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U.S. Securities and Exchange Commission

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

INVESTMENT ADVISERS ACT OF 1940
Release No. 2101 / January 22, 2003

ADMINISTRATIVE PROCEEDING
File No. 3-11014


In the Matter of

FRED ALBERT SCHLUEP,

Respondent.


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ADMINISTRATIVE PROCEEDINGS PURSUANT TO SECTION 203(f) OF THE INVESTMENT ADVISERS ACT OF 1940, 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 203(f) of the Investment Advisers Act of 1940 ("Advisers Act") against Fred Albert Schluep ("Schluep" or "Respondent").

II.

In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. Solely for the purposes 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 203(f) of the Investment Advisers Act of 1940, 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. Schluep, age 43, resides in Red Bluff, California. From April 1989 to July 1997, Schluep, was registered as an investment adviser with the Commission. He was certified to do business as an investment adviser in the State of California from April 1989 until the California Department of Corporations revoked his state certification in July 2001 for failing to file mandatory reports.

2. On October 9, 2002, a judgment was entered by consent against Schluep, permanently enjoining him from future violations of Sections 206(1) and 206(2) of the Advisers Act, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, in the civil action entitled Securities and Exchange Commission v. Fred Albert Schluep, et al., Civil Case No. C-02-4193 (the "Injunctive Action"), in the United States District Court for the Northern District of California.

3. The Commission's Complaint alleged, among other things, that from September 1991 to March 2001, Schluep, while acting as an investment adviser, misappropriated in excess of $5 million from at least 26 clients by forging his clients' signatures on checks and fund transfer documents and making material misrepresentations and omissions to investors in connection with the purchase or sale of securities. In addition, the Complaint alleged that Schluep made misrepresentations and omissions of material facts to at least two clients in 1999 for the purpose of inducing them to invest over $60,000 in securities that Schluep recommended; Schluep misappropriated the clients' investment funds and never purchased the securities for the clients. The Complaint also alleged that Schluep repeatedly lulled his clients into believing that the misappropriated funds would be repaid by giving clients reimbursement checks that were returned for insufficient funds.

IV.

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

ACCORDINGLY, IT IS HEREBY ORDERED:

Pursuant to Section 203(f) of the Advisers Act, that Respondent Schluep be, and hereby is barred from association with any investment adviser.

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

Jonathan G. Katz
Secretary

 

http://www.sec.gov/litigation/admin/ia-2101.htm


Modified: 01/23/2003