INVESTMENT ADVISERS ACT OF 1940
Release No. 2326 / November 10, 2004

Admin. Proc. File No. 3-11681


In the Matter of

KENNETH B. MACQUEEN,

Respondent.



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ORDER MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONS

I.

The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest to enter an order in this public administrative proceeding, previously instituted on September 23, 2004, against Kenneth B. MacQueen ("Respondent" or "MacQueen") pursuant to Section 203(f) of the Investment Advisers Act of 1940 ("Advisers Act").

II.

MacQueen has submitted an Offer of Settlement ("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 Respondent, the subject matter of these proceedings and the findings contained in paragraph III.E. below, which are admitted, Respondent consents to the issuance of this Order Making Findings and Imposing Remedial Sanctions ("Order") as set forth below.

III.

On the basis of the Order Instituting Administrative Proceedings Pursuant to Section 203(f) of the Investment Advisers Act of 1940 and the Offer submitted by MacQueen, the Commission makes the following findings:

A. MacQueen, age 47, was a resident of Orland Park, Illinois during the relevant time frame. From at least 1993 until March 2003, MacQueen was a principal of MacQueen Capital Management Corp. ("MacQueen Capital"). He was not registered with the Commission in any capacity.

B. MacQueen Capital was an unregistered investment adviser and was an Illinois corporation during the relevant time. MacQueen operated MacQueen Capital's advisory business. MacQueen Capital was the adviser to the Dividend Reinvestment Fund, L.L.C. ("Dividend Fund"), an unregistered hedge fund.

C. On February 29, 2003, the Commission filed a Complaint in the United States District Court for the Northern District of Illinois against MacQueen, MacQueen Capital, and the Dividend Fund captioned SEC v. Kenneth B. MacQueen, et al., No. 03 C 1423.

D. The Complaint alleges that MacQueen, through MacQueen Capital and the Dividend Fund, raised at least $1.325 million from five investors in an ongoing fraudulent investment scheme. According to the Complaint, MacQueen misrepresented the Dividend Fund's investment objectives by telling investors that the Dividend Fund would generate annual returns of approximately 25% through a low risk, dividend reinvestment arbitrage investment strategy, even though the Dividend Fund generated little or no returns from its stated investment strategy. The Complaint also alleges that MacQueen misrepresented the use of investor proceeds by claiming that proceeds would be used by the Dividend Fund for its dividend reinvestment arbitrage trading strategy, when MacQueen actually used the proceeds to pay existing investors and to pay personal expenses such as the purchase of a vacation home. The Complaint also alleges that, to conceal his fraud and to obtain additional investments, MacQueen made numerous misrepresentations to investors regarding the value of their interests in the Dividend Fund. Based on these allegations, the Complaint asserts that MacQueen violated Sections 17(a)(1), 17(a)(2) and 17(a)(3) 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 206(2) of the Advisers Act.

E. On July 8, 2003, the Court entered an order permanently enjoining MacQueen, MacQueen Capital and the Dividend Fund from violating Sections 17(a)(1), 17(a)(2) and 17(a)(3) 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. In a written consent, MacQueen and MacQueen Capital admitted the allegations of the Complaint and agreed to the entry of the order of permanent injunction.

IV.

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

ACCORDINGLY, IT IS HEREBY ORDERED:

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

Any reapplication for association by the Respondent 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 the Respondent, 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.

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

Jonathan G. Katz
Secretary