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U.S. Securities and Exchange Commission

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.

SECURITIES EXCHANGE ACT OF 1934
Rel. No. 45439 / February 13, 2002

Admin. Proc. File No. 3-10247


In the Matter of the Application of

KEITH SPRINGER
2233 River Plaza Drive
#353
Sacramento, CA 95833

For Review of Action Taken by the

NEW YORK STOCK EXCHANGE, INC.


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OPINION OF THE COMMISSION

    NATIONAL SECURITIES EXCHANGE -- REVIEW OF DISCIPLINARY PROCEEDING

      Improper Post-Execution Allocation Of Trades

      Delayed Allocation Of Trades With Better Executions To Personal Account To Detriment Of Customers

      Attempt To Obstruct Internal Investigation

      Recordkeeping Violations

    Former registered representative of member firm of national securities exchange effected improper post-execution allocation of trades; delayed allocation of trades; attempted to obstruct firm's investigation; allocated trades with better executions to personal account to the detriment of customers; and caused recordkeeping inaccuracies. Held, Exchange disciplinary action sustained.

APPEARANCES:

    Andrew Sidman, of Butler, Fitzgerald and Potter, and Neil A. Sussman, for Keith Springer.

    David P. Doherty, Robert A. Marchman, Linda S. Riefberg, Stephanie Fine, and Alison Bishop, for the New York Stock Exchange, Inc.

Appeal filed: July 29, 2000
Last brief received: October 27, 2000

I.

Keith Springer, formerly a registered representative with Everen Securities, Inc. ("Everen"), a member firm of the New York Stock Exchange, Inc. ("NYSE" or "Exchange"), appeals from the NYSE's disciplinary action against him. The Exchange found that, between June 1995 and March 1996 ("the relevant time period") Springer engaged in conduct inconsistent with just and equitable principles of trade in that he effected improper post-execution allocation of trades, delayed allocation of trades and allocated trades with better executions to his personal account to the detriment of his customers, and attempted to obstruct Everen's internal investigation of his violations.1 In addition, the Exchange found that Springer violated NYSE Rule 401 by effecting improper post-execution allocation of trades which resulted in the granting of preferential treatment to himself;2 and caused violations of NYSE Rule 440 and Rules 17a-3 and 17a-4 under the Securities Exchange Act of 1934 by failing to make and preserve timely records.3

The Exchange Hearing Panel censured Springer and barred him for two and one-half years from membership, allied membership, approved person status, and from employment or association in any capacity with any member or member organization. On appeal of the Hearing Panel's decision, the Committee for Review of the Board of Directors of the NYSE ("Committee for Review") increased the period of the bar to four years. Springer now appeals the NYSE's findings as well as the sanctions against him.4 We base our findings upon an independent review of the record.

II.

Keith Springer became a registered representative in 1985. He joined Everen's Sacramento, California office in March 1995, where he was employed until April 1996. The conduct in question occurred while Springer was at Everen. Springer is currently employed by Roundhill Securities, Inc., a non-member Firm.

While at Everen, Springer had a partnership with Jonathan Bolter under the name The Springer Bolter Group ("Springer-Bolter"). The two had become partners while they were employed by Prudential Securities, Inc. ("Prudential") prior to joining Everen. When Springer and Bolter moved to Everen they brought along an employee named Marcia Patik, who was described in the record as a registered sales assistant as well as a computer operator. They came to Everen with approximately $140 million in client assets, $20 million of which were placed in 75 managed discretionary accounts in the Everen Portfolio Management ("EPM") program.5 Both Springer and Bolter also maintained personal accounts in the EPM program. Springer effected most of thetrading for Springer-Bolter's managed discretionary accounts and Bolter focused primarily on the marketing of the partnership.

When Springer and Bolter joined Everen there was a computer trade allocation system in place known as APL. It was designed to allocate bunched orders,6 allocating the securities in such orders to the various accounts according to certain percentages. During the relevant time period all registered representatives in the EPM program were required to use APL for all their EPM accounts.

