. UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES ACT OF 1933 Release No. 7453 / September 22, 1997 SECURITIES EXCHANGE ACT OF 1934 Release No. 39107 / September 22, 1997 INVESTMENT ADVISERS ACT OF 1940 Release No. 1669 / September 22, 1997 INVESTMENT COMPANY ACT OF 1940 Release No. 22829 / September 22, 1997 ADMINISTRATIVE PROCEEDING File No. 3-9100 In the Matter of : ORDER MAKING FINDINGS, : IMPOSING REMEDIAL Michael C. Robertson : SANCTIONS AND ORDERING and M.C. Robertson & Associates, Inc. : RESPONDENTS TO CEASE : AND DESIST Respondents. : : I. The Securities and Exchange Commission ("Commission") on September 26, 1996, instituted public administrative and cease-and-desist proceedings pursuant to Section 8A of the Securities Act of 1933 ("Securities Act"), Sections 15(b)(6) and 21C of the Securities Exchange Act of 1934 ("Exchange Act"), Sections 203(e), (f) and (k) of the Investment Advisers Act of 1940 ("Advisers Act"), and Section 9(b) of the Investment Company Act of 1940 ("Investment Company Act") against Michael C. Robertson ("Robertson") and M.C. Robertson & Associates, Inc. ("MCR & Associates") (collectively referred to as "Respondents"). The Respondents have submitted an Offer of Settlement ("Offer") that the Commission has determined is appropriate and in the public interest to accept. II. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, Respondents admit the jurisdiction of the Commission over them and the subject matter of these administrative and cease-and-desist proceedings; and, without admitting or denying any of the findings contained herein, consent to the entry of this Order Making Findings and Imposing Remedial Sanctions and Ordering Respondents to Cease and Desist ("Order") containing the findings set forth in Section III below and ======END OF PAGE 1====== imposing sanctions set forth in Section IV below. III. On the basis of this Order and the Offer submitted by Respondents, the Commission finds that: A. Respondents Robertson, age 67, was an associated person of a Dallas, Texas-based registered broker-dealer from July 1989 to January 1990, and an associated person of an Arlington, Texas-based registered broker-dealer from January 1990 to November 1995. From July 1989 through August 1991, Robertson was also an affiliate to a Norwalk, Connecticut-based registered investment adviser which, utilizing Robertson, provided pension consulting services for two clients, the City of Fort Worth Employees' Retirement Fund ("Fort Worth ERF") and the Oklahoma Police Pension and Retirement System ("Oklahoma Police PRS"). MCR & Associates is an unregistered investment adviser which provided pension consulting services for the Fort Worth ERF from September 1991 to June 1994 and which has provided such services for the Oklahoma Police PRS since September 1991. MCR & Associates has been wholly-owned and controlled by Robertson throughout its existence. B. Fraud in the Offer and Sale, and in Connection with the Purchase and Sale, of Securities From 1983 to June 1994, Robertson provided pension consulting services to the Fort Worth ERF. Prior to 1989, the Fort Worth ERF purchased shares of equity mutual funds. Thereafter, three of the equity mutual funds adopted plans to pay service fees pursuant to Section 12(b) of the Investment Company Act and Rule 12b-1 thereunder ("12b-1 Fees"). The broker-dealers to which the mutual funds paid these fees included the Dallas, Texas and Arlington, Texas-based broker-dealers with which Robertson was associated. From mid-1989 through June 1994, the broker- dealers, in turn, passed through to Robertson approximately $700,000 in 12b-1 Fees. Respondents failed to disclose to the Fort Worth ERF their receipt of the 12b-1 Fees. In order to obtain the 12b-1 Fees mentioned above, Robertson caused the broker-dealers with which he was then associated to be designated as the Fort Worth ERF's dealer-of-record. Robertson accomplished these designations without authority from or disclosure to the Fort Worth ERF. In addition to the foregoing, Robertson arranged "commission recapture" programs for both the Fort Worth ERF and the Oklahoma Police PRS. Under the terms of the programs, the clients recovered 75% and 70%, respectively, of brokerage commissions on designated trades through a broker-dealer with which Robertson was associated. Until October 1994, Robertson did not disclose to either client, however, that, after payment of ticket charges, he received one-half of the commissions not recaptured by those clients. In all, between October 1991 and June 1994, Robertson received approximately $60,000 in brokerage commissions that he either