UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES ACT OF 1933 Release No. 7406 / March 24, 1997 SECURITIES EXCHANGE ACT OF 1934 Release No. 38432 / March 24, 1997 ADMINISTRATIVE PROCEEDING File No. 3-9104 ____________________________________ : In the Matter of : ORDER MAKING FINDINGS, : ISSUING CEASE-AND-DESIST PETER TOSTO and INVESTOR : ORDERS AND DISGORGEMENT RELATIONS, INC. : AGAINST RESPONDENTS : PETER TOSTO AND INVESTOR Respondents. : RELATIONS, INC. : ___________________________________: I. On September 26, 1996, the Securities and Exchange Commission ("Commission") issued an Order Instituting Public Administrative and Cease-and-Desist Proceedings and Notice of Hearing Pursuant to Section 8A of the Securities Act of 1933 ("Securities Act") and Sections 15(b), 19(h) and 21C of the Securities Exchange Act of 1934 ("Exchange Act") ("Order Instituting Proceedings") against Respondents Peter Tosto ("Tosto"), Investor Relations, Inc. ("IRI"), George Panagiotou ("Panagiotou"), Mark Savage ("Savage"), and Dean Verrigni ("Verrigni") (collectively, the "Respondents"), to determine whether the allegations contained in the Order Instituting Proceedings were true; what remedial and other sanctions, if any, were appropriate in the public interest against the Respondents; and whether cease-and-desist orders should issue against the Respondents. Respondents Tosto and IRI have submitted Offers of Settlement ("Offers") which the Commission has determined to accept. 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, and without admitting or denying the allegations contained in the Order Instituting Proceedings or the findings contained in the Order Making Findings, Issuing Cease-and-Desist Orders and Disgorgement Against Respondents Peter Tosto and Investor Relations, Inc. ("Order"), except as to the jurisdiction of the Commission, which is admitted, Tosto and ==========================================START OF PAGE 2====== IRI, by their Offers, consent to the entry of the findings, sanctions, and cease-and-desist orders set forth below. II. On the basis of the Order Instituting Proceedings, this Order and the Offers submitted by Tosto and IRI, the Commission makes the following findings:-[1]- A. The securities of San Diego Bancorp ("SDB") are registered with the Commission pursuant to Section 12(g) of the Exchange Act and its stock has traded since at least 1993 over-the-counter on the National Association of Securities Dealers Inc.'s ("NASD") electronic bulletin board. B. Tosto, who maintains a residence in New York, is a former registered representative ("RR") who was suspended from association with any member firm by the NASD in 1990. C. IRI, a Utah corporation, is an entity solely owned, operated and controlled by Tosto. D. During the period from at least in or about September 1993 through April 1994, Tosto and IRI violated Section 17(a) of the Securities Act in that, in the offer or sale of securities, by the use of the means or instruments of transportation or communication in interstate commerce or by the use of the mails, directly or indirectly, they employed devices, schemes or artifices to defraud; obtained money or property by means of untrue statements of material facts or omitted to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or engaged in transactions, practices or courses of business which operated or would operate as a fraud or deceit upon the purchaser. For example, Tosto and IRI: 1. paid RRs to sell SDB stock to their customers or to recruit others to sell SDB stock. This compensation was not disclosed by the RRs to their customers. A major shareholder of SDB paid Tosto compensation to generate this market activity in SDB stock, which had an otherwise relatively illiquid market. The market activity allowed the major shareholder to sell his SDB ---------FOOTNOTES---------- -[1]- Any findings contained in this Order are made pursuant to the Offers submitted by Tosto and IRI and are not binding on any other person or entity named as a respondent in this or any other proceeding. ==========================================START OF PAGE 3====== stock. Tosto, individually and through IRI, received payments from the major shareholder and transferred some, but not all, of these payments to the RRs and others. Tosto and IRI retained a substantial amount of these payments for themselves; and 2. made material misrepresentations to a registered broker-dealer in connection with transactions in SDB stock. Tosto and IRI placed orders through a registered broker-dealer in cash accounts held for Tosto's and IRI's beneficial interest. In opening the accounts and in placing the orders, Tosto and IRI misrepresented, inter alia, their identity and financial means. Tosto and IRI subsequently failed to pay for shares which they purchased. Thus, Tosto and IRI avoided substantial losses, which were incurred by the broker-dealer on Tosto's and IRI's behalf. E. During the period from at least in or about September 1993 through April 1994, Tosto and IRI violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder in that, directly or indirectly, by use of the means or instrumentalities of interstate commerce, or of the mails, or of any facility of any national securities exchange, in connection with the purchase or sale of securities, they employed devices, schemes or artifices to defraud; made untrue statements of material facts or omitted to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or engaged in acts, practices or courses of