UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION Securities Act of 1933 Release No. 7439 / August 26, 1997 Securities Exchange Act of 1934 Release No. 38970 / August 26, 1997 Administrative Proceedings File No. 3-9373 In the Matter of : : Robert Alan Denton, : ORDER INSTITUTING PUBLIC Jeffrey Peter Morrison, : ADMINISTRATIVE AND CEASE- Lee Michael Rough, : AND-DESIST PROCEEDINGS, Marc David Siden and : MAKING FINDINGS AND Kenneth Thomas Tripoli. : IMPOSING REMEDIAL SANCTIONS : AND CEASE-AND-DESIST ORDER : Respondents. : : I. In connection with a proposed public administrative and cease- and- desist proceeding 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"), Robert Alan Denton ("Denton"), Jeffrey Peter Morrison ("Morrison"), Lee Michael Rough ("Rough"), Marc David Siden ("Siden") and Kenneth Thomas Tripoli ("Tripoli"), have each submitted an Offer of Settlement which the Commission has determined is in the public interest to accept. Solely for the purpose of this proceeding, and any other proceeding brought by or on behalf of the Commission or in which the Commission is a party, without any other adjudication and without admitting or denying the findings contained in this Order Instituting Public Administrative and Cease-and-Desist Proceedings, Making Findings and Imposing Remedial Sanctions and Cease-and-Desist Order ("Order") (except as to Section III.A.1, which is admitted by Denton; Section III.B.1, which is admitted by Morrison; Section III.C.1, which is admitted by Rough and Section III.D.1, which is admitted by Siden; and Section III.E.1, which is admitted by Tripoli), Denton, Morrison, Rough, Siden and Tripoli each consent to the institution of public administrative and/or cease-and-desist proceedings, the findings and the remedial sanctions, as set forth below. II. Accordingly, IT IS ORDERED that a public administrative proceeding pursuant to Sections 15(b) and 19(h) of the Exchange Act, and a cease-and- ======END OF PAGE 1====== desist proceeding pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act be, and they hereby are, instituted. III. On the basis of this Order and the Offers of Settlement, the Commission finds that: A. DENTON 1. Denton has been associated as a registered representative with Biltmore Securities, Inc. ("Biltmore") since July 1992. Denton became a 2.5% shareholder of the firm in December 1992. 2. From in or about July 1992 to in or about June 1995, Denton willfully violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in that Denton, in connection with the purchase and sale and in the offer and sale of securities, by use of the means and instrumentalities of interstate commerce, the means and instruments of transportation and communication in interstate commerce and the mails: (a) employed devices, schemes and artifices to defraud, (b) made untrue statements of material facts and omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; (c) engaged in acts, practices and a course of business which would and did operate as a fraud and deceit; and (d) obtained money and property by means of untrue statements of material facts and omissions to state material facts necessary to make the statements made, in light of the circumstances under which they were made, not misleading. As part of the aforesaid conduct, Denton made price predictions without a reasonable basis with regard to certain securities, recommended the purchase of those securities without disclosing material negative information and engaged in unauthorized trading in the accounts of Biltmore's customers. 3. From in or about July 1992 to in or about June 1995, Denton willfully violated Section 10(b) of the Exchange Act and Rule 10b-6 thereunder, in that Denton, in connection with the purchase and sale of securities, by use of the means and instrumentalities of interstate commerce and the mails, while participating in the distribution of various securities, used manipulative and deceptive devices and contrivances in that he, on behalf of Biltmore, attempted to induce and did induce other persons to purchase the securities which were the subject of the distributions before he completed his participation in such distributions.<(1)> <(1)> On December 18, 1996, the Commission adopted a comprehensive revision of Rules 10b-6, 10b-7, 10b-8 and 10b-21, which became effective on March 4, 1997. Among other things, these amendments deemed Rules 101 and 102 under Regulation M as successor rules to Rule 10b-6. Accordingly, this Order orders (continued...) ======END OF PAGE 2====== 4. From in or about July 1992 to in or about June 1995, Denton willfully aided and abetted violations of Section 15(c) of the Exchange Act and Rule 15c1-2 thereunder, in that Denton, by use of the means and instrumentalities of interstate commerce and the mails, effected transactions in and induced or attempted to induce the purchase and sale of certain securities (other than commercial paper, bankers' acceptances or commercial bills), otherwise than on a national securities exchange of which Biltmore was a member, by means of manipulative, deceptive and fraudulent devices or contrivances, which included: (a) engaging in acts, practices and courses of business which operated as a fraud and deceit, and (b) making untrue statements of material facts and omissions to state material facts necessary to make the statements made in light of the circumstances under which they were made, not misleading, which statements and omissions were made with knowledge or reasonable grounds to believe that they were untrue or misleading, including the activities described in Section III.A.2., above. B. MORRISON 1. Morrison has been associated as a registered representative with Biltmore since February 1992. Morrison became a 2.5% shareholder of the firm in December 1992. 