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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. 2142 / July 3, 2003

Administrative Proceeding
File No. 3-11170


In the Matter of

PETER W. CHABOT,

Respondent.


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ORDER INSTITUTING 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 administrative proceedings be, and hereby are, instituted pursuant to Section 203(f) of the Investment Advisers Act of 1940 ("Advisers Act") against Peter W. Chabot ("Chabot" or "Respondent").

II.

In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (the "Offer") 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 herein, except as to the Commission's jurisdiction over him and the subject matter of these proceedings, and the findings contained in Section III.4 and III.6 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 the Offer of Settlement submitted by Respondent, the Commission finds that:

1. Between 1998 through the present, Chabot was associated with Chabot Investments, Inc. ("Chabot Investments") an unregistered investment adviser.

2. On November 13, 2001, the Commission filed a Complaint in the United States District Court for the Southern District of New York, in an action captioned Securities and Exchange Commission v. Peter W. Chabot, Chabot Investments, Inc., Sirens Investments, Inc., Sirens Synergy and The Synergy Fund, LLC, Civil Action No. 01 CV 9976 (AGS)(S.D.N.Y.), alleging, among other things, that Chabot and Chabot Investments engaged in the fraudulent offer and sale of securities in violation of 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 Sections 206(1) and (2) of the Advisers Act.

3. The Commission's Complaint alleges that, beginning in 1999, Chabot, individually and through the defendants, raised over $1.1 million from approximately 14 investors by making material misrepresentations and omissions to them concerning an alleged offshore hedge fund. Chabot falsely claimed he was a successful Wall Street trader and had a successful track record operating an earlier hedge fund. Chabot then caused to be prepared false and misleading account statements for the investors claiming that the hedge fund had assets of $135 million. As alleged in the Commission's Complaint, the hedge fund raised only approximately $1.16 million and Chabot did not buy stocks or other securities with investors' monies. Instead, he spent their money on personal expenses, including over $100,000 on computers, clothes, foreign travel, and sports tickets, and an additional $100,000 for the rent of a loft apartment.

4. On January 8, 2002, Chabot pled guilty to one count of securities fraud in violation of Title 15 United States Code Section 78j(b), 17 C.F.R. Section 240.10b-5 and one count of wire fraud in violation of Title 18 United States Code Section 1343 before the United States District Court for the Southern District of New York, in United States v. Peter W. Chabot, Case No. 02 Cr 19. On February 27, 2002, Chabot was sentenced to 27 months imprisonment to run concurrently on both counts, supervised release of 36 months and restitution of $1,265,868.

5. The counts of the criminal information to which Chabot pled guilty alleged, among other things, that Chabot made false representations to potential investors about the "Sirens Synergy Fund" and obtained approximately $1.2 million from investors. From July 1999 through August 2001, Chabot also distributed fictitious monthly statements to investors that falsely portrayed the Synergy Fund as having investment gains of as much as approximately 20 percent per year.

6. On June 25, 2003, a final judgment was entered by consent against Chabot and Chabot Investments permanently enjoining Chabot and Chabot Investments 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 (2) of the Advisers Act.

IV.

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

ACCORDINGLY IT IS HEREBY ORDERED:

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

By the Commission.

Jonathan G. Katz
Secretary

 

http://www.sec.gov/litigation/admin/ia-2142.htm


Modified: 07/07/2003