Whether APL functioned as designed is in dispute. Springer claims that APL did not perform as promised to him when he was recruited by Everen; the NYSE claims that Springer-Bolter never learned how to use APL properly. Both Springer and Bolter complained to Everen management about the APL system in writing on more than one occasion. What is not in dispute, however, is that sometime in the summer of 1995 Springer received authorization from his supervisors at Everen to bypass APL and telephone orders for EPM accounts directly to the trading desks.

Springer and Bolter devised a system, approved by Everen management, to keep track of the telephoned trades for their EPM accounts. They created a "trading sheet," on which was listed all of their EPM accounts (including their personal accounts) and the account numbers, with space to list the number of shares purchased or sold. They would place their orders by telephone with the appropriate trading desk. The desk would supply the execution details, and whoever placed the order would use this information to prepare the trading sheet, indicating on the trading sheet how the trade was to be allocated among accounts.

Once the trading sheet was filled out, it was brought to the "cage," or the wire room, in the office.7 There, the wire operator would input the data from the trading sheet or order ticket into Everen's computer system, fax the allocation information to the trading desk (where the desk would time-stamp its copy), and then time-stamp the trading sheet.8 Accordingto Steve Stahlberg, Everen's Sacramento office manager at the time, Everen's rules required that the wire operator's time-stamp be at a time reasonably close to when the order was telephoned to the desk, necessitating prompt submission of the trading sheets to the cage. Wire operators in the Sacramento office were told to process the trading sheets (and any other tickets from telephoned orders) in a timely manner, but first to process orders that, unlike Springer's and Bolter's, had not yet been relayed to the trading desk.

Springer placed trades in this manner much more actively than Bolter -- both for his own accounts and those of his customers.9 Typically, Springer filled in the trading sheet for these trades, although Patik occasionally filled out trading sheets for Springer. Patik received the trading sheets from Springer and took them to the cage. When trading for his own accounts the same securities as his customers, sometimes Springer would place his trade as part of a bunched order with his customers' trades.10 In these instances Springer and the customers would get the same price.11 Often, however, Springer traded the same securities as his customers on the same day, but did so by placing a separate order by telephone and writing up separate, single order tickets that he personally brought to the cage. As explained in more detail below, processing his orders separately allowed for the possibility that the prices for his personal trades could differ from those for his customers' trades.

Springer was often late in submitting his trading sheets, sometimes not delivering them until the cage asked for them. Both wire operators who worked in the office during the relevant time period and Joanne Meninger, the branch operations manager, told Stahlberg that they received calls from the trading desksabout Springer-Bolter trades not being entered into the system in a timely fashion. Meninger did not have similar problems with any one else in the office. When she received these calls, she either asked Patik to get the trading sheets from Springer, or went directly to Springer herself to get them. Sometimes Springer had the completed trading sheets on his desk; other times he would still be working on them and brought them to the cage himself when he was finished. Bolter also testified that at times people in the office came looking for trade confirmations or trading sheets. According to Patik, Springer "sometimes" gave her the trading sheets on time but often he would not give them to her in a timely manner and she would go to his office and "pound his desk" for them.

Although Stahlberg was the branch manager of the Sacramento office, he did not have any supervisory responsibility for the EPM program, so initially he did not review Springer-Bolter's daily runs. Starting in January 1996, however, Stahlberg reviewed the accounts of Springer-Bolter's clients, and Springer's and Bolter's personal accounts, because of the number of complaints he had received about the delays associated with Springer's trades and order tickets. This review led him to ask Springer about the returns on his personal account, which, at 220%, were "far in excess of the closest client return." Springer told Stahlberg that the disparity in returns was due to the fact that he traded his own account more aggressively and took a lot more risk than he did with his client accounts and that he always traded on margin.

Stahlberg alerted R. Gerald Baker, Everen's head of compliance, to the performance discrepancies between Springer's account and those of his customers. Baker responded by conducting an audit. Everen's compliance team reviewed for a period of 90 days order tickets for Springer's and Bolter's personal accounts and for their customers' accounts, specifically looking for transactions on the same day and on the same side of the market both in Springer's or Bolter's personal and customer accounts. During this review, Baker's staff discovered that in half a dozen instances Springer had traded in the same security on the same day and on the same side of the market as his customers, and that by delaying the allocations of those trades he had ensured that the trades allocated to his account were at more favorable prices than those allocated to his customers.

