SECURITIES ACT OF 1933
Rel. No. 8251 / July 15, 2003

SECURITIES EXCHANGE ACT OF 1934
Rel. No. 48177 / July 15, 2003

INVESTMENT ADVISERS ACT OF 1940
Rel. No. 2146 / July 15, 2003

INVESTMENT COMPANY ACT OF 1940
Rel. No. 26099 / July 15, 2003

Admin. Proc. File No. 3-9461

In the Matter of the Applications of

FUNDAMENTAL PORTFOLIO ADVISORS, INC.

LANCE BROFMAN

and

FUNDAMENTAL SERVICE CORPORATION
60 East 8th Street
Apt. 30-E
New York, N. Y. 10003

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ORDER IMPOSING REMEDIAL SANCTIONS

On the basis of the Commission's opinion issued this day, it is

ORDERED that the investment adviser registration of Fundamental Portfolio Advisors, Inc. be, and it hereby is, revoked; and it is further

ORDERED that Lance M. Brofman be, and hereby is barred from association with any broker, dealer, investment adviser, or investment company; and it is further

ORDERED that the broker-dealer registration of Fundamental Service Corporation be, and it hereby is revoked; and it is further

ORDERED that Fundamental Portfolio Advisors, Inc. and Fundamental Service Corporation each pay a civil money penalty of $500,000, and that Lance M. Brofman pay a civil money penalty of $250,000; and that and it is further

ORDERED that Lance M. Brofman and Fundamental Portfolio Advisors, Inc. cease and desist from committing or causing any future violation of Sections 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, Section 34(b) of the Investment Company Act of 1940, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940; and it is further

ORDERED that Fundamental Service Corporation cease and desist from committing or causing any future violation of Sections 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rules 10b-3 and 10b-5 thereunder, and Section 15(c) of the Exchange Act and Rule 15c1-2 thereunder.

Payment of the civil money penalty shall be made within 21 days of the issuance of this order. The civil money penalty shall be: (i) made by United States postal money order, certified check, bank cashiers's check, or bank money order; (ii) made payable to the Securities and Exchange Commission; and (iii) mailed or delivered by hand or courier to the Comptroller, 6432 General Green Way, Alexandria, VA 22312; and (iv) submitted under cover letter that identifies the particular respondent in these proceedings, as well as the Commission's administrative file number. A copy of this cover letter and money order or check shall be sent to Leslie Kazon, Northeast Regional Office, Securities and Exchange Commission, The Woolworth Building, 233 Broadway, New York, NY 10279.

By the Commission.

Jonathan G. Katz
Secretary

_______________________

1 15 U.S.C. § 77q.
2 15 U.S.C. § 78j.
3 17 C.F.R. § 240.10b-5.
4 15 U.S.C. § 80a-33.
5 15 U.S.C. §§ 80b-6 (1) and (2).
6 17 C.F.R. § 240.10b-3.
7 15 U.S.C. § 78o and 17 C.F.R. § 240.15c1-2.
8 FPA's registration was cancelled in 2001 for failure to convert to electronic filing.
9 The Order Instituting Proceedings also named Malanga. On July 7, 1998, the Commission accepted Malanga's offer of settlement. Without admitting or denying the allegations in the Order, Malanga consented to findings that, among other things, he knowingly or recklessly: marketed the Fund as a safe and stable investment when he knew the Fund was investing in securities that heightened the Fund's sensitivity to interest rate risk and that were contrary to representations in the Fund's prospectus and sales literature; failed properly to supervise Brofman; and failed to inform the Board about FPA's commission arrangements.
10 Investment Company Act Rule 22c-1provides that the price of a mutual fund share must be based upon the current "net asset value" ("NAV") of the share.

17 C. F. R. § 270.22c-1.

11 The most significant risk associated with a government bond is interest rate risk. Generally, the price of a government bond has an inverse relationship to the movement of interest rates. That is, when interest rates rise, a bond's price will fall; when interest rates fall, a bond's price will rise. It is common in bond portfolio management to quantify the exposure of a bond or portfolio to interest-rate risk. The name given to this measure of interest-rate risk is duration. Duration is an estimate of the sensitivity of a portfolio to changes in interest rates. Duration is expressed in years, although a security's duration is not necessarily the same as its years to maturity. The link between the duration of a portfolio and the portfolio's responsiveness to changes in interest rates is expressed in the following equation:

Percentage change in bond price
or portfolio value 		= Duration x Percentage
change in interest rate

A duration of three years, for example, denotes that for a 100 basis-point change in interest rates, the price (or value) of a security (or portfolio) will change by 3% (3 x .01); for a 300 basis-point change in interest rates, the price (or value) of a security will change by 9% (3x.03). Thus, a higher duration indicates a higher degree of price sensitivity to interest rate changes, and hence greater risk to investors.

