SECURITIES ACT OF 1933
Rel. No. 8345A / December 11, 2003

SECURITIES EXCHANGE ACT OF 1934
Rel. No. 48904A / December 11, 2003

INVESTMENT COMPANY ACT OF 1940
Rel. No. 26289A / December 11, 2003

INVESTMENT ADVISERS ACT OF 1940
Rel. No. 2200A / December 11,2003

Admin. Proc. File No. 3-10659


In the Matter of

ZION CAPITAL MANAGEMENT LLC

and

RICKY A. LANG
c/o Robert T. McAllister, P.C.
455 Sherman Street, Suite 310
Denver, Colorado 80203


ORDER IMPOSING REMEDIAL SANCTIONS

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

ORDERED that Ricky A. Lang be, and he hereby is, barred from association with any investment adviser or investment company; and it is further

ORDERED that Ricky A. Lang and Zion Capital Management LLC cease and desist from committing or causing any violations or any future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, Section 17(a) of the Securities Act of 1993, and Sections 204, 206(1), 206(2), and 207 of the Investment Advisers Act of 1940 and Rules 204-2(a)(3) and 204-2(a)(7); and it is further

ORDERED that Ricky A. Lang and Zion Capital Management LLC, jointly and severally, pay disgorgement in the amount of $211,821, together with prejudgment interest, as described in
17 C.F.R. § 201.600(b), from December 31, 1998, which the Commission deems to be the date of the violative conduct, through the last day of the month preceding the month in which disgorgement is made; and it is further

ORDERED that Ricky A. Lang and Zion Capital Management LLC, jointly and severally, pay a civil monetary penalty of $220,000, which shall be added to and become part of the disgorgement fund for the benefit of the victims of the violations, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002; and it is further

ORDERED that the Division of Enforcement submit a plan of disgorgement in accordance with Rule 610 of the Rules of Practice, 17 C.F.R. § 201.610, within 60 days of the date of this order; and is further

ORDERED that Ricky A. Lang and Zion Capital Management LLC shall, within 21 days of the entry of the Order, pay the civil money penalties and the disgorgement. Payment shall be: (i) made by United States postal money order, certified check, bank cashier's check, or bank money order; (ii) made payable to the Securities and Exchange Commission; (iii) mailed or delivered by hand to the Office of Financial Management, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Stop 0-3, Alexandria, VA 22312; and (iv) submitted under cover letter which identifies the particular respondents in this proceeding and the file number of this proceeding making payment. A copy of this cover letter and check shall be sent to Robert M. Fusfeld, Counsel for the Division of Enforcement, Securities and Exchange Commission, Central Regional Office, 1801 California Street, Suite 4800, Denver, Colorado 80202-2648.

By the Commission.

Jonathan G. Katz
Secretary

Endnotes

1 15 U.S.C. § 77q(a).

2 15 U.S.C. § 78j(b).

3 17 C.F.R. § 240.10b-5.

4 15 U.S.C. §§ 80b-6(1) and 80b-6(2).

5 15 U.S.C. § 80b-7.

6 15 U.S.C. § 80b-4; 17 C.F.R. §§ 275.204-2(a)(3) and 275.204-2(a)(7).

7 The law judge did not revoke Zion's registration, finding that Zion was no longer registered with the Commission as an investment adviser. The Division did not appeal that determination.

8 The Division of Enforcement initially moved for summary affirmance of the law judge's Initial Decision although it thereafter filed its brief on the merits. We determine that, in this case, further consideration of the proceeding is warranted and therefore deny the motion.

9 The record does not indicate why Lang received an equity interest. Lang's equity interest increased to 12.3% after Dambro left Jayhead.

10 Various persons, including Lang, had the authority to trade different portions of Jayhead's assets through these separate sub-accounts. Each trader could trade only in the sub-account assigned to that trader. At any given period, two to five individuals, including Lang, were trading for Jayhead sub-accounts.

11 Zion was to receive a management fee from the Dominion Fund, calculated and payable quarterly, as well as incentive compensation of 25% of any profits after losses were recouped, calculated and payable at the end of each year. Although the law judge found (and the parties do not contest) that the management fee was .0375% of net trading profits, the Form ADV listed the fee as .375%, and Lang testified and stated in the Dominion Fund's marketing materials that the fee was 1.5%.

Due to Dominion Fund's losses through December 1998, Zion ultimately took no management fees, and Lang relinquished the 1.2% ownership in the Dominion Fund that he had taken in lieu of organization expenses.

12 Initially, Mallach, Dambro, and Vickery were going to own the general partner of the Dominion Fund and participate in the offer and sale of Dominion Fund's limited partnership interests. However, because of then-pending proceedings brought against them by the Commission and the Federal Trade Commission, which later resulted in settlement and the imposition of sanctions, they withdrew from the offering. See S.E.C. v. Technigen Corp., et al., No. 98-S-933 (D. Colo. July 24, 2000) (final judgment of permanent injunction and other relief against defendants David J. Dambro and Douglas E. Mallach); F.T.C. v. Digital Interactive Associates, Inc., et al., No. 95-Z-754 (D. Colo. June 14, 1999) (stipulated final order for permanent injunction and settlement of claims as to defendants Terry K. Vickery and David Dambro).

