SECURITIES AND EXCHANGE COMMISSION Securities Exchange Act of 1934 Release No: 37065 / April 4, 1996 Administrative File No: 3-8981 ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS INSTITUTED AGAINST FLAGSHIP SECURITIES, INC., DENNIS G. MILEWITZ AND NOREEN M. BARRINGTON The Commission instituted public administrative proceedings, pursuant to Sections 15(b) and 19(h) of the Securities Exchange Act of 1934 ("Exchange Act"), and cease and desist proceedings, pursuant to Section 21C of the Exchange Act, against Flagship Securities, Inc. ("FSI"), which is a registered broker-dealer located in Syracuse, New York, Dennis G. Milewitz ("Milewitz") and Noreen M. Barrington ("Barrington"). Milewitz owns 50% of FSI, and Barrington is FSI's office manager. The Commission's order alleges that, from April 6, 1994 through July 31, 1994, FSI: (1) knowingly maintained fully paid for customers' securities as collateral for FSI's loan account; (2) commingled fully paid for customers' securities with FSI's securities; (3) failed to properly compute FSI's reserve formula, thereby causing a deficiency in FSI's special reserve bank account for the exclusive benefit of FSI's customers; and (4) failed to utilize a settlement date basis for its securities position record. In addition, the Commission's order alleges that Milewitz and Barrington willfully aided and abetted and/or caused those violations. Further, Milewitz failed reasonably to supervise Barrington with a view to preventing certain of Barrington's aiding and abetting violations. A hearing will be scheduled to determine whether the allegations against FSI, Milewitz and Barrington are true and, if so, what sanctions, if any, are appropriate and in the public interest, whether a cease and desist order against FSI, Milewitz and Barrington is appropriate, whether disgorgement and reasonable interest against FSI is appropriate, and whether civil penalties should be imposed upon FSI, Milewitz and Barrington.