This review led Everen to terminate Springer, as described infra. Subsequent to the termination, a review of Springer's trading for the entire time he was employed by Everen uncovered in excess of 150 delayed allocations of trades for Springer'scustomers. At the hearing below, the Exchange's expert, John Bates, analyzed eight trading days from the relevant time period, which were selected as a representative sampling of Springer's trading. On each of these days Springer traded the same security, on the same side of the market, as his customers.

For example, on one of the eight days in question, July 17, 1995, Springer traded UUNET. He bought 2,000 shares at $48.50 by telephone order at about 10:47 a.m. At about 11:12 a.m. he purchased another 2,000 shares at $47.50, this time by telephoned limit order. At about 11:20 a.m. Springer allocated the first purchase to his customers; he allocated the second purchase, at the lower price, to himself at about 12:55 p.m. Prior to allocating the second purchase to himself, however, Springer sold 2,000 shares at $48.25. He telephoned this sale at about 12:52 p.m., and allocated it to himself at about 2:07 p.m.

In another example, on September 27, 1995, Springer traded Genisys. At about 10:36 a.m. he bought 1,000 shares by telephone order at a price of $44.125, but did not allocate it to his customers until about 2:26 p.m. In the interim, at 1:57 p.m. he purchased another 2,000 shares, by telephoned limit order, at a price of $39.50. He allocated this second purchase to himself twenty minutes later. Immediately upon allocating the second purchase to himself he sold 2,000 shares via telephone order at $42.75, allocating that sale to himself at about 2:38 p.m.

In March 1996, prior to Springer's termination, Baker summoned Springer to Chicago to meet with him. According to Patik, as Springer was leaving for the airport he pulled her aside and said:

If the director of compliance calls or if the compliance department calls while I'm gone, I want you to tell them that I handed you the trading sheets and because they were phoned in and you didn't feel like there was any sensitivity in terms of time because the trades were done, that they might have laid on your desk for a couple of hours because you didn't think it was important to do anything with them, and you were so busy.

Patik further asserts that Springer later called her from Chicago to reiterate his earlier comments, telling her that if compliance called she should explain that she was responsible for any allocation delays. Springer denies that these conversations ever took place, and maintains that he had no idea why he was called to Chicago.

During the Chicago meeting, Baker showed Springer reports demonstrating that typically there was a significant time delay between when Springer called the trading desk and when he allocated trades. According to Baker, Springer acknowledged the delayed allocations, "seemed apologetic for what appeared to have happened, and offered to make restitution to the firm." According to Springer, when Baker asked him about the transactions in question Springer explained that any difference in returns between his accounts and those of his customers was due to the fact that he traded more aggressively and speculatively for himself. Baker terminated Springer at the end of the meeting.12

At some point during the following few days, Springer returned to Everen to clean out his office and saw Stahlberg. Stahlberg testified that Springer apologized to him, saying in essence that it was easy and he had gotten carried away. Springer denies making these statements to Stahlberg.

After he was terminated, Springer tried on several occasions to talk to Bolter, but Bolter refused. Springer wrote Bolter several undated letters. In one he told Bolter that he "got carried away," and in another he wrote "I can see how I got caught up in this business of always more more more. You're either driving the steamroller or in front of it. Mine was going too fast."

III.

A. Springer traded on the same side of the market, on the same day, as his customers, using separate order tickets. Because he was not using the APL system, Springer did not have to allocate the trades at the same time they were executed; rather, allocation could be delayed until whenever the paper trading sheets and order tickets were submitted. The delay in allocation and Springer's use of separate order tickets for himself rather than bunching his orders with those of his customers permitted Springer to take advantage for himself of price movements during the day without being subject to the risk of market fluctuations.