12 The duration of a portfolio is the weighted average of the duration of the individual securities in the portfolio. See Barrons Finance and Investment Handbook 285 (4th ed. 1995). As used herein, the term "duration" refers to the "weighted average duration" or "average weighted duration" of the Fund's portfolio.
13 The duration of a portfolio may change over time due to changes in the durations of securities in a portfolio. Fund managers generally measure a portfolio's exposure to interest rate changes and use hedging techniques involving futures and options to "rebalance" the portfolio's duration in order to assure that the interest rate risk will not exceed the upper limit specified for the Fund's duration.
14 Fabozzi was accepted by the law judge as an expert in fixed-income securities, including mortgage-backed securities such as collateralized mortgage obligations, and with respect to the management of bond funds and other fixed-income portfolios.
15 Derivative Financial Instruments Relating to Banks and Financial Institutions, Hearings Before the Senate Committee on Banking, Housing and Urban Affairs, 104th Cong. 1st Sess. 57 (Jan. 5, 1995) (statement of Arthur Levitt, Chairman of the SEC) (hereafter "Levitt Statement"), text accompanying n.21, available at http://www.sec.gov/news/testimony/testarchive/1995/spch022.txt. See also Lyle Roberts, Suitability Claims Under Rule 10b-5: Are Public Entities Sophisticated Enough to Use Derivatives, 63 U. Chi. L. Rev. 801, n.3 (1996).
16 See generally Kenneth G. Lore & Cameron L. Cowan, Mortgage- Backed Securities §3.03 (1999).

The structuring of floating rate securities based on fixed rate payment streams works as follows. As a stream of payments from a pool of mortgages (with fixed interest rates) is paid to a particular bond class, payments are divided into two payment streams based on a specified floating interest rate. One payment stream varies directly with the specified interest rate (floaters) and the other payment stream varies inversely with the specified interest rate (inverse floaters). The extent to which floaters/inverse floaters vary with thespecified interest rate is calculated so that the total return of both payment streams equals the total payment stream from the (fixed interest rate) mortgage pool at any point in time.

17 Securities may be structured so that the underlying CMO payments are distributed on a prioritized basis to mitigate the prepayment risk. This structuring makes CMOs more marketable to customers with different income stream needs. See generally Frank J. Fabozzi, The Handbook of Fixed Income Securities, (5th ed. 1997). To accomplish this, securities derived from the underlying mortgage pool are sold in classes, or tranches, where each class has a different payment priority. For example, three classes of CMO bonds may be offered, Class A, Class B, and Class C. Holders of Class A bonds receive all interest and principal from the underlying mortgage pool until the payments equal the Class A bonds' full par value. After holders of Class A bonds have received payments equal to par, holders of Class B bonds receive all interest and principal for those bonds until par value for those bonds is reached. After Class B bonds have received full payment of interest and principal, all remaining payments from the mortgage pool go to the Class C bonds. The tranches that assume the greatest prepayment risk are called support tranches.
18 Generally, the coupon rate of a floater is reset monthly. Consequently, there is little, if any, change in the market value of a floater as the reference rate changes. Most of the change is absorbed by the inverse floater and explains why an inverse floaters can have a very high duration. The degree of change in the value of an inverse floater when interest rates change is influenced by its multiple. The duration of an inverse floater is computed as: (1 + the multiple) x the duration of the fixed rate tranche.
19 Net assets represent the Fund's total assets minus its debt obligation. The prospectuses and sales literature advised prospective investors that, in order to boost income, the Fund might use bank loans or other forms of borrowing to fund securities purchases, and that borrowed funds could comprise up to one third "of the value of [the Fund's] total assets."
20 The record indicates the following interest rate changes from December 31, 1993 to December 30, 1994:

 Rate (%)
12/31/93		 Rate (%)
12/30/94		 Yield Change
in bp
2-year Treasury 4.25 7.67 342 bp
3-year Treasury 4.54 7.79 325 bp
5-year Treasury 5.21 7.83 262 bp
10-year Treasury 5.80 7.84 204 bp
30-year Treasury 6.35 7.88 153 bp
21 Bloomberg is a 24-hour on-line system that provides financial news, market information, and analytics.
22 Although Brofman could not produce documentation of his duration calculations prior to December 1994, neither the Division nor the law judge challenged his assertions that he made calculations prior to that time, or that he used the Bloomberg Modified Duration function in making his calculations.
23 Bloomberg actually used "Spread Duration" which is a form of Modified Duration. Spread Duration fails to factor interest rate changes into the duration calculation. For simplicity, we will refer to the Bloomberg model as Modified Duration.
24 Abbott was accepted by the law judge as an expert in calculating the Fund's duration.
25 Kenneth Gaertner ("Gaertner"), who has been in charge of the development of mortgage-backed securities analytics for Bloomberg for over ten years, testified that the Modified Duration screens used by Brofman did not measure the sensitivity of inverse floaters to changes in interest rates, and because of this substantially understated their price volatility.
26 The Division does not contend that the particular system used by Abbott to calculate the Fund's duration was the only appropriate method for doing so. Rather, the Division maintains that no appropriate method for calculating duration consistent with the Fund'srepresentations would have resulted in a duration anywhere near three.
27 This is because the number representing the percentage change in the portfolio value (the first half of the duration equation) reflects the change in the net value of the portfolio. A portfolio with securities worth $100 million and a duration of 3 can be expected to decline in value by 3 percent, or $3 million, in response to a 1 percent increase in interest rates. However, if the same securities were purchased with $80 million of borrowed money, the net value of the fund is only $20 million. The $3 million decline in value of the total assets would mean that the net value would decline to $17 million, which is a 15 percent decline in the net value. Thus, the duration of the portfolio purchased with borrowed money would be 15.
28 Sankaran was the owner of a registered broker-dealer that executed futures and options transactions for the Fund. He made recommendations to Brofman about inverse floaters, hedging, and other matters.
29 See The Handbook of Mortgage-backed Securities (1988), edited by Fabozzi.
30 Section 17(a) of the Securities Act, 15 U.S.C. § 77q, Section 10(b) of the Exchange Act, 15 U.S.C. § 78j, and Section15(c) of the Exchange Act, 15 U.S.C § 78o.
31 15 U.S.C. § 80a-33(b).
32 See, e.g., Basic Inc. v. Levinson, 485 U.S. 224, 231-32 (1988) (quoting TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 449 (1976)).
33 SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180, 195 (1963).
34 See Aaron v. SEC, 446 U.S. 680, 695, 697 (1980); Ernst & Ernst v. Hochfelder, 425 U.S. 185, 193 (1976); Steadman v. SEC, 603 F.2d 1126, 1134 (5th Cir. 1979), aff'd, 450 U.S.91 (1981). See, e.g., Aaron v. SEC, 446 U.S. at 696; SEC v. Capital Gains, 375 U.S. at 196.
35 Darvin v. Bache Halsey Stuart Shields, Inc., 479 F. Supp 460, 464 (S.D.N.Y. 1979) ("the same scienter standard applies to [S]ections 10(b) and 15(c), and Rules 10b-5 and 15c1-2"); and L. C. Wegard & Co., 53 S.E.C. 607, 615 (1998), aff'd, 189 F.3d 461 (2d Cir. 1999) (Table) (respondent lacked requisite scienter to have violated Sections 17(a)(1), 10(b), and 15(c)).
36 Ernst & Ernst v. Hochfelder, 425 U.S. at 193.
37 Herman & MacLean v. Huddleston, 459 U.S. 375, 390 n.30 (1983); Pagel, Inc. v. SEC, 803 F.2d 942, 946 (8th Cir. 1986); In re Meyer Blinder, 50 S.E.C. 1215, 1230 (1992).
38 See, e.g., Howard v. Everex Systems, Inc., 228 F.3d 1057 (9th Cir. 2000). The Ninth Circuit defined recklessness as:

"an extreme departure from the standards of ordinary care, [] which presents a danger of misleading buyers or sellers that is either known [] or is so obvious that the actor must have been aware of it." Id. at 1063 (citations omitted).

See also Newton v. Merrill, Lynch, Pierce, Fenner & Smith, Inc., 135 F.3d 266, 272-73 (3d Cir. 1998) ("recovery on a federal securities fraud claim requires a showing of scienter: a deliberate or reckless misrepresentation of a material fact").

