UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES ACT OF 1933 Release No. 7610 / November 12, 1998 ADMINISTRATIVE PROCEEDING File No. 3-9770 ) In the Matter of ) ) ORDER MAKING FINDINGS ) AND ORDERING RESPONDENT Maynard Matt Smith, ) TO CEASE AND DESIST Respondent. ) ) I. On October 27, 1998, the Commission deemed it appropriate and in the public interest to institute cease- and-desist proceedings pursuant to Section 8A of the Securities Act of 1933 ("Securities Act") against Respondent Maynard Matt Smith ("Smith"). In response to the institution of the cease-and-desist proceedings against him, Respondent Smith has submitted an Offer of Settlement ("Offer") which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceeding brought by or on behalf of the Commission or to which the Commission is a party, and without admitting or denying the findings herein, except for those set forth in Section II.A., below, which are admitted, Respondent Smith consents to the entry of this Order Making Findings and Ordering Respondent to Cease and Desist ("Order"). II. On the basis of this Order and the Respondent's Offer, the Commission makes the following findings: A. Smith, age 43, resides in Dallas, Texas. From approximately 1987 to 1990, Smith was a registered representative with two broker-dealers that were registered with the Commission. In 1993, the National Association of Securities Dealers ("NASD") censured Smith, fined him $50,000, barred him from association with any member of the NASD in any capacity, and ordered him to make restitution of $56,100 for violating the suitability provisions of the NASD Rules of Fair Practice. B. From in or about June 1997 to in or about June 1998, Smith received approximately $4,500 per month from the author and publisher of investment newsletters (hereinafter the "author") for researching public companies and writing and editing articles for inclusion in the author's newsletters. Smith was not directly involved in the circulation or publication of the investment newsletters. C. From in or about April 1994 through the present, Smith and the author have been doing business as Katapult Consulting. In or about July 1997, Smith and the author entered into negotiations to provide consulting services to Autobond. In or about October 1997, Autobond entered into a written agreement with Smith and the author for consulting and public relations services. Under the agreement, Autobond agreed to pay each of them $2,500 per month for eighteen months. D. Smith reviewed and edited one of the author's investment newsletters, dated September 8, 1997, recommending Autobond's stock for purchase. The recommendation in this newsletter states, among other things, that "whether it's by internal growth or a takeover, we believe Autobond Acceptance Corp. represents an enormous investment opportunity to travel in the fast lane." E. At the time Smith reviewed and edited the author's September 8, 1997 newsletter, Smith and the author anticipated that they would receive $2,500 per month in compensation from Autobond. This newsletter did not disclose that Smith and the author anticipated compensation or the amount of anticipated compensation. F. By reviewing and editing the author's September 8, 1997 investment newsletter, Smith was a cause of the author's violations of Section 17(b) of the Securities Act. Section 17(b), in pertinent part, "makes it unlawful for any person to publish . . . or circulate any notice, circular, advertisement . . . or communication which, though not purporting to offer a security for sale, describes such security for a consideration received or to be received, directly or indirectly, from an issuer . . . without fully disclosing the receipt, whether past or prospective, of such consideration and the amount thereof." The author violated Section 17(b) by publishing the September 8, 1997 newsletter without disclosing that Smith and the author anticipated receiving compensation or the amount of the anticipated compensation from Autobond. G. As a result of the conduct described in Paragraphs II.A. through II.F. above, Respondent Smith was a cause of Section 17(b) violations, due to an act or omission that Smith knew or should have known would contribute to such violation of this provision of the Securities Act or any rules or regulations thereunder. III. Accordingly, IT IS ORDERED pursuant to Section 8A of the Securities Act that Respondent Smith cease and desist from committing or causing any violation and any future violation of Section 17(b) of the Securities Act. For the Commission, by its Secretary, pursuant to delegated authority. Jonathan G. Katz Secretary