UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 38335 / February 26, 1997 ADMINISTRATIVE PROCEEDING File No. 3-9216 _______________________________ : In the Matter of : : DAVID P. SCHWARTZ, : ORDER MAKING FINDINGS AND : IMPOSING REMEDIAL SANCTION Respondent. : : : _______________________________: I. In these public administrative proceedings instituted pursuant to Sections 15(b) and 19(h) of the Securities Exchange Act of 1934 ("Exchange Act"), Respondent David P. Schwartz ("Schwartz") has submitted an Offer of Settlement ("Offer"), which the Securities and Exchange Commission ("Commission") has determined is in the public interest to accept.-[1]- II. 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, Schwartz: A. Admits to the jurisdiction of the Commission over him and over the subject matter of these proceedings, and B. Without admitting or denying the findings in this Order, except as to the entry of the injunction in Paragraph III.C. below, which is admitted, consents to the entry of this ---------FOOTNOTES---------- -[1]- The Order Instituting Proceedings Pursuant To Sections 15(b) And 19(h) of the Securities Exchange Act of 1934 And Notice Of Hearing ("Order Instituting Proceedings") was issued by the Commission on January 8, 1997. In the Matter of David P. Schwartz, Exchange Act Release No. 38135, 1997 SEC LEXIS 51 (Jan. 8, 1997). ==========================================START OF PAGE 2====== Order and the imposition of the remedial sanction set forth below. III. On the basis of the Order Instituting Proceedings and the Offer, the Commission finds that:-[2]- A. Schwartz resides in New York, New York, and Miami, Florida. From September 1986 to August 1992, Schwartz was associated with Morgan Stanley & Co., Incorporated ("Morgan Stanley") as a registered representative. B. On November 8, 1994, the Commission filed a Complaint against Schwartz, SEC v. Edward A. Cantor, Michael Levine and David P. Schwartz, 94 Civ. 8079 (JGK) (S.D.N.Y.). The Complaint alleges that Schwartz violated Section 14(e) of the Exchange Act and Rule 14e-3 by illegally conveying material, nonpublic information to defendant Edward A. Cantor, who thereafter purchased DeSoto, Inc. ("DeSoto") securities prior to the announcement on November 9, 1989, of a tender offer for DeSoto by Sutton Holding Corp. ("Sutton"). The Complaint alleges that the source of the material, nonpublic information was defendant Michael Levine ("Levine"), who received it from Michael Zurawin, one of the investors who formed Sutton. The Complaint also alleges that Schwartz, while associated with Morgan Stanley, had an undisclosed commission sharing agreement with Levine's broker pursuant to which Schwartz received a share of the commission income from Levine's illegal trading in DeSoto securities, among others. C. On December 14, 1995, the United States District Court for the Southern District of New York entered a final judgment against Schwartz (a) permanently enjoining him from future violations of Section 14(e) of the Exchange Act and Rule 14-3; (b) ordering him to pay $3,041.02 in disgorgement plus prejudgment interest; and (c) ordering him to pay a penalty of $14,822.00 under the Insider Trading and Securities Fraud Enforcement Act of 1988. Schwartz consented to the entry of the final judgment without admitting or denying the allegations in the Complaint. IV. ---------FOOTNOTES---------- -[2]- The findings herein are made pursuant to Respondent's Offer and are not binding on any other person or entity in this or any other proceeding. ==========================================START OF PAGE 3====== In view of the foregoing, the Commission deems it appropriate and in the public interest to accept Schwartz's Offer and to impose the sanctions specified in the Offer. Accordingly, IT IS HEREBY ORDERED that, pursuant to Sections 15(b) and 19(h) of the Exchange Act, Schwartz be, and hereby is, barred from association with any broker, dealer, municipal securities dealer, investment adviser or investment company, with the right to reapply for association after five years to the appropriate self-regulatory organization, or if there is none, to the Commission. By the Commission. Jonathan G. Katz Secretary