business which operated or would operate as a fraud or deceit upon any person. For example, they engaged in the conduct described in Section II.D., above. III. In view of the foregoing, the Commission deems it appropriate and in the public interest to accept the Offers, issue cease-and-desist orders and order disgorgement and compliance with Respondents Tosto's and IRI's undertakings, as specified in the Offers. ACCORDINGLY, IT IS HEREBY ORDERED, that: A. Tosto cease and desist, pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, from committing or causing any violation and any future violation of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act, and Rule 10b-5 promulgated thereunder; ==========================================START OF PAGE 4====== B. Tosto, within three days of the entry of this Order, pay disgorgement, for which he is jointly and severally liable with IRI, in the amount of $857,000 and reasonable interest from September 1993 to the date of the Order in the amount of $243,241.92, for a total amount of $1,100,241.92, to the United States Securities and Exchange Commission. Such payment shall be: (a) made by United States postal money order, certified check, bank cashier's check or bank money order; (b) made payable to the United States Securities and Exchange Commission; (c) delivered by certified mail to the Office of the Secretary, Securities and Exchange Commission, 450 Fifth Street, N.W., Stop 6-9, Washington, D.C. 20549; and (d) submitted under cover letter which identifies Tosto as a Respondent in this proceeding, the file number of this proceeding, a copy of which cover letter and money order or check shall be sent to Ellen N. Hersh, Assistant Regional Director, Northeast Regional Office, Securities and Exchange Commission, 7 World Trade Center, 13th Floor, New York, New York 10048; C. Tosto shall comply with his undertakings, upon reasonable notice and payment of statutory witness and travel fees, to appear without the service of a subpoena at reasonable times and places to testify as a witness at the hearing or other related proceedings in this matter; and D. Tosto and IRI shall comply with their undertakings that both Tosto and IRI shall cooperate with the staff of the Commission in such further investigations and inspections as the Commission shall determine to pursue relating to the marketing, offer, purchase or sale of securities, arising out of or relating to conduct which occurred before the date of this Offer. Furthermore, Tosto and IRI shall actively induce the cooperation of all employees, agents and representatives of Tosto and IRI in any such investigation or inspection. At the request of the Commission's staff, Tosto and IRI shall appear and testify, and shall use their best efforts to obtain the appearance and testimony of their employees, agents and representatives, at any investigative testimony, deposition, hearing or trial. IT IS FURTHER ORDERED, that: A. IRI cease and desist, pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, from committing or causing any violation and any future violation of Section 17(a) of the Securities Act and ==========================================START OF PAGE 5====== Section 10(b) of the Exchange Act, and Rule 10b-5 promulgated thereunder; B. IRI, within three days of the entry of this Order, pay disgorgement, for which it is jointly and severally liable with Tosto, in the amount of $857,000 and reasonable interest from September 1993 to the date of the Order in the amount of $243,241.92, for a total amount of $1,100,241.92, to the United States Securities and Exchange Commission. Such payment shall be: (a) made by United States postal money order, certified check, bank cashier's check or bank money order; (b) made payable to the United States Securities and Exchange Commission; (c) delivered by certified mail to the Office of the Secretary, Securities and Exchange Commission, 450 Fifth Street, N.W., Stop 6-9, Washington, D.C. 20549; and (d) submitted under cover letter which identifies IRI as a Respondent in this proceeding, the file number of this proceeding, a copy of which cover letter and money order or check shall be sent to Ellen N. Hersh, Assistant Regional Director, Northeast Regional Office, Securities and Exchange Commission, 7 World Trade Center, 13th Floor, New York, New York 10048; C. IRI shall comply with its undertakings, upon reasonable notice and payment of statutory witness and travel fees, to appear without the service of a subpoena at reasonable times and places to testify as a witness at the hearing or other related proceedings in this matter; and D. IRI shall comply with its undertakings that both IRI and Tosto shall cooperate with the staff of the Commission in such further investigations and inspections as the Commission shall determine to pursue relating to the marketing, offer, purchase or sale of securities, arising out of or relating to conduct which occurred before the date of this Offer. Furthermore, IRI and Tosto shall actively induce the cooperation of all employees, agents and representatives of IRI and Tosto in any such investigation or inspection. At the request of the Commission's staff, Tosto and IRI shall appear and testify, and shall use their best efforts to obtain the appearance and testimony of their employees, agents and representatives, at any investigative testimony, deposition, hearing or trial. By the Commission. ==========================================START OF PAGE 6====== Jonathan G. Katz Secretary