did not disclose or did not adequately disclose to his pension fund clients. ======END OF PAGE 2====== Respondents employed instrumentalities of interstate commerce and the mails to accomplish the foregoing. MCR & Associates, through Robertson, and Robertson engaged in the foregoing activities. Accordingly, Respondents willfully violated Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act. Respondents have submitted sworn financial statements and other evidence and have asserted their financial inability to pay a civil penalty. The Commission has reviewed the sworn financial statements and other evidence provided by Respondents and has determined that Respondents do not have the financial ability to pay a civil penalty. Respondents have submitted sworn financial statements and other evidence and have asserted their financial inability to pay disgorgement in excess of $450,000. The Commission has reviewed the sworn financial statements and other evidence provided by Respondents and has determined that Respondents do not have the financial ability to pay disgorgement or prejudgment interest in excess of $450,000. IV. On the basis of the foregoing, it is appropriate and in the public interest to impose the sanctions which are set forth in the Offer submitted by the Respondents. In determining to accept the Offer, the Commission considered the Sworn Statement of Financial Condition of Respondents which accompanied the Offer. ACCORDINGLY, IT IS ORDERED THAT: A. Robertson be, and hereby is, barred from association with any broker, dealer, municipal securities dealer, investment adviser, or investment company; B. Pursuant to Section 8A of the Securities Act of 1933, Section 21C of the Securities Exchange Act of 1934, and Section 203(k) of the Investment Advisers Act of 1940, Respondents shall cease and desist from committing or causing any violation of, and any future violation of, Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act; C. Respondents shall pay disgorgement of $768,994.08 plus prejudgment interest, but that payment of such amount exceeding $450,000 be waived based upon Respondents' demonstrated inability to pay; D. The Division of Enforcement may, at any time following the entry of this Order, petition the Commission to: (1) reopen this matter to consider whether Respondents provided accurate and complete financial information at the time such representations were made; (2) determine the amount of disgorgement and prejudgment interest to order; and (3) seek any additional remedies that the Commission would be authorized to impose in this proceeding if Respondents' Offer had not been accepted. No other issues shall be considered in connection with this petition other than ======END OF PAGE 3====== ======END OF PAGE 3====== whether the financial information provided by Respondents was fraudulent, misleading, inaccurate or incomplete in any material respect, the amount of disgorgement and prejudgment interest to order and whether any additional remedies should be imposed. Respondents may not, by way of defense to any such petition, contest the findings in this Order or the Commission's authority to impose any additional remedies that were available in the original proceeding; and E. Within fifteen (15) days of the date of the Order, Robertson shall disgorge, by delivery to the staff of the Commission's Fort Worth District Office, $450,000 paid as follows: (a) $25,000 made by United States postal money order, certified check, bank cashier's check, or bank money order payable to the City of Fort Worth Employees' Retirement Fund, c/o: Retirement Administrator; (b) $25,000 made by United States postal money order, certified check, bank cashier's check, or bank money order payable to the Oklahoma Police Pension and Retirement System, c/o: Executive Director; and (c) $400,000 made by promissory note payable to the City of Fort Worth Employees' Retirement Fund, c/o: Retirement Administrator, executed by Respondent Robertson and guaranteed by Evelyn Robertson, wife of Respondent Robertson ("the Promissory Note"). The Promissory Note shall: have a three (3) year term and be payable in equal annual installments; bear simple interest at a rate equal to that current yield of a one-year Treasury instrument; and the outstanding balance will be fully collateralized with identified negotiable securities satisfactory to the City of Fort Worth Employees' Retirement Fund or its agent designated for that purpose. The note may be prepaid, in whole or in part, at any time without penalty. By the Commission. Jonathan G. Katz Secretary ======END OF PAGE 4====== ======END OF PAGE 4======