Springer's trading sheets and order tickets showing trade allocations were consistently submitted late. His trading for himself was consistently at prices superior to his trading for his customers. The annualized return on Springer's account was220 percent, far in excess of what even an experienced trader might be expected to achieve, more than can plausibly be explained by "more aggressive" trading. Stahlberg described Springer's personal returns as being "far in excess of the closest client return." This confluence of consistently late submission of trade allocations and consistently superior trading for himself leads inexorably to the conclusion that Springer was intentionally delaying the allocation of trades so that he could keep the best trading results for himself, not his clients.13

The conclusion that Springer acted to enhance his trading results at the expense of his customers' is buttressed by Springer's communications with Baker, Stahlberg, and Bolter. When Baker confronted Springer in Chicago, Springer apologized and offered to make restitution to the firm. He apologized to Stahlberg and said, in essence, that his scheme was easy and that he got carried away. He wrote to Bolter that he "got carried away," and "got caught up in this business of always more more more." These apologies evidence his own awareness that his conduct was wrong. Springer's contention that he did not apologize or admit wrongdoing to Baker and Stahlberg is belied by his apology and confessions in his letters to Bolter.14

Springer attacks the charges against him on several grounds. First, he asserts that the evidence relied upon by the Exchange is "fundamentally flawed and unreliable" because there is no direct evidence that Springer placed the trades in question. The only other person who had the authority to trade for Springer-Bolter's customers on a discretionary basis was Bolter. However, both Springer and Bolter testified that Springer-Bolter's division of labor was such that Springer did the trading. Moreover, several Everen employees, including Patik and Meninger, testified that, when Springer-Bolter trading sheets were late, they retrieved them from Springer, not Bolter. Springer often was still in the process of filling them out when staff came to collect the sheets. We find that Springer placed the trades in question.15

Springer also claims that the NYSE relied on "anecdotal testimony from various Everen employees expressing dislike of Springer to implicate him." Springer asks us to discount the testimony of most of the witnesses and instead credit his account of the events at issue.

It is well-settled that credibility determinations of an initial fact-finder are entitled to considerable weight and deference, since they are based on hearing the witnesses' testimony and observing their demeanor.16 Such determinations can be overcome "only where the record contains 'substantial evidence' for doing so."17 Here, the hearing panel made a specific credibility finding regarding Marcia Patik's testimony, and stated that her account was "corroborated by other Firm employees who had difficulty in obtaining allocations from Mr. Springer." There is no evidence in the record that would justify overcoming these credibility determinations.

In fact, the testimony among the witnesses was consistent with regard to how Springer handled his trading sheets and order tickets, his delays in allocations, the complaints received about Springer's delays, and the language Springer used about his behavior after he was terminated. The weight of witness testimony is consistent with the documentary evidence, and the testimony among the various witnesses is consistent. It is Springer's testimony that is inconsistent with the documentary and testimonial evidence.

Springer next argues that the testimony of Everen's compliance director Baker is hearsay and should not form the basis for our findings because Baker testified about the analysis performed by his staff. Springer contends that the Exchange erred in not calling as witnesses the members of Baker's staff who analyzed Springer's trading. We disagree.

As we have said many times before, hearsay statements may be admitted in evidence and, in an appropriate case, may form the basis for findings of fact.18 In determining whether to rely on hearsay evidence, it is necessary to evaluate its probative value and reliability, and the fairness of its use.19 The factors to consider include the possible bias of the declarant, the type of hearsay at issue, whether the statements are signed and sworn (rather than anonymous, oral, or unsworn), whether the statements are contradicted by direct testimony, whether the declarant was available to testify, and whether the hearsay is corroborated.20

Baker's testimony meets a number of these criteria and is, in our view, reliable and probative. Baker's staff reviewed and analyzed Springer's trading and reported their findings pursuant to Baker's direction and supervision in the course of their normal work at Everen. These hearsay statements were not contradicted, and in fact were corroborated by Baker's and Bates' own analyses of the documents presented at the hearing. We have no reason to believe that the testimony of Baker in reporting the findings of his staff is unreliable or biased. We see no unfairness in the use of this hearsay in making our findings.

