FOR IMMEDIATE RELEASE 98-110 SEC Brings Year 2000 Enforcement Actions For First Time; 37 Broker-Dealers Charged for Failing to Make Required Y2K Disclosure Washington, DC, October 20, 1998 -- The Securities and Exchange Commission today charged 37 brokerage firms for failing to report on their Year 2000 preparedness as required by Commission rules. These enforcement actions were brought in conjunction with the National Association of Securities Dealers Regulation Inc. (NASDR) to ensure that firms comply with their Year 2000 disclosure obligations. As part of these joint efforts, the NASDR also announced today that it has brought actions against 59 of its member firms for late filing of the necessary information. SEC Chairman Arthur Levitt said, "Customers of brokerage firms have the right to know what steps their brokers have taken to address possible computer failures that could affect their investments. The Commission takes the Year 2000 computer problem very seriously and has required broker-dealers to do the same." SEC Commissioner Laura S. Unger, who is spearheading the Commission's Year 2000 efforts, said, "Broker-dealers should disclose how they are working to ensure that their computer systems are ready for the Year 2000. Firms are required to make public disclosure of their progress. Today's cases make clear that we will not tolerate firms who keep customers in the dark in this vital area." SEC Enforcement Director Richard H. Walker said, "These are the first cases the Enforcement Division has brought concerning Year 2000 disclosure. We will continue to be vigilant in policing Year 2000-related disclosure and will not wait until the new millennium to bring additional enforcement actions." The SEC's rules required firms to file form "BD-Y2K" with both the Commission and the firms' appropriate self- regulatory organizations by August 31, 1998. The Commission brought these actions against broker-dealers that failed to file all or part of this form. Broker-dealers must disclose on the forms the steps they have taken to address Year 2000 problems, including information about their remediation and contingency plans in case they are not ready in time. Broker-dealer compliance with the filing requirement is crucial to the Commission's efforts to identify potential Year 2000 problems and review the industry's state of preparedness. Nineteen of the 37 firms charged agreed to settlement offers, which consist of a cease-and-desist order, a censure, and a civil penalty. Firms that were required to file Part I of the form and failed to do so will pay a $5,000 penalty. Firms that were required to file both Parts I and II of the form and failed to file Part II (a narrative) will pay $15,000. Firms that were required to file both Parts I and II of the form and filed neither part will pay $25,000. Fines from the settled cases total $235,000. (See attached chart for details of settled and non-settled cases.) The SEC acknowledges the valuable assistance of the staff of the National Association of Securities Dealers, the NASDR, and the New York Stock Exchange in developing and bringing these cases. Broker-dealers must file an updated form BD-Y2K by April 30, 1999. Investors are encouraged to call the SEC's public reference room at (202) 942-8090 to assess the Year 2000 readiness of their broker-dealers by reviewing their form BD-Y2K. For further information regarding the Commission's actions, contact Mary Keefe, Regional Director, Midwest Regional Office at (312) 353-9338. # # # SEC "BD-Y2K" ENFORCEMENT ACTIONS SETTLED CASES OCTOBER 20, 1998 A. $5,000 Net Capital, Failure to File Part I $5,000 Fine Offered 1. Bowling Green Securities, Inc. --------------------- NY, NY 2. Intra Network Securities, Inc. ---------------------- San Diego, CA 3. Investment Services Capital Corp.---------------- Tarrytown, NY 4. Mayhill Agency, Inc. ------------------------------- Morristown, NJ 5. Neutral Switch, Inc. -------------------------------- Garden City, NY 6. The Transportation Group (Securities) Limited-- NY, NY 7. FPS Broker Services, Inc. ------------------------ Westborough, MA 8. The Partners Financial Group, Inc. --------------- Miami, FL B. $100,000 Net Capital, Failure to File Part II $15,000 Fine Offered 1. Arbitrage Partners, Inc.----------------------------- NY, NY 2. Bluestone Capital Partners, L.P. ------------------ NY, NY 3. General Re Securities Corporation --------------- NY, NY 4. Haberman Brothers --------------------------------- NY, NY 5. Mahler & Emerson, Inc. ---------------------------- NY, NY 6. Pellinore Securities Corp. -------------------------- NY, NY 7. Rensselaer Securities Corp. ------------------------ Troy, NY 8. Robert E. Meyers & Co. ---------------------------- Fort Wayne, IN C. $100,000 Net Capital, Failure to File Parts I and II $25,000 Fine Offered 1. M.R. Beal & Company ----------------------------- NY, NY 2. First of America Securities, Inc. ------------------- Kalamazoo, MI 3. King Financial Services, Inc. ----------------------- Iselin, NJ SEC "BD-Y2K" ENFORCEMENT ACTIONS NON-SETTLED CASES OCTOBER 20, 1998 A. $5,000 Net Capital, Failure to File Part I 1. Allegheny Financial Programs, Inc. -------------- Weston, WV 2. Atlantic - Pacific Capital, Inc. --------------------- Greenwich, CT 3. Comstock Partners, L.L.C. ------------------------ Beverly Hills, CA 4. Constitution Securities, Inc. ----------------------- Hartford, CT 5. Elswick, Banks and Associates, Inc. ------------- Atlanta, GA 6. McGlone & Co. ------------------------------------- Westport, CT 7. Phoenix Financial Services Corp. ---------------- Brooklyn, NY 8. Laguna Financial Corporation -------------------- San Jose, CA B. $100,000 Net Capital, Failure to File Part II 1. Gelber Securities, Inc. ------------------------------- Chicago, IL 2. J.W. Barclay & Co., Inc. ---------------------------- NY, NY 3. Multi Spectrum Investing Corporation ----------- Somerville, NJ 4. Stonegate Securities, Inc. --------------------------- Dallas, TX 5. V.B.C. Securities ------------------------------------ Clifton, NJ C. $100,000 Net Capital, Failure to File Parts I and II 1. Alden Capital Markets, Inc. ------------------------ NY, NY 2. Bettinger & Leech Financial Corp. ---------------- NY, NY 3. E.C. Capital, Ltd. ----------------------------------- Mineola, NY 4. J. Robbins Securities, L.L.C. ----------------------- Phoeniz, AZ 5. William Scott & Co., L.L.C. ----------------------- Union, NJ