13 The Investment Summaries described the management and the investment objectives of the Dominion Fund. The Investment Summaries described DAM's investment and trading strategy and represented that the Dominion Fund would employ the same strategy.

14 The Investment Summaries, which were dated August 1997 and January 1998, stated that from 1996 to "present" Lang had been portfolio manager and trader for DAM and Jayhead. The Investment Summaries did not state whether Lang had left DAM and Jayhead unlike the Form ADV.

15 Zion's Form ADV contained other false statements. The Form ADV stated that Lang was not employed for a period of one month in 1991. However, Lang had been unemployed for more than one year. The Form ADV also stated that Lang had been employed as a trader for Rockmont Value Investors for a six-month period in 1996. Although Lang had sought employment with Rockmont, he never traded for and received no compensation from Rockmont.

16 The Investment Summaries described DAM as an investment partnership.

17 These investors ultimately lost the majority of their investment. Upon Dominion Fund's dissolution in late 1999, Anderson had lost $712,611, Tigue had lost $142,000 to $143,000; and Westman had lost $53,053 to $54,053.

18 Market Wise was named Tiger Investment Group, Inc. prior to August 1998.

19 Lang testified that, when he gave these notes to his secretary, he made no effort to retain them; he surmised that the notes must have been thrown away.

20 For example, the July 13, 1998, trade blotter does not record a buy order of 1,000 shares of Nordstrom stock nor a buy order of 200 shares of Tel-Save Holdings, Inc. stock, both of which appear on the July 1998 Smith Barney statement. The July 29 trade blotter does not record a short sale of 1,000 shares of Turbodyne Technologies, Inc. stock, which is listed on the Smith Barney account statement.

21 For example, the July 1998 profit and loss report for the Dominion Fund did not include two short sales of Actel Corp. made on July 7 and two short sales of Platinum Software Corp. made on July 20.

22 For example, on July 16, the Dominion Fund bought 5,000 shares of Omnipoint at 27.56. On July 21, the Dominion Fund sold a total of 6,000 shares of Onmipoint. It is not possible from the report to determine whether on July 21 the Dominion Fund (a) opened the day by selling its original 5,000 share position and later bought and sold an additional 1,000 shares; (b) began by shorting 1,000 shares which it subsequently covered and later sold the initial 5,000 share position; or (c) bought an additional 1,000 shares and subsequently sold all 6,000 shares.

23 This figure represents the March 1998 balance in the DAM sub-account--$220,241--less $104,820, the sum of the ending value of the DAM account, plus the $351,832 which had been withdrawn from the account in the interim.

24 This figure represents the starting value of the Dominion Fund account--$1,169,665--less $456,277, the ending value of the Dominion Fund account, and the $14,208 withdrawn for expenses.

25 S.E.C. v. Capital Gains Research Bureau, Inc., 375 U.S. 180, 191-92 (1963), citation omitted.

26 375 U.S. at 194, citation omitted.

27 The fact that the Dominion Fund was unregistered does not affect the scope of the antifraud provisions of the securities laws in protecting the Dominion Fund, its investors, and prospective investors.

28 Lang argues that the Division's classification of his trading misstates profits and losses in both accounts. He claims that some of trades identified as day trades, for example, were not day trades because the particular stock at issue was actually held in inventory. Thus, calculating whether a particular trade was profitable required a determination as to whether the security at issue was held in inventory and the acquisition price of that security.

However, the Respondents did not proffer evidence identifying which particular shares of any security were held in inventory and these securities' initial prices to support this assertion. See text accompanying n.20 supra. See also Donald T. Sheldon, 51 S.E.C. 59, 77 (1992), aff'd, 45 F.3d 1515 (11th Cir. 1995) (finding that once the Division presented prima facie evidence of fraudulent pricing of securities, the burden of producing evidence shifted to respondents). See also 5 U.S.C. § 556(d) (placing the burden of presenting evidence on the proponent of an issue). In any event, Lang's own profit and loss calculations show that overall, the results of the Dominion Fund and DAM's trading were similar to that calculated by the Division.

29 Some of the positions had been held from the spring or the summer of 1998 until November 1998. In fact, Lang admitted that he undertook a strategy different from that he had described, claiming that, "I was attempting to improve upon my performance by increasing the holding period of the positions." By holding longer-term positions, Lang did not have to recognize his losses.

30 These matters would be material because there is a substantial likelihood that a reasonable investor would consider the information important in making an investment decision. See Basic Inc. v. Levinson, 485 U.S. 224, 231 (1988) (citing TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 449 (1976)). A reasonable investor would want to know about the actual conflicts, Respondents' allocations, and Respondents' deviations in trading strategies.

31 Lang did not consider this practice to be problematic. He asserted that, if he had placed orders by telephone, he would not need separate phone lines to trade for two different accounts.

