. As part of this conduct, Shaner engaged in the acts and practices described in paragraph D above. H. On October 28, 1996, the United States District Court for the Southern District of Iowa, in the action captioned Securities and Exchange Commission v. Mark S. Shaner, et al, case no. 4-96-CV-70767, entered an Order of Permanent Injunction and Other Equitable Relief (Injunctive Order) by consent against Shaner and Shaner & Co. The Injunctive Order enjoins Shaner and Shaner & Co. from future violations of, and aiding and abetting violations of Section 17(a) of the Securities Act and Sections 10(b) and 15(c) of the Exchange Act and Rules 10b-5 and 15c1-2 thereunder. The Complaint filed in that action alleges the acts and practices described in paragraphs D through G above. IV. In view of the foregoing, it is in the public interest to impose the sanctions specified in the Offer of Settlement. ==========================================START OF PAGE 4====== ACCORDINGLY, IT IS HEREBY ORDERED THAT: A. Shaner & Co.'s registration as a broker-dealer be, and hereby is revoked, effective from the date of the entry of this Order; and B. Shaner be, and hereby is, barred from association with any broker, dealer, investment adviser, investment company or municipal securities dealer, effective from the date of the entry of this Order. By the Commission. Jonathan G. Katz Secretary