2. From in or about February 1992 to in or about June 1995, Morrison willfully violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in that Morrison, in connection with the purchase and sale and in the offer and sale of securities, by use of the means and instrumentalities of interstate commerce, the means and instruments of transportation and communication in interstate commerce and the mails: (a) employed devices, schemes and artifices to defraud, (b) made untrue statements of material facts and omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; (c) engaged in acts, practices and a course of business which would and did operate as a fraud and deceit; and (d) obtained money and property by means of untrue statements of material facts and omissions to state material facts necessary to make the statements made, in light of the circumstances under which they were made, not misleading. As part of the aforesaid conduct, Morrison made price predictions without a reasonable basis with regard to certain securities, recommended the purchase of those securities without disclosing material negative information and engaged in unauthorized trading in the accounts of Biltmore's customers. 3. From in or about February 1992 to in or about June 1995, Morrison willfully violated Section 10(b) of the Exchange Act and Rule 10b-6 thereunder, in that Morrison, in connection with the purchase and sale of securities, by use of the means and instrumentalities of interstate <(1)>(...continued) respondents to cease and desist from violating Rules 101 and 102 of Regulation M. ======END OF PAGE 3====== commerce and the mails, while participating in the distribution of various securities, used manipulative and deceptive devices and contrivances in that he, on behalf of Biltmore, attempted to induce and did induce other persons to purchase the securities which were the subject of the distributions before he completed his participation in such distributions. 4. From in or about February 1992 to in or about June 1995, Morrison willfully aided and abetted violations of Section 15(c) of the Exchange Act and Rule 15c1-2 thereunder, in that Morrison, by use of the means and instrumentalities of interstate commerce and the mails, effected transactions in and induced or attempted to induce the purchase and sale of certain securities (other than commercial paper, bankers' acceptances or commercial bills), otherwise than on a national securities exchange of which Biltmore was a member, by means of manipulative, deceptive and fraudulent devices or contrivances, which included: (a) engaging in acts, practices and courses of business which operated as a fraud and deceit, and (b) making untrue statements of material facts and omissions to state material facts necessary to make the statements made in light of the circumstances under which they were made, not misleading, which statements and omissions were made with knowledge or reasonable grounds to believe that they were untrue or misleading, including the activities described in Section III.B.2., above. C. ROUGH 1. Rough has been associated as a registered representative with Biltmore since January 1992. Rough became a 2.5% shareholder of the firm in June 1992. 2. From in or about January 1992 to in or about June 1995, Rough willfully violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in that Rough, in connection with the purchase and sale and in the offer and sale of securities, by use of the means and instrumentalities of interstate commerce, the means and instruments of transportation and communication in interstate commerce and the mails: (a) employed devices, schemes and artifices to defraud, (b) made untrue statements of material facts and omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; (c) engaged in acts, practices and a course of business which would and did operate as a fraud and deceit; and (d) obtained money and property by means of untrue statements of material facts and omissions to state material facts necessary to make the statements made, in light of the circumstances under which they were made, not misleading. As part of the aforesaid conduct, Rough made price predictions without a reasonable basis with regard to certain securities, recommended the purchase of those securities without disclosing material negative information and engaged in unauthorized trading in the accounts of Biltmore's customers. 