Springer argues that the Exchange's expert erred in relying on the cage time stamps to determine allocation times, because the cage time-stamped the trading sheets and order tickets afterthe trading information was sent to the trading desks.21 The trading desk time stamps are a more accurate reflection, Springer argues, of the time of allocation since they precede the cage time stamps. He asserts that had Bates relied instead on the trading desks' time stamps he would have seen that the lapses in time between the trades in question and the respective allocations were "insignificant." Our own examination of the trading documents shows that reliance on the trading desk time stamp yields at most a reduction of ten minutes in the time span between the trade and subsequent allocation for one trade, and of one to three minutes in a few of the other trades at issue. The allocations for these trades still appear to have been delayed by as little as twelve minutes and as much as almost four hours, so these discrepancies do not change the overall picture presented by the Exchange of Springer's repeatedly delaying allocations in order that he could benefit from market movements.

Springer also asserts that the NYSE failed to elicit evidence of the actual times the trades were allocated. He attacks the testimony of the Exchange's expert witness, on the grounds that Bates failed to take into account that several of the orders placed on the eight days analyzed were limit orders. Had he considered this, Springer argues, Bates would have realized that the cage time stamps may not have accurately reflected the time the orders in question were actually filled. However, Baker testified that small limit orders such as those typically placed by Springer were easily filled immediately or in a matter of minutes. Springer's assertion to the contrary is unsupported by the evidence.

Springer admits to "isolated instances" in which he did not complete the trading documentation on time. He attributes these delays to "the hectic pace of business in the office" and said the delays were inadvertent. Moreover, Springer argues that it was the failure of the APL system that led to any delayed allocations that may have occurred, since its failure caused the Sacramento office to be much busier than it should have been and created extra work for everyone there. APL's failure, Springer argues, was exacerbated by the relative inexperience of some of the Sacramento branch operations personnel and the high volume of trades in the office. We reject this contention. Our discussion above makes evident that the delayed trades were not "isolated instances" but rather part of a pattern so pronounced that it prompted the analysis of Springer's trading by Everen management in the first place.

Springer contends that had it been his intention to delay allocations to maximize his profit he never would have complained about his problems with APL, and that "it defies common sense to conclude that [he] was intentionally exploiting the lack of APL while simultaneously attempting to have it repaired." We need not ascertain Springer's motive in order to find that he committed the violations charged.22 We find that Springer violated just and equitable principles of trade when he effected improper post-execution allocation of trades, delayed allocation of trades and allocated trades with better executions to his personal account to the detriment of his customers. By his improper post-execution allocation of trades, Springer granted preferential treatment to himself, in violation of NYSE Rule 401. This misconduct also resulted in his failure to make and preserve required and timely records, in violation of NYSE Rule 440 and Rules 17a-3 and 17a-4 under the Securities Exchange Act of 1934.

B. The NYSE also found that Springer obstructed Everen's internal investigation of his violations when he asked Marcia Patik to take responsibility for the delayed allocations. The Exchange's evidence consists primarily of Patik's testimony regarding the two conversations she had with Springer the day he went to Chicago.

Springer claims that his first conversation with Patik could not have taken place because he did not know why he was called to Chicago. He cites the testimony of wire operator Kevin Cronic who, when asked whether he discussed with Springer why he was going to Chicago said, "[n]o, but I, he didn't know, because I remember asking something like, you know, when are you going to be back." Springer asserts that this testimony supports his claim that he wasn't aware of the purpose of the trip.

Cronic's testimony, however, tells us little about Springer's knowledge of the purpose of his trip to Chicago, only that Springer did not know when he would return. Moreover, Springer's claim of ignorance is undermined by Stahlberg, who testified that while the audit was underway Springer repeatedly asked him about it, and asked whether the audit was being used to check things out regarding his trading activity, indicating that he knew at least that his conduct was being scrutinized.

Springer further maintains that Patik is "glaringly biased" against him as a result of his law suit against her and statesthat her testimony "defies belief."23 As noted supra, the hearing panel found that Patik's testimony was credible, and we do not find anything in the record to suggest this finding was incorrect. Springer has not shown any evidence of Patik's alleged bias, and her testimony in other respects was supported by and consistent with that of Stahlberg and other witnesses. Accordingly, we concur with the NYSE's finding that Springer obstructed Everen's internal investigation of his conduct and in doing so violated just and equitable principles of trade.

IV.

