UNITED STATES OF AMERICA
In the Matter of
BARCLAY L. GRAYSON
|ORDER INSTITUTING PUBLIC|
PURSUANT TO SECTION 203(f) OF
THE INVESTMENT ADVISERS ACT OF
1940, MAKING FINDINGS AND
IMPOSING REMEDIAL SANCTIONS
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest to institute a public administrative proceeding pursuant to Section 203(f) of the Investment Advisers Act of 1940 ("Advisers Act") against Barclay L. Grayson ("Grayson").
Accordingly, IT IS HEREBY ORDERED that said proceeding be, and hereby is, instituted.
In anticipation of the institution of this proceeding, Grayson has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. Solely for the purpose of this proceeding 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 in this Order, except that Respondent admits the jurisdiction of the Commission over him and over the subject matter of this proceeding and admits the entry of the judgment of permanent injunction set forth in paragraph III.C., Respondent consents to the entry of this Order Instituting Public Administrative Proceeding Pursuant To Section 203(f) Of The Investment Advisers Act Of 1940, Making Findings And Imposing Remedial Sanctions ("Order").
On the basis of this Order and Respondent's Offer, the Commission finds that:
A. Barclay L. Grayson ("Grayson"), age 31, is a resident of Portland, Oregon. He is an 18.75% shareholder and was a director and the president of Capital Consultants, LLC ("Capital Consultants"), a registered investment adviser. On September 21, 2000, Grayson resigned from both positions at Capital Consultants.
B. On September 21, 2000, the Commission filed an action against Grayson and others in the United States District Court for the District of Oregon. The Complaint filed in that action alleges, among other things, that Grayson participated in an undisclosed Ponzi-like scheme at Capital Consultants using client funds to make interest payments to clients invested in a failed and bankrupt $160 million loan that Capital Consultants made to Wilshire Credit Corp. ("Wilshire Credit"). In early 1999, the loan to Wilshire Credit was discharged in bankruptcy. The Complaint alleged that Grayson participated in reporting to clients that the loan's value was $160 million, stating that Capital Consultants had sold the loan to two other entities and that they are making the loan payments. The Complaint further alleged that Grayson failed to inform the clients that Capital Consultants lent an additional $71 million of client funds to the two entities to make the payments on the loan to Wilshire Credit. Grayson also allegedly omitted other material information, including the fact that the entities that purchased the Wilshire Credit loan had the right to terminate their purchase agreement at any time, for any reason, and without further liability. The Complaint also alleged that Capital Consultants billed clients invested in the Wilshire Credit loan a 3% annual management fee based on the purported $160 million value. Grayson participated in the sale of participation interests in the loan at the full cost. The Complaint further alleges that, as a result of the foregoing actions, Grayson violated Section 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and aided and abetted Capital Consultants violations of Sections 206(1) and 206(2) of the Advisers Act.
C. On April 30, 2001, the United States District Court for the District of Oregon entered a Judgment of Permanent Injunction Against Barclay L. Grayson ("Judgment"). The Judgment permanently enjoins Grayson from violating Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act. SEC v. Capital Consultants, LLC, et al., Civil Action No. CV-00-1290 (KI) (D. Ore.).
Based on the foregoing, the Commission deems it appropriate and in the public interest to accept the Offer submitted by Grayson and to impose the remedial sanctions specified in Respondent's Offer.
Accordingly, IT IS HEREBY ORDERED, effective immediately, that Respondent Grayson is barred from association with any investment adviser, with the right to reapply for association after five (5) years to the appropriate self-regulatory organization, or if there is none, to the Commission.
By the Commission.
Jonathan G. Katz
|Home | Previous Page||