3. From in or about January 1992 to in or about June 1995, Rough willfully violated Section 10(b) of the Exchange Act and Rule 10b-6 thereunder, in that Rough, in connection with the purchase and sale of ======END OF PAGE 4====== securities, by use of the means and instrumentalities of interstate commerce and the mails, while participating in the distribution of various securities, used manipulative and deceptive devices and contrivances in that he, on behalf of Biltmore, attempted to induce and did induce other persons to purchase the securities which were the subject of the distributions before he completed his participation in such distributions. 4. From in or about January 1992 to in or about June 1995, Rough willfully aided and abetted violations of Section 15(c) of the Exchange Act and Rule 15c1-2 thereunder, in that Rough, by use of the means and instrumentalities of interstate commerce and the mails, effected transactions in and induced or attempted to induce the purchase and sale of certain securities (other than commercial paper, bankers' acceptances or commercial bills), otherwise than on a national securities exchange of which Biltmore was a member, by means of manipulative, deceptive and fraudulent devices or contrivances, which included: (a) engaging in acts, practices and courses of business which operated as a fraud and deceit, and (b) making untrue statements of material facts and omissions to state material facts necessary to make the statements made in light of the circumstances under which they were made, not misleading, which statements and omissions were made with knowledge or reasonable grounds to believe that they were untrue or misleading, including the activities described in Section III.C.2., above. D. SIDEN 1. Siden was associated as a registered representative with Biltmore from January 1992 through June 1995. Siden is currently associated with VTR Capital, Inc., a broker-dealer registered with the Commission since January 1988. 2. From in or about January 1992 to in or about June 1995, Siden willfully violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in that Siden, in connection with the purchase and sale and in the offer and sale of securities, by use of the means and instrumentalities of interstate commerce, the means and instruments of transportation and communication in interstate commerce and the mails: (a) employed devices, schemes and artifices to defraud, (b) made untrue statements of material facts and omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; (c) engaged in acts, practices and a course of business which would and did operate as a fraud and deceit; and (d) obtained money and property by means of untrue statements of material facts and omissions to state material facts necessary to make the statements made, in light of the circumstances under which they were made, not misleading. As part of the aforesaid conduct, Siden made price predictions without a reasonable basis with regard to certain securities, recommended the purchase of those securities without disclosing material negative information and engaged in unauthorized trading in the accounts of Biltmore's customers. ======END OF PAGE 5====== 3. From in or about January 1992 to in or about June 1995, Siden willfully violated Section 10(b) of the Exchange Act and Rule 10b-6 thereunder, in that Siden, in connection with the purchase and sale of securities, by use of the means and instrumentalities of interstate commerce and the mails, while participating in the distribution of various securities, used manipulative and deceptive devices and contrivances in that he, on behalf of Biltmore, attempted to induce and did induce other persons to purchase the securities which were the subject of the distributions before he completed his participation in such distributions. 4. From in or about January 1992 to in or about June 1995, Siden willfully aided and abetted violations of Section 15(c) of the Exchange Act and Rule 15c1-2 thereunder, in that Siden, by use of the means and instrumentalities of interstate commerce and the mails, effected transactions in and induced or attempted to induce the purchase and sale of certain securities (other than commercial paper, bankers' acceptances or commercial bills), otherwise than on a national securities exchange of which Biltmore was a member, by means of manipulative, deceptive and fraudulent devices or contrivances, which included: (a) engaging in acts, practices and courses of business which operated as a fraud and deceit, and (b) making untrue statements of material facts and omissions to state material facts necessary to make the statements made in light of the circumstances under which they were made, not misleading, which statements and omissions were made with knowledge or reasonable grounds to believe that they were untrue or misleading, including the activities described in Section III.D.2., above. E. TRIPOLI 1. Tripoli was associated as a registered representative with Biltmore from April 1992 through February 1995. Tripoli is not currently associated with a broker-dealer. 