The hearing panel censured Springer and barred him from membership, allied membership, and approved person status, and from employment or association in any capacity with any member or member organization for a period of two and one-half years. Springer appealed this decision to the Board of Directors of the NYSE, and the Exchange then asked that the Board reconsider the penalty imposed on Springer by the hearing panel. The Board upheld the hearing panel's decision on the merits and increased the bar against Springer to four years.24

We review sanctions imposed by the NYSE to determine whether those sanctions are excessive or oppressive, or whether they impose an unnecessary or inappropriate burden on competition.25 We do not find that the sanctions in this case are either excessive or oppressive. Springer's misconduct was not anisolated incident but rather an ongoing pattern that stopped only when it was detected. Springer's failure to allocate securities transactions fairly to his customers goes to the heart of the duties owed by a securities professional to his investor clients. In light of the significant misconduct we have found, the sanctions imposed by the NYSE are warranted.

Springer argues that the sanctions imposed on him are more severe than those imposed in similar NYSE cases. As we have consistently held, the appropriate sanction depends on the facts and circumstances of each particular case; it often cannot be precisely determined by comparison with action taken in other proceedings.26

We conclude that the sanctions imposed by the NYSE are neither excessive nor oppressive.

An appropriate order will issue.27

By the Commission (Commissioners HUNT and GLASSMAN); Chairman PITT not participating.

Jonathan G. Katz
Secretary


UNITED STATES OF AMERICA
before the
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.

SECURITIES EXCHANGE ACT OF 1934
Rel. No. 45439 / February 13, 2002

Admin. Proc. File No. 3-10247


In the Matter of the Application of

KEITH SPRINGER
2233 River Plaza Drive
#353
Sacramento, CA 95833

For Review of Action Taken by the

NEW YORK STOCK EXCHANGE, INC.


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ORDER SUSTAINING DISCIPLINARY ACTION TAKEN
BY NATIONAL SECURITIES EXCHANGE

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

ORDERED that the disciplinary action taken by the New York Stock Exchange, Inc., against Keith Springer, be, and it hereby is, sustained.

By the Commission.

Jonathan G. Katz
Secretary


Footnotes

1 These charges were pursuant to NYSE Rule 476(a), which subjects members or employees of members to disciplinary sanctions if, inter alia, they engage in conduct inconsistent with just and equitable principles of trade.
2 NYSE Rule 401 requires brokers and dealers to adhere to the principles of good business practice.

NYSE Rule 401 has been read by the courts to require brokers to conduct dealings with high standards of commercial honor, consistent with just and equitable principles of trade. Sacks v. Reynolds Securities, 593 F.2d 1234, 1242 (DC Cir. 1978).

3 NYSE Rule 440 requires brokers and dealers to make and preserve books and records prescribed by the NYSE and by Exchange Act Rules 17a-3 and 17a-4.

Exchange Act Rules 17a-3 and 17a-4 require brokers and dealers to keep current books and records regarding executedsecurities transactions and customer accounts. 17 C.F.R. §§ 240.17a-3 and 240.17a-4.