39 In further support of the correctness of his duration calculations, Brofman argues that the

Division's strategy was to attribute the supposed differences between the Fund's behavior and that of three-year Treasuries to differences in duration calculation methodology rather than options and futures. The Division's witnesses proprietary methodology may have been a better predictor of the response of the futures and options that comprised the Fund's hedge positions to the sudden and extreme increases in interest rates. (The Fund and Bloomberg's methodology was the Black-Scholes Methodology.)

Brofman goes on to argue that "there is absolutely no doubt that the Black-Scholes Methodology for the options-on-futures was the prevailing industry standard at the time." The import of this argument is unclear. The Black-Scholes methodology to which Brofman refers is an options pricing model propounded by economists Myron Scholes and Fischer Black in 1973. Brofman is not charged, however, with incorrectly pricing the options that were used to hedge the inverse floaters.

40 See Hunt v. Alliance North American Gov't Income Trust, Inc., 159 F.3d 723, 728-29 (2d Cir. 1998) (quoting Olkey v. Hyperion 1999 Term Trust, Inc., 98 F.3d 2, 5 (2d Cir. 1996)).
41 Brofman asserts that the law judge erred by failing to admit as an exhibit Brofman's standard deviation analysis of the Fund's "historically observed volatility," which purported to demonstrate that the Fund's volatility was lower than longer-term fixed income investments. None of the Fund's offering documents disclosed that relative stability of NAV would be measured by standard deviation. Instead, the Fund represented that low volatility was linked to the Fund's limited duration. Standard deviation is not a duration calculation model. Thus, Brofman's proposed analysis is irrelevant to any disclosures concerning the Fund's performance and was properly excluded by the law judge.
42 SEC v. Capital Research Bureau, Inc., 375 U.S. at 186.
43 In April 1994, FPA and FSC entered into settlements with the New York State Attorney General ("NYAG") concerning the marketing of the New York Muni Fund, one of the Fundamental Funds. The NYAG found that the New York Muni Fund pursued "aggressive portfolio strategies to obtain income and capital appreciation from investments in municipal bonds." These strategies included (a) substantial investments in several types of inverse floating-rate municipal bonds; and (b) leverage. FPA and FSC, without admitting or denying the NYAG's findings, entered into an Assurance of Discontinuance and Undertaking. FPA and FSC undertook, among other things, to: (a) provide prospective investors with a narrative and, if feasible, visual description of the New York Muni Fund's "effective portfolio duration or sensitivity to interest rate risk" and use of leverage; and (b) retain or designate a Compliance Officer to review the Muni Fund's compliance with applicable federal and state rules and regulations and the rules and regulations for the National Association of Securities Dealers, Inc. ("NASD"), particularly those relating to sales materials. Brofman, as the Fund's manager, was necessarily aware of the NYAG's concern with respect to duration calculations for the inverse floaters at issue there, and should have realized the implications of these concerns for the Fund's duration calculations.
44 In support of his claims, Brofman cites language in a 1996 Commission order issued pursuant to a settlement agreement, County of Orange, California, et al., Exchange Act Rel. No. 36761 (Jan. 24, 1996), 61 SEC Docket 487, noting that the Modified Duration of the Orange County investment pool was a measure of the pool's interest-rate sensitivity resulting from its investment in "inverse floaters." The order in County of Orange does not indicate that the inverse floaters at issue in County of Orange were mortgage-backed securities with pre-payment risk and other imbedded options creating the extreme sensitivity to interest rate fluctuations associated with the Fund's inverse floaters. Therefore, the discussion of duration in County of Orange is not relevant. Moreover, to the extent that Brofman is arguing that the County of Orange order validates his use of Modified Duration to calculate the Fund's duration, that argument ignores Brofman's admission that he used Modified Duration on the Bloomberg screen, Spread Duration, a form of Modified Duration that did not measure interest rate sensitivity. See n.25 supra. Brofman also cites the initial decision in Piper Capital Management, Inc. et al. Initial Decision No. 175, 73 SEC Docket 3175 (Nov. 30, 2000), appeals filed Dec. 22, 2000. However, because we granted the Division's petition for review, the initial decision ceased to have any force or effect. See 17 C.F.R. §§ 201.360 (d) and (e). Moreover, the law judge in Piper Capital, while recognizing that Modified Duration was one of at least three duration calculation models recognized in the industry from 1991 through early 1994, did not determine any of those models to be the industry standard.
