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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. 2244 / May 28, 2004

Admin. Proc. File No. 3-11505


In the Matter of

Warren Asset Management, LLC and Weldon R. Warren,

Respondents.



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ORDER INSTITUTING ADMINISTRATIVE PROCEEDINGS PURSUANT TO SECTIONS 203(e) AND 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 Sections 203(e) and 203(f) of the Investment Advisers Act of 1940 ("Advisers Act") against Warren Asset Management, LLC ("WAM") and Weldon R. Warren ("Warren") (collectively "Respondents").

II.

In anticipation of the institution of these proceedings, Respondents have 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 to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission's jurisdiction over them and the subject matter of these proceedings, and the findings contained in Section III.3. below, which are admitted, Respondents consent to the entry of this Order Instituting Administrative Proceedings Pursuant to Sections 203(e) and 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 Respondents' Offer, the Commission finds that:

1. Warren, age 48 and a resident of Highland Village, Texas, owns and operates WAM from his home. Warren, through WAM, also manages the investment activities of DG Private Investment Fund, LLC ("DGPIF"), a pooled investment fund, and frequently conducts business under the name Dynamic Financial Management. Warren does not receive a salary from WAM but typically withdraws management fees directly from client accounts on a quarterly basis.

2. WAM, a Texas limited liability company, is an investment adviser registered with the Commission. At Warren's direction, WAM provides discretionary investment advisory services primarily to individual investors. Effective October 10, 2003, the State of Texas revoked WAM's corporate charter for failure to pay its franchise taxes.

3. On May 21, 2004, the U.S. District Court for the Northern District of Texas entered a Final Judgment of Permanent Injunction ("Final Judgment") by consent against Respondents. Pursuant to the Final Judgment, WAM is permanently enjoined from future violations 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 203A, 204, 206(1), 206(2) and 206(4) of the Advisers Act and Rules 204-2(a)(1)-(7), 204-2(a)(10)-(12), 204-2(a)(14), 204-2(a)(16), 204-2(b), 204-2(e)(3), 204-3, 206(4)-1(a)(5), 206(4)-2, 206(4)-4(a)(1) and (2), and 206(4)-4(c) thereunder. Pursuant to the Final Judgment, Warren is permanently enjoined from future violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and from aiding and abetting future violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 203A, 204, 206(1), 206(2) and 206(4) of the Advisers Act and Rules 204-2(a)(1)-(7), 204-2(a)(10)-(12), 204-2(a)(14), 204-2(a)(16), 204-2(b), 204-2(e)(3), 204-3, 206(4)-1(a)(5), 206(4)-2, 206(4)-4(a)(1) and (2), and 206(4)-4(c) thereunder. Securities and Exchange Commission v. Warren Asset Management, LLC et al., Civil Action Number 3-04CV-1038R (N.D. Tex.).

4. The Commission alleges in its complaint that since at least November 2001, WAM, Warren and DGPIF misrepresented and failed to disclose to clients material facts about their investments. According to the complaint, these misrepresentations and omissions of fact included information relating to the following: the management fee charged by WAM as adviser to DGPIF; the risks associated with investments placed by WAM on behalf of its clients; WAM's performance record; the rate of return earned by WAM as set forth in client account statements; Warren's prior bankruptcy; and the fact that WAM and DGPIF are no longer in good standing as limited liability companies with the State of Texas. The Commission also alleges that WAM failed to maintain books and records required by law, such as general ledgers, bank statements, cash reconciliations and records of securities transactions and failed to adhere to the rules relating to custody of client funds.

IV.

In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions agreed to in the Respondents' Offer.

IT IS HEREBY ORDERED that, pursuant to Section 203(e) of the Advisers Act, the investment adviser registration of Respondent WAM be, and hereby is revoked.

IT IS HEREBY ORDERED that pursuant to Section 203(f) of the Advisers Act, Respondent Warren be, and hereby is barred from association with any investment adviser.

Any reapplication for association by Respondent Warren will be subject to the applicable laws and regulations governing the reentry process, and reentry may be conditioned upon a number of factors, including, but not limited to, the satisfaction of any or all of the following: (a) any disgorgement ordered against Respondent Warren, whether or not the Commission has fully or partially waived payment of such disgorgement; (b) any arbitration award related to the conduct that served as the basis for the Commission order; (c) any self-regulatory organization arbitration award to a customer, whether or not related to the conduct that served as the basis for the Commission order; and (d) any restitution order by a self-regulatory organization, whether or not related to the conduct that served as the basis for the Commission order.

By the Commission.

Jonathan G. Katz
Secretary


http://www.sec.gov/litigation/admin/ia-2244.htm


Modified: 05/28/2004