Finality Order of an Initial Decision of an SEC Administrative Law Judge

In the Matter of
Del Mar Financial Services, Inc., Kevin C. Dills,
Private Brokers Corporation, Robert A. Roberts, and Matthew R. Jennings

UNITED STATES OF AMERICA
before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES ACT OF 1933
Rel. No. 8063 / February 7, 2002

SECURITIES EXCHANGE ACT OF 1934
Rel. No. 45414 / February 7, 2002

Admin. Proc. File No. 3-9959

On August 14, 2001, the administrative law judge issued a decision in the above-entitled case. Among other conduct, the law judge found that Del Mar Financial Services, Inc., a registered broker-dealer, and Kevin C. Dills, Del Mar's president and sole owner, defrauded Del Mar's customers by improperly altering trade tickets initially entered on May 3 and May 6, 1996, to reduce the sales price of shares of Comparator Systems Corporation sold by those customers. The law judge found that Del Mar and Dills willfully violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Exchange Act Rule 10b-5. She further found that Dills aided, abetted, and was a cause of Del Mar's violations of Exchange Act Sections 15(c)(3) and 17(a)(1) and Exchange Act Rules 10b-10, 15c3-1, and 17a-3. The law judge ordered Del Mar and Dills to cease and desist from committing or causing any violations or future violations of these sections, assessed civil money penalties against both Del Mar and Dills, revoked Del Mar's registration, barred Dills from association with any broker or dealer, and ordered both respondents to pay disgorgement, plus prejudgment interest.

The law judge further found that respondent Jai Chaudhuri violated the antifraud provisions and imposed sanctions. Shedismissed the proceeding as to Private Brokers Corporation, Robert A. Robert, and Matthew R. Jennings.¹

On September 4, 2001, the Division filed a petition for review. The Division sought an increase in the amount of disgorgement that the law judge imposed with respect to the alteration of the May 3 and May 6 customer trade tickets from $505,502.50 to $860,159.38. The Division also petitioned for review of the law judge's determination to dismiss the proceeding as to Private Brokers Corporation, Robert A. Roberts, and Matthew R. Jennings and with respect to certain evidentiary rulings. No other party petitioned for review. We granted the Division's petition and set a briefing schedule.

On October 30, 2001, the Division filed its brief in support of its petition for review. As relevant here, the Division argues that the law judge should not have limited the disgorgement against Del Mar and Dills to the amount obtained solely from the alteration of the trade tickets of those customers who testified at trial. The Division asks that the Commission increase the disgorgement amount assessed against Del Mar and Dills to $860,159.38, which, in its view, represents the total amount that they fraudulently obtained as a result of altering Comparator trade tickets.

On November 21, 2001, the Division moved for an order declaring the initial decision final as to Del Mar and Dills, except for the amount of disgorgement. In its motion, the Division explains that, except with respect to the amount of disgorgement for the transactions that occurred on May 3 and May 6, 1996, it will not seek any increase in the liability of or any other additional relief as to Del Mar or Dills. Neither Del Mar nor Dills has responded to the Division's motion. Further, any brief in opposition to the Division's petition for review was due December 12, 2001. Neither Del Mar nor Dills has filed a brief on the merits.

Under these circumstances, we deem it appropriate to circumscribe review of the initial decision with respect to Del Mar and Dills. We therefore amend our order granting the petition for review to limit our review to the amount of disgorgement obtained by Del Mar and Dills from the alteration of the Comparator customer trade tickets that were initially entered on May 3 and May 6, 1996.

Notice is hereby given, pursuant to Rule of Practice 360(e),² that, except as provided above, the initial decision of the administrative law judge has become the final decision of the Commission with respect to Del Mar Financial Services, Inc. and Kevin C. Dills. The order contained in that decision provides that (a) Del Mar Financial Services, Inc. and Kevin C. Dills shall cease and desist from committing or causing any violations or future violations of Securities Act 17(a), Exchange Act Sections 10(b), 15(c), and 17(a), and Exchange Act Rules 10b-5, 10b-10, 15c3-1, and 17a-3; (b) Kevin C. Dills is barred from association with any broker or dealer; (c) the registration of Del Mar Financial Services, Inc. as a broker or dealer is revoked; (d) Kevin C. Dills shall pay a civil money penalty of $200,000; and (e) Del Mar Financial Services, Inc. shall pay a civil money penalty of $500,000. That order is hereby declared final to the extent set forth in this paragraph.

The payment of the civil money penalties shall be made within 21 days of the date of this notice. Payment shall be (a) made by United States postal money order, certified check, bank cashier's check, or bank money order; (b) made payable to the Securities and Exchange Commission; (c) mailed or delivered by hand to the Comptroller, Securities and Exchange Commission, 6432 General Green Way, Suite B, Mail Stop 0-3, Alexandria, Virginia 22312; and (d) submitted with a cover letter that identifies the particular respondent in this proceeding who is making payment, as well as the Commission's administrative proceeding file number. A copy of the cover letter and money order or check shall be sent to William A. Kuehnle, Division of Enforcement, Securities and Exchange Commission, 450-5th Street N.W., Washington, D.C. 20549-0911.

By the Commission.

Jonathan G. Katz
Secretary

Footnotes

http://www.sec.gov/litigation/aljdec/33-8063.htm