UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 37019 / March 25, 1996 INVESTMENT COMPANY ACT OF 1940 Release No. 21853 / March 25, 1996 ADMINISTRATIVE PROCEEDING File No. 3-8977 --------------------------------- : ORDER INSTITUTING PUBLIC In the Matter of: : PROCEEDINGS, MAKING : FINDINGS, AND IMPOSING BECKY A. SWANSTON, : REMEDIAL SANCTIONS AND : ORDER TO CEASE AND DESIST Respondent. : --------------------------------- : I. The Securities and Exchange Commission (the "Commission") deems it appropriate and in the public interest to institute public proceedings pursuant to Sections 15(b)(6) and 19(h) of the Securities Exchange Act of 1934 ("Exchange Act") and Section 9(f)(1) of the Investment Company Act of 1940 ("ICA") against Becky A. Swanston. II. In anticipation of the institution of this proceeding, Ms. Swanston has submitted an Offer of Settlement ("Offer") to the Commission, which the Commission has determined to accept. Solely for the purpose of this proceeding, 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 matters set forth herein, except that Ms. Swanston admits the jurisdiction of the Commission over her and over the subject matter of this proceeding and paragraphs III A. and III B., Ms. Swanston consents to the issuance of this Order Instituting Proceedings, Making Findings and Imposing Remedial Sanctions ("Order"), and to the entry of the findings and the order set forth below. Accordingly, IT IS ORDERED that proceedings pursuant to Sections 15(b)(6) and 19(h) of the Exchange Act and Section 9(f)(1) of the ICA be, and hereby are, instituted against Becky A. Swanston. ==========================================START OF PAGE 2====== III. On the basis of this Order and the Offer submitted by Ms. Swanston, the Commission finds that:-[1]- A. Becky A. Swanston ("Swanston") was employed as a registered representative of Lehman Brothers, Inc. ("Lehman"), a broker and dealer in securities registered with the Commission, in the firm's New York City office, from May 1985 to July 1994. B. From March 1993 to September 1993, Swanston served as the registered representative for the account of American Capital Federal Mortgage Trust ("ACFMT" or the "Fund"), an investment company registered with the Commission. C. At times prior to September 6, 1993, ACFMT's portfolio contained certain Planned Amortization Class Interest Only securities ("PAC IOs"). Certain of these PAC IOs were materially overvalued by the Fund in its books and records, and in computing its net asset value, during the period from on or about August 4, 1993 to and including August 27, 1993. During this period, ACFMT sold, redeemed, or repurchased redeemable securities at a price not based on the current net asset value of those securities. D. From on or about August 4, 1993 through at least August 26, 1993, Swanston willfully aided and abetted ACFMT's violations of ICA Rule 22c-1(a), and caused such violations, by providing ACFMT, directly and indirectly, with prices for certain PAC IOs that were based on pricing assumptions (e.g. spreads to U.S. Treasury securities and mortgage prepayment speeds) that had been provided by ACFMT's portfolio manager, rather than by obtaining such prices from Lehman's trading desk, and, as a result, were materially higher than the representative prevailing market. IV. In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions which are set forth in the Offer submitted by Ms. Swanston. Accordingly, IT IS HEREBY ORDERED, that Becky A. Swanston: A. be, and hereby is, censured; ---------FOOTNOTES---------- -[1]- The findings herein are made pursuant to Ms. Swanston's Offer of Settlement and are not binding on any other person or entity named as a respondent in this or any other proceeding. ==========================================START OF PAGE 3====== B. shall pay a civil penalty, pursuant to Section 21B of the Exchange Act, in the amount of $10,000, within 21 days of the issuance of this Order to the United States Treasury. 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 Securities and Exchange Commission; (C) delivered by hand or courier to the Comptroller, Securities and Exchange Commission, 450 5th Street, N.W., Washington, D.C. 20549; and (D) submitted under cover letter which identifies Swanston as Respondent in these proceedings, and the file number of these proceedings, a copy of which cover letter and money order or check shall be sent to T. Christopher Browne, District Administrator, Fort Worth District Office, Securities and Exchange Commission, 801 Cherry Street, 19th Floor, Fort Worth, Texas 76102; and C. cease and desist from causing violations and future violations of ICA Rule 22c-1(a). By the Commission. Jonathan G. Katz Secretary