INVESTMENT ADVISERS ACT OF 1940
Release No. 1979 / September 28, 2001

ADMINISTRATIVE PROCEEDING
File No. 3-10598


In the Matter of

DAVID F. BELLET,

Respondent.


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ORDER INSTITUTING PUBLIC
PROCEEDINGS, MAKING FINDINGS,
AND IMPOSING A CEASE-AND-DESIST ORDER

I.

The Securities and Exchange Commission ("Commission") deems it appropriate to institute public cease-and-desist proceedings pursuant to Section 203(k) of the Investment Advisers Act of 1940 ("Advisers Act"), against David F. Bellet ("Bellet").

In anticipation of the institution of these proceedings, Bellet has submitted an Offer of Settlement ("Offer") to the Commission, 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 in which the Commission is a party, and without admitting or denying the findings contained herein, except as to the Commission's jurisdiction over him and over the subject matter of this proceeding, which is admitted, Bellet has consented to the entry of this Order Instituting Public Proceedings, Making Findings, and Imposing a Cease-and-Desist Order ("Order").

Accordingly, IT IS ORDERED that cease-and-desist proceedings pursuant to Section 203(k) of the Advisers Act be, and hereby are, instituted against Bellet.

II.

On the basis of this Order and the Offer, the Commission makes the following findings:1

INTRODUCTION

A. From 1992 through 1999, Crown Capital Management, Ltd. and Crown-Glynn Advisors Ltd. (collectively "Crown Capital") managed and acted as investment advisers for three private investment companies organized as two investment partnerships and one trust that invested in securities. Crown Advisors Ltd., a separate entity, assisted in day-to-day management of Crown Capital. All three entities were registered as investment advisers with the Commission.

B. Crown Capital's internal operating procedures required all employees and affiliated persons to submit to Crown Capital's compliance officer, on a quarterly basis, personal trading reports identifying every security transaction where the individual had discretion and acquired direct or indirect beneficial ownership. For seven quarterly periods, beginning January 1997, Bellet, an advisory representative of Crown Capital, failed to comply with these requirements. Bellet's actions caused Crown Capital to keep inaccurate and untrue personal trading records in violation of certain provisions of the Advisers Act.

RESPONDENT

C. Bellet, 54, owned a one-third (1/3) interest in Crown Capital Management, Ltd. and Crown-Glynn Advisors Ltd. and fifty-one (51) percent of Crown Advisors Ltd. during the relevant period. He acted as a Managing Director of Crown Capital Management, Ltd. and Crown-Glynn Advisors Ltd. and Chairman of Crown Advisors Ltd. Presently, Bellet does not act as an advisory representative (as defined in Rule 204-2(a)(12)(iii)(A) of the Advisers Act) for, and is not otherwise an associated person of, any investment adviser registered with the Commission.

RELATED ENTITIES

D. Crown Capital Management, Ltd. registered with the Commission as an investment adviser pursuant to Section 203(c) of the Advisers Act on April 13, 1992, and remained registered through March 21, 2000, the effective date of Crown Capital Management, Ltd.'s withdrawal from registration.

E. Crown-Glynn Advisors Ltd. registered with the Commission as an investment adviser pursuant to Section 203(c) of the Advisers Act on April 9, 1992, and remained registered through March 24, 2000, the effective date of Crown-Glynn Advisors Ltd.'s withdrawal from registration.

F. Crown Advisors Ltd. registered with the Commission as an investment adviser pursuant to Section 203(c) of the Advisers Act on April 13,1992, and remained registered through March 24, 2000, the effective date of Crown Advisors Ltd.'s withdrawal from registration.

FACTS

G. For a seven-year period ending December 31, 1999, Crown Capital managed three private investment companies. As of January 1999, assets under management approximated $158 million. Crown Capital made investment decisions on the basis of a majority vote of a seven-member investment team. Bellet, as a member of the investment team, cast one of seven votes.

H. Crown Capital's internal operating procedures required all employees and affiliated persons to submit to Crown Capital's compliance officer, on a quarterly basis, personal trading reports identifying every transaction in securities in which the individual had, or as a result of the transaction acquired, direct or indirect beneficial ownership and had investment discretion. Although Bellet knew of these internal operating procedures, he failed to comply with them with respect to certain transactions during the seven quarterly periods beginning in January 1997.

I. From January 1997 through September 1998, personal brokerage accounts over which Bellet had investment discretion engaged in several hundred transactions in securities in which Bellet had, or as a result of the transactions acquired, direct or indirect beneficial ownership. Bellet failed to disclose these transactions to Crown Capital's compliance officer as required by Crown Capital's internal operating procedures.

J. Instead of reporting his actual personal trades, Bellet submitted personal trading reports that contained fictitious transactions to Crown Capital's compliance officer over the course of the seven quarterly periods.

K. Bellet's misconduct, as described above, with respect to his reporting of personal trades to Crown Capital did not adversely affect the economic interests of Crown Capital, the partnerships or trust managed by Crown Capital, or their respective clients or accounts. In January 1999, following the completion of a routine field examination of Crown Capital by the Commission's Northeast Regional Office, Bellet voluntarily disclosed to the Commission staff the fact that his prior personal trading reports during the seven quarterly periods beginning in January 1997 were fictitious. Bellet then voluntarily submitted to the staff corrected personal trading reports, as well as brokerage account statements, detailing his actual personal security transactions.

LEGAL VIOLATIONS

L. Section 204 of the Advisers Act provides that investment advisers that make use of the mails or any means or instrumentality of interstate commerce in connection with their advisory business shall make and keep, for periods prescribed by rule by the Commission as necessary or appropriate in the public interest or for the protection of investors, certain books and records. Rule 204-2(a)(12) requires every investment adviser registered under Section 203 of the Advisers Act to make and keep true, accurate, and current records of every transaction in a security in which an advisory representative (as defined in Rule 204-2(a)(12)(iii)(A)) of the investment adviser has, or by reason of the transaction acquires, any direct or indirect beneficial ownership.

M. For seven quarterly periods beginning in January 1997, Bellet submitted to Crown Capital fictitious personal trading reports and failed to submit accurate and true reports of transactions in securities in which he had, or by reason of such transactions acquired, direct or indirect beneficial ownership. Therefore, with respect to the seven quarterly periods, Crown Capital failed to make and keep true, accurate, and current records of Bellet's securities transactions, because it did not record Bellet's actual transactions in securities and recorded the fictitious transactions that Bellet reported. As a result, Crown Capital violated Section 204 of the Advisers Act and Rule 204-2(a)(12) thereunder. Bellet was a cause of Crown Capital's violations.

III.

In view of the foregoing, the Commission finds that Bellet was a cause of Crown Capital's violations of Section 204 of the Advisers Act and Rule 204-2(a)(12) thereunder. In determining to accept the Offer, the Commission considered remedial acts promptly undertaken by Bellet and cooperation afforded the Commission staff. The Commission deems it appropriate to issue the cease-and-desist order specified in the Offer submitted by Bellet.

Accordingly, IT IS ORDERED, pursuant to Section 203(k) of the Advisers Act, that Bellet shall cease and desist from causing any violation and any future violation of Section 204 of the Advisers Act and Rule 204-2(a)(12) thereunder.

By the Commission.

Jonathan G. Katz
Secretary


Footnote

1 The findings in this Order are not binding on anyone other than Bellet.