4 Springer also asks that we compel the NYSE to release a memorandum prepared by the NYSE's Office of the General Counsel for the use of the NYSE Board of Directors in its review of Springer's case. Springer made this request via a separate motion on August 18, 2000, but reiterates his request in his brief. We addressed this request in a separately issued order on November, 13, 2000, in which we denied Springer's motion. Securities Exchange Act Rel. No. 43548 (Nov. 13, 2000), 73 SEC Docket 2496.
5 EPM was a wrap-fee investment program administered by Everen, in which the registered representative exercised discretionary authority over the accounts in the program.
6 A bunched order is a purchase or sale of the same security for several accounts at one time.
7 Access to the cage at Everen was limited to the wire operator and compliance personnel -- registered representatives were not allowed in the cage.
8 The time-stamp of the trading sheet by the cage thusoccurred slightly after the time-stamp by the trading desk, and trade allocations were not made until the information from the trading sheets was transmitted by the cage to the trading desk.
9 Springer did not use APL at all. Bolter's trading was almost entirely personal trading for his own account.
10 Springer's personal trading information would be listed on the trading sheet with that of his customers.
11 If the order was filled by more than one trade, the price would be averaged.
12 During the meeting Baker stepped out and called Stahlberg to see whether he agreed that Springer should be terminated. Stahlberg did.
13 These delayed allocations were not, as Springer characterized them at the hearing, "isolated instances." Complaints by traders and staff about his delay in submitting his trading documentation were so vocal and frequent that they prompted the investigation of his activities. Baker's staff uncovered 150 instances of trading activity when Springer delayed allocations. Although Bates testified and submitted records as to only eight of those instances, his testimony was that those eight were typical of the 150 discovered by Baker's staff. In any event, the eight instances analyzed by Bates at the hearing amply demonstrate misconduct.
14 Springer admits to writing these letters to Bolter, but argues that they are not admissions of wrongdoing. It is hard to see how they could be characterized otherwise.
15 Some of the evidence against Springer is circumstantial. However, circumstantial evidence can be more than sufficient to prove a violation of the securities laws. See Jonathan Feins, Exchange Act Rel. No. 41943, (Sept. 29, 1999) 70 SEC Docket 2116, 2124; Herman & MacLean v. Huddleston, 459 U.S. 375, 390 n.30 (1983) (citations omitted).
16 Keith L. DeSanto, 52 S.E.C. 316, 319 (1995), petition denied, 101 F.3d 108 (2d Cir. 1996)(Table).
17 Anthony Tricarico, 51 S.E.C. 457, 460 (1993)(citations omitted).
18 Kevin Lee Otto, Exchange Act Rel. No. 43296 (Sept. 15, 2000), 73 SEC Docket 964, 969, aff'd, 253 F.3d 960 (7th Cir.), cert. denied, 122 S.Ct. 548 (2001); Harry Gliksman, Exchange Act Rel. No. 42255 (Dec. 20, 1999), 71 SEC Docket 892, 901, appeal pending, No. 00-70141 (9th Cir.) (Gallagher); No. 00-70258 (9th Cir.) (Gliksman); Charles D. Tom, 50 S.E.C. 1142, 1145 (1992) (citations omitted).
19 Charles D. Tom, (citing Calhoun v. Bailar, 626 F.2d 145, 148-49 (9th Cir. 1980), cert. denied, 452 U.S. 906 (1981)).
20 Id.
21 See n.8 supra and accompanying text.
22 Kenneth Sonken, 48 S.E.C. 832, 835-836 (1987).
23 In 1996 Everen sued Springer to recover a portion of the bonus it advanced him when he and Bolter joined Everen. Springer counter-sued, in part charging Marcia Patik with intentional and malicious defamation. The case was eventually settled out of court.
24 In deciding on an appropriate sanction, the hearing panel found Springer's serious misconduct mitigated somewhat by Everen's failure adequately to supervise him. Everen was the subject of a separate disciplinary proceeding as a direct consequence of Springer's conduct, and consented to the imposition of a $120,000 fine and a censure.

The Committee for Review disagreed, and found that the sanctions imposed by the hearing panel were not severe enough to address Springer's "egregious misconduct."

25 Section 19 (e)(2) of the Securities Exchange Act of 1934, 15 U.S.C. § 78s(e)(2). Springer does not claim, and the record does not show, that the NYSE's action has imposed an undue burden on competition.
26 See Butz v. Glover Livestock Comm'n. Co., 411 U.S. 182, 187 (1973); Jonathan Feins, Exchange Act Rel. No. 41943 (Sept. 29, 1999), 70 SEC Docket 2116, 2131 n. 36. We note, moreover, that most of the cases on which Springer relies involved negotiated settlements. Sanctions in litigated matters are often more severe. See Brian L. Gibbons, 52 S.E.C. 791, 795 (1996), aff'd, 112 F.3d 516 (9th Cir. 1997); James Alan Schneider, 52 S.E.C. 840, 844 (1996), aff'd, 118 F.3d 1577 (3d Cir. 1997)(Table).
27 We have considered all of the contentions advanced by the parties. We have rejected or sustained them to the extent that they are inconsistent or in accord with the views expressed in this opinion.

http://www.sec.gov/litigation/opinions/34-45439.htm


Modified: 02/15/2002