Securities Act of 1933
Rel. No. 8264 / August 13, 2003
Securities Exchange Act of 1934
Rel. No. 48332 / August 13, 2003
Admin. Proc. File No. 3-10033
In the Matter of DEREK L. DUBOIS |
ORDER IMPOSING REMEDIAL SANCTIONS
On the basis of the Commission's opinion issued this day, it is
ORDERED that Derek L. DuBois be, and hereby is, barred from association with any broker or dealer, member of a national securities exchange, or member of a registered securities association; and it is further
ORDERED that DuBois cease and desist from committing or causing violations and future violations of 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; and it is further
ORDERED that, within 30 days of the entry of this order, DuBois shall disgorge $2,450, plus prejudgment interest computed at the rate set forth in Rule 600 of the Commission's Rules of Practice, from January 1, 1995, to the date of payment.
Payment of disgorgement shall be (i) made by United States postal money order, certified check, bank cashier's check, or bank money order made payable to the Securities and Exchange Commission; (ii) hand-delivered or mailed to the Comptroller, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Stop 0-3, Alexandria, Virginia 22312; and (iii) submitted under cover letter which identifies DuBois as the respondent in this proceeding, and gives the file number of this proceeding. A copy of the cover letter and check shall be sent to James A. Kidney, counsel for the Division of Enforcement,Securities and Exchange Commission, 450 Fifth St., N.W., Washington, D.C. 20549-0808.
By the Commission.
Jonathan G. Katz
Secretary
Endnotes
1 DuBois currently is co-owner and branch manager of the Moors & Cabot office in Reisterstown, Maryland.
2 17 C.F.R. § 201.411(c).
3 Order Granting Petition for Review, Directing Review on Commission Initiative, and Scheduling Briefs, Adm. Proc. File No. 3-1003 (Dec. 11, 2002).
4 15 U.S.C. § 77q.
5 15 U.S.C. § 78j.
6 17 C.F.R. § 240.10b-5.
7 At the time, Skalko was a manager in a J.W. Gant office in Florida. Skalko would later become a principal of Corporate Resources Group, Inc. ("CRG"), described infra.
On August 11, 2000, Skalko consented to the entry of a judgment in the U.S. District Court for the Middle District of Florida, which permanently enjoined him from violating the antifraud, antitouting, and registration provisions of the federal securities laws. The consent judgment also required Skalko to pay disgorgement and prejudgment interest in the amount of $425,000 and a civil penalty of $100,000. Lit. Rel. No. 16717 (Sep. 21, 2000), 73 SEC Docket 1106.
8 Kirby was a partner at J.W. Gant. Kirby would later become a "core broker of the month" for CRG.
9 DuBois and Curtis worked in the same J.W. Gant office. Curtis also knew Skalko through their association with J.W. Gant and was listed in a CRG publication as a broker of the month. Curtis now works for DuBois at Moors & Cabot.
10 Campo testified at the hearing that he had been convicted in Florida for trafficking in cocaine. He was released on bond instead of being imprisoned. Campo testified that, under the terms of his release, he was obligated to testify truthfully in any hearings and to cooperate fully with the authorities.
11 On February 2, 2000, Rodriguez consented to the entry of a judgment in the U.S. District Court for the Middle District of Florida, which permanently enjoined him from violating the antifraud and registration provisions of the federal securities laws. The consent judgment also requiredRodriguez to pay disgorgement and prejudgment interest in the amount of $19,432.79, which was waived because of Rodriguez's demonstrated inability to pay. Lit. Rel. No. 16447 (Feb. 22, 2000), 71 SEC Docket 2221.
12 See text accompanying note 7.
13 DuBois testified that it was unusual for him to trade Bulletin Board stocks.
Within two to four weeks of their purchase of Tracker stock, DuBois sold his individual clients' Tracker shares at approximately 5½ per share as the stock price began to fall.
14 The names in the note referred to Jack Rodriguez and Roberto Veitia. Rodriguez testified that he received the confirmations faxed by DuBois.
15 DuBois testified that he did not receive the check. However, on December 13, 1994, the day after CRG issued the check, Rodriguez sent an overnight courier package to DuBois. It is unclear whether the check was enclosed.
16 Although Campo testified that he arranged with somebody to retain some of the money, Campo did not identify that person.
17 During his testimony, DuBois alleged variously that the money order from Campo represented the repayment of a loan for the purchase of a used car, or for new tires.
18 DuBois testified that he was unaware that Kirby was associated with CRG.
19 See Richard H. Morrow, 53 S.E.C. 772, 781 (1998); Gilbert Zwetsch, 50 S.E.C. 816, 818 (1991).
20 DuBois accuses the Division of ignoring what he claims is the exculpatory testimony of Rodriguez. DuBois asserts that, when the Division asked Rodriguez how DuBois responded to his invitation of a bribe, Rodriguez said, "'No, he just wanted leads.'" Rodriguez actually testified, "[DuBois] was working the stock, but . . . he just wanted leads, as far as I can remember." We believe that DuBois' faxing of trade confirmations to CRG and the series of checks that CRG issued to DuBois and Campo demonstrate that DuBois expected to be paid by CRG for selling Tracker stock.
21 Morrow, 53 S.E.C. at 784. See also Affiliated Ute Citizens of Utah v. United States, 406 U.S. 128, 153 (1972); Kevin Eric Shaughnessy, 53 S.E.C. 692, 695 (1998) ("a reasonable investor would consider [a] broker's acceptance of kickbacks to sell particular securities material to the investor's decision whether to purchase those securities based on the broker's recommendation"). Information is material if there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision. See Basic Inc. v. Levinson, 485 U.S. 224, 230-31 (1988) (citing TSC Indus. v. Northway, Inc., 426 U.S. 438, 449 (1976)).
22 Morrow, 53 S.E.C. at 784.
23 See Herman & MacLean v. Huddleston, 459 U.S. 375, 390 n.30 (1983).
24 Michalic v. Cleveland Tankers, Inc., 364 U.S. 325, 330 (1960) (citing Rogers v. Missouri Pacific R. Co., 352 U.S. 500, 508, n.17).
25 Herman & MacLean v. Huddleston, 459 U.S. 375, 390 n.30 (1983).
26 DuBois now asserts that Campo's money order arrived with a note bearing the greeting "Merry Christmas." He did not suggest that Campo's payment was a gift until his brief in support of his petition for review.
27 See Butz v. Glover Livestock Comm'n Co., 411 U.S. 182, 185 (1973) (holding that an agency's choice of sanction is "peculiarly a matter for administrative competence") (internal quotations omitted).
28 Steadman v. SEC, 603 F.2d 1126, 1140 (5th Cir. 1979), aff'd on other grounds, 450 U.S. 91 (1981).
29 This is not the first time that DuBois has skirted the securities laws. In the early 1990s, for example, Tamaron disciplined DuBois for the unauthorized sale of securities to an individual in Kansas.
30 We have considered all of the parties' contentions. We have rejected or sustained them to the extent that they are inconsistent or in accord with the views expressed in this opinion.