32 Lang also asserts that the three investors did not rely on the disclosure documents in determining to invest in the Dominion Fund. However, we have consistently held that the Commission does not have to demonstrate reliance of investors to prove a violation of the antifraud provisions. See, e.g., S.E.C. v. Blavin, 760 F.2d 706, 711 (6th Cir. 1985) and Martin R. Kaiden, Exchange Act Rel. No. 41629 (July 20, 1999), 70 SEC Docket 439, 451 n.34.

33 Moreover, as discussed above, the Respondents had represented that the Dominion Fund would generally engage in in-and-out trading and limit the percentage of the Fund's capital exposed to overnight risk. The Respondents had also represented that the Dominion Fund's trading would mirror DAM's prior trading.

34 While Lang did not dispute that he was properly charged as primarily liable under Advisers Act Section 206(1) and (2), we do not need to reach the question whether Lang waived this issue. The courts have found that an associated person is liable under Advisers Act Section 206 where the investment adviser is controlled by the associated person. See, e.g., S.E.C. v. Berger, 244 F.Supp.2d 180, 192 (S.D.N.Y. 2001) (finding associated person liable under Sections 206(1) and (2) based on control of investment adviser), aff'd on other grounds, 2003 U.S. App. LEXIS 3562 (2d Cir. Feb. 27, 2003). See also John J. Kenny, Securities Act Rel. No. 8234 (May 14, 2003), 80 SEC Docket 564, ___ n.54, appeal pending, No. 03-2327 (8th Cir.).

35 To establish that Lang aided and abetted the violations, we must find that: (1) Zion committed a violation; (2) Lang had a general awareness or reckless disregard that his actions were part of an overall course of conduct that was improper; and (3) Lang substantially assisted the conduct that constituted the violation. See Sharon M. Graham v. S.E.C., 222 F.3d 994, 1000 (D.C. Cir. 2000); Robert L. McCook, Exchange Act Rel. No. 47572 (Mar. 26, 2003), 79 SEC Docket 3421, 3425.

36 Sharon M. Graham, 53 S.E.C. 1072, 1085 n.35 (1998).

37 In addition to the factors discussed above, in determining whether to impose a cease-and-desist order, we consider whether the violation is recent, the degree of harm to investors or the marketplace resulting from the violation, and the remedial function to be served by the cease-and-desist order in the context of any other sanctions being sought in the same proceedings. KPMG Peat Marwick LLP, Exchange Act Rel. No. 43862 (Jan. 19, 2001), 74 SEC Docket 384, 436, reh'g denied, Exchange Act Rel. No. 44050 (Mar. 8, 2001), 74 SEC Docket 1351, petition denied, 289 F.3d 109 (D.C. Cir. 2002).

38 15 U.S.C. 80a-9(b) and 15 U.S.C. 80b-3(f).

39 S.E.C. v. First City Financial Corp., 890 F.2d 1215, 1230 (D.C. Cir. 1989); S.E.C. v. Robert Johnston and Fiduciary Planning, Inc., 143 F.3d 260, 263 (6th Cir. 1998); John J. Kenny, Exchange Act Rel. No. 47847 (May 14, 2003), 80 SEC Docket 564, 595, appeal pending, No. 03-2327 (8th Cir.).

40 S.E.C. v. First Jersey Sec., Inc., 101 F.3d 1450, 1475 (2d Cir. 1996), cert. denied, 522 U.S. 812 (1997), quoting, S.E.C. v. Patel, 61 F.3d 137, 139 (2d Cir. 1995).

41 The law judge added the total starting values of the Dominion Fund to that for DAM ($1,169,665 + $220,241 = $1,389,906). DAM's starting value was 15.85% of that total. The law judge then allocated 15.85% of the net of Dominion Fund's losses and DAM's profits, which was $462,769, or $73,329 as the losses.

42 SEC v. First City Fin. Corp., 890 F.2d at 1231.

43 15 U.S.C. §§ 80a-9(d) and 80b-3(i).

44 15 U.S.C. §§ 80a-9(d)(2) and 80b-3(i)(2). The maximum amounts of these civil money penalties were adjusted for inflation for violations occurring after December 9, 1996, and before February 2, 2001, by 17 C.F.R. § 201.1001.

45 The first tier provides for a maximum of $5,500 for each act or omission by a natural person ($55,000 for any other person). The second tier provides for a maximum of $55,000 for each act or omission by a natural person ($275,000 for any other person) if the conduct involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement.

46 15 U.S.C. § 7246.

47 Although these proceedings were brought before the passage of the Sarbanes-Oxley Act (the "Act"), we are applying the Fair Funds provision. Payment of these sanctions to a "fair fund" does not infringe on the rights of the Respondents. The amount of the sanctions is not affected by the Act. Rather, the Act merely allows that civil penalties be paid to the investors who suffered losses rather than to the U.S. Treasury. The Commission has ordered such sanctions be distributed to victims pursuant to Section 308 in numerous settled proceedings initially brought before the passage of the Act. See, e.g., S.E.C. v. WorldCom, Inc., Litigation Rel. No. 18277 (Aug. 7, 2003), 2003 SEC LEXIS 1879.

48 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.