2. From in or about April 1992 to in or about February 1995, Tripoli willfully violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in that Tripoli, in connection with the purchase and sale and in the offer and sale of securities, by use of the means and instrumentalities of interstate commerce, the means and instruments of transportation and communication in interstate commerce and the mails: (a) employed devices, schemes and artifices to defraud, (b) made untrue statements of material facts and omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; (c) engaged in acts, practices and a course of business which would and did operate as a fraud and deceit; and (d) obtained money and property by means of untrue statements of material facts and omissions to state material facts necessary to make the statements made, in light of the circumstances under which they were made, not misleading. As part of the aforesaid conduct, Tripoli made price predictions without a reasonable basis with regard to certain securities, recommended the purchase of those securities without disclosing material negative information and engaged in unauthorized trading in the accounts of Biltmore's customers. ======END OF PAGE 6====== 3. From in or about April 1992 to in or about February 1995, Tripoli willfully violated Section 10(b) of the Exchange Act and Rule 10b-6 thereunder, in that Tripoli, in connection with the purchase and sale of securities, by use of the means and instrumentalities of interstate commerce and the mails, while participating in the distribution of various securities, used manipulative and deceptive devices and contrivances in that he, on behalf of Biltmore, attempted to induce and did induce other persons to purchase the securities which were the subject of the distributions before he completed his participation in such distributions. 4. From in or about April 1992 to in or about February 1995, Tripoli willfully aided and abetted violations of Section 15(c) of the Exchange Act and Rule 15c1-2 thereunder in that Tripoli, by use of the means and instrumentalities of interstate commerce and the mails, effected transactions in and induced or attempted to induce the purchase and sale of certain securities (other than commercial paper, bankers' acceptances or commercial bills), otherwise than on a national securities exchange of which Biltmore was a member, by means of manipulative, deceptive and fraudulent devices or contrivances, which included: (a) engaging in acts, practices and courses of business which operated as a fraud and deceit, and (b) making untrue statements of material facts and omissions to state material facts necessary to make the statements made in light of the circumstances under which they were made, not misleading, which statements and omissions were made with knowledge or reasonable grounds to believe that they were untrue or misleading, including the activities described in Section III.E.2., above. IV. In view of the foregoing, the Commission finds that it is in the public interest to impose the sanctions specified in the Offers of Settlement. Accordingly, it is ORDERED that: A. Effective immediately, respondent Tripoli is hereby barred from association with any broker, dealer, municipal securities dealer, investment adviser or investment company; B. Effective immediately, respondent Rough is hereby barred from association with any broker, dealer, municipal securities dealer, investment company or investment adviser provided, however, that after a period of three (3) years subsequent to the entry of this Order he has a right to apply to the appropriate self-regulatory organization or, where there is none, to the Commission for permission to become so associated; C. Effective immediately, respondent Denton is hereby barred from association with any broker, dealer, municipal securities dealer, investment company or investment adviser provided, however, that after a period of two and one-half (2.5) years subsequent to the entry of this Order he has a right to apply to the appropriate self-regulatory ======END OF PAGE 7====== organization or, where there is none, to the Commission for permission to become so associated; D. Effective immediately, respondent Morrison is hereby barred from association with any broker, dealer, municipal securities dealer, investment company or investment adviser provided, however, that after a period of two (2) years subsequent to the entry of this Order he has a right to apply to the appropriate self-regulatory organization or, where there is none, to the Commission for permission to become so associated; E. Effective immediately, respondent Siden is suspended for a period of twelve months from association with any broker, dealer, municipal securities dealer, investment adviser or investment company; F. Effective immediately, respondents Denton, Morrison, Rough and Siden shall cease and desist from committing or causing any violation or future violation of Section 17(a) of the Securities Act and Sections 10(b) and 15(c) of the Exchange Act and Rules 10b-5 and 15c1-2, and Rules 101 and 102 of Regulation M, promulgated thereunder. By the Commission. Jonathan G. Katz Secretary ======END OF PAGE 8====== ======END OF PAGE i======