45 Newton v. Merrill, Lynch, Pierce, Fenner & Smith, Inc., 135 F.3d at 274.
46 See Mitchell Hutchins, Securities Act Rel. No. 7444 (Sept. 2, 1997), 65 SEC Docket 780; USAA Inv. Mgmt. Co., Investment Advisers Act Rel. No. 1359 (Jan. 22, 1993), 53 SEC Docket 1085 .
47 Graham v. SEC, 222 F. 3d 994, 1000 (D.C. Cir. 2000) (setting forth elements for aiding and abetting liability); Levine v. Diamanthuset, Inc., 950 F.2d 1478, 1483 (9th Cir. 1990).
48 Sharon M. Graham, 53 S.E.C. 1072, 1085 n.35 (1998); (noting that a respondent is a "cause" of another's violation if the respondent "knew or should have known" that his or her act or omission would contribute to such violation), aff'd, 222 F.3d 994 (D.C. Cir. 2000); Richard D. Chema, 53 S.E.C. 1049, 1059 n.20 (1998) (finding that respondent willfully aided and abetted primary violations "necessarily makes him a 'cause' of those violations").
49 As used here, the term "soft dollars" describes an arrangement whereby an investment adviser directs its client transactions to a broker-dealer and in exchange for the commissions generated by these transactions receives research, brokerage, or other products or services. See Oakwood Counselors, Inc., Advisers Act Rel. No. 1614, 63 SEC Docket 2485, 2486 (Feb. 10, 1997). The term also includes soft dollar credits generated by syndicate designations.
50 CMS is identified in the record as an "affiliate" of Malanga. Brofman admitted knowing at the time of the soft dollar payments to CMS that Newell and Sankaran were business associates involved with the company, and that Newell and Malanga were partners in several businesses. Brofman also acknowledged "the possible appearance of an affiliation between [] Malanga and [] Newell, (through Newell's wife)." There is no record evidence of CMS's ownership.
51 Buchwald testified that it was his responsibility to prepare a draft of the Board minutes soon after the meeting, while the event was fresh in his memory, and to send copies of the draft to Board members for their review and comment in advance of its final approval at the Board's next meeting.
52 See Victor Teicher, Exchange Act Rel. No. 40010 (May 20, 1998), 67 SEC Docket 542, 547, aff'd, 177 F.3d 1016 (D.C. Cir. 1999).
53 See Capital Gains, 375 U.S. at 194.
54 See Capital Gains, 375 U.S. at 191-193, 200-01 (suppression of information material to an evaluation of the disinterestedness of investment adviser "operates as a fraud or deceit" on purchaser).
55 Kingsley, Jennison, McNulty & Morse, Inc. et. al., 51 S.E.C. 904, 906, 909 (1993).
56 Steadman v. SEC, 603 F.2d at 1134. See also, S Squared Technology Corp., Advisers Act Rel. No. 1575 (Aug. 7, 1996), 62 SEC Docket 1560 (Section 206 (2)); SEC v. Tandem Mgmt., Inc., Litigation Rel. No. 14670 (Oct. 2, 1995), 60 SEC Docket 1331 (Sections 206 (1) and (2)).
57 Credibility determinations are the prerogative of the trier of fact, and are ordinarily entitled to great weight in our review of the record. See Universal Camera Corp. v. NLRB, 340 U.S. 474, 496 (1951); Jacob Wonsover, Exchange Act Rel. No. 41123 (Mar. 1, 1999), 69 SEC Docket 694, 701 n.14, petition denied, 205 F.3d 408 (D.C. Cir. 2000) (law judge credited testimony when it was supported by documentary evidence or the evidence of other witnesses and the Commission found no basis to reject that determination); Litwin Sec., Inc., 52 S.E.C. 1339, 1342 n.13 (1997) (the Commission will reject initial fact-finders determination as to credibility only when the record contains "substantial evidence" to the contrary); C. James Padgett, 52 S.E.C. 1257, 1277 n.65 (1997) (credibility determination of the initial decision maker is entitled to considerable weight as it is based on hearing witnesses' testimony and observing their demeanor), petition denied, Sullivan v. SEC, 159 F.3d 637 (D.C. Cir. 1998) (Table).
58 Only Bullock is specifically identified in Brofman's Brief on Appeal as one of the referenced witnesses.
59 See discussion supra at p.26.
60 KPMG Peat Marwick LLP, Exchange Act Rel. No. 43862 (Jan. 19, 2001), 74 SEC Docket 384, 436 (quoting SEC v. Steadman, 967 F.2d 636, 647-648 (D.C. Cir. 1992)), motion for reconsideration denied, Exchange Act Rel. No.44050 (Mar. 8, 2001), 74 SEC Docket 1351, petition denied, 289 F.3d 109 (D.C. Cir. 2002). See also Donald T. Sheldon, 51 S.E.C. 59, 87 n.124 (1992), aff'd, 45 F.3d 1515 (11th Cir. 1995).
61 On two prior occasions the Commission has found that Brofman engaged in fraud in connection with his management of mutual funds:

In 1984, the Commission found that Brofman, then president of Investors Portfolio Management, Inc. ("IPM") and president and portfolio manager of the New York Muni Fund, had, among other things, violated, or aided and abetted violations of, certain antifraud provisions. The Commission found that Brofman and IPM had disseminated sales literature that materially misrepresented the seven-day yield of the New York Muni Fund and, contrary to the Muni Fund's stated policies, caused the Muni Fund to lend and borrow money for investment purposes. The Commission also found that IPM had violated various recordkeeping and reporting provisions and had caused the Muni Fund to sell and redeem Muni Fund shares at prices that were not based upon net asset value, in violation of the Investment Company Act Rule 22c-1. The Commission suspended Brofman for five months but permitted him to continue to manage the Fundamental Funds, subject to supervisory restrictions and limitations on his and IPM's compensation. Investors Portfolio Mgmt., Inc. and Lance M. Brofman, Exchange Act Rel. No. 21016, (June 4, 1984), 30 SEC Docket 1010.

In 1986, the Commission found that Brofman had again violated the antifraud provisions by, among other things, failing to disclose risks created by certain strategies used by the California Muni Fund that artificially and temporarily boosted the fund's yield. The Commission found that Brofman and IPM had, in order to boost the fund's yield, deliberately adopted an investment strategy that "exposed the Fund's capital to risks that were inconsistent with its stated investment objective." Specifically, Brofman and IPM pursued a strategy of purchasing bonds that would fail to be delivered on settlement day ("failed bonds"), thereby earning interest on the failed bonds between settlement date and delivery date and using the funds that would have been required to pay for the failed bonds if they did not fail to purchase additional securities. The Commission found that Brofman, among other things, caused the California Muni Fund to fail to disclose the risks of the failed bond strategy and the fact that the strategy was not sustainable. The Commission suspended Brofman for three months and ordered that he be supervised for five years after the end of his suspension. Lance M. Brofman, Investment Company Act Rel. No. 15340 (Oct. 2, 1986), 36 SEC Docket 1249. Following a litigated proceeding against IPM arising out of the same underlying facts, IPM's registration was revoked. Investors Portfolio Mgmt., Inc., 50 S.E.C. 251 (1990).

62 In 1998, in proceedings involving the conduct at issue in this matter, FSC, Malanga and FSC's head of marketing, David Wieder, settled NASD charges that they had overstated the Fund's safety and stability, omitted to state its risks and potential volatility, and misrepresented the nature of the portfolio. FSC and Malanga were censured and, jointly and severally, ordered to pay a $100,000 fine. FSC was required to pre-file with the NASD all advertising and sales literature for a period of three years, and to engage, at the firm's expense, a consultant to review FSC's compliance procedures and to make recommendations to improve the same. Malanga was suspended for 30 days from association, in any capacity, with any member firm, required to requalify as an investment company products/variable contracts principal and limited representative, and undertook not to apply for registration as a general securities principal for a period of three years.
63 15 U.S.C. § 78u-2 (b), 15 U.S.C. § 80a-9 (d), and 15 U.S.C. § 80b-3 (i).
64 The law judge's determination was based on financial statements and tax returns for FPA and FSC. The financial records indicated that, in 1997, FPA had a net income of approximately $76,000 and FSC experienced a net loss of approximately ($89,000).
65 15 U.S.C. § 77h-1, 15 U.S.C. § 78u-3 (a), 15 U.S.C. § 80a-9 (f) and 80b-3 (k).
66 KPMG, at 429-436.
67 KPMG, at 436.
68 Id. at 430.
69 Id. at 436, n.148.
70 While FPA's registration was cancelled, the record contains no information concerning whether FPA has ceased to exist entirely, and for that reason we find that the cease-and-desist order is appropriate for FPA.
71 We have considered all of the contentions advanced by the parties. We reject or sustain them to the extent that they are inconsistent or in accord with the views expressed in this opinion.