UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 37153 / April 30, 1996 ADMINISTRATIVE PROCEEDING File No. 3-8995 ------------------------------ : In the Matter of : ORDER INSTITUTING PROCEEDINGS, Kevin Bartholomew, : MAKING FINDINGS AND IMPOSING : SANCTIONS : : Respondent. : ------------------------------: I. The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public proceedings be instituted 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") against Kevin Bartholomew ("Bartholomew"). In anticipation of the institution of these administrative proceedings, Bartholomew has submitted an Offer of Settlement ("Offer") 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 in which the Commission is a party, Bartholomew by his Offer, without admitting or denying the Commission's findings as to him, except for those findings contained in Section III.1, which are admitted by Bartholomew, consents to the entry of this Order Instituting Proceedings, Making Findings and Imposing Sanctions ("Order"). II. Accordingly, IT IS ORDERED that proceedings pursuant to Section 8A of the Securities Act and Sections 15(b), 19(h), and 21C of the Exchange Act be, and hereby are, instituted. ==========================================START OF PAGE 2====== III. On the basis of this Order and the Offer submitted the Commission finds-[1]- that: 1. Bartholomew is a 42 year old resident of Omaha, Nebraska. He was employed by PaineWebber Incorporated ("PaineWebber") from 1984 until he was permitted to resign in January 1995. Bartholomew was a registered representative at PaineWebber's Omaha, Nebraska office from October 1987 until January 1995. 2. From at least 1988 until 1992, Bartholomew sold direct investments to a number of investors for whom the investments were not suitable in light of their age, financial condition and conservative investment objectives. Many of Bartholomew's customers were retired or close to retirement and expressly informed him that they desired liquid, income-producing, low- risk investments. Bartholomew concentrated high percentages of many of these customers' investments in direct investments, which were not liquid and not suitable for investors with conservative investment objectives. Bartholomew also misrepresented to many of his customers the liquidity, risks, and benefits of purchasing direct investments. 3. In July 1992, Bartholomew purchased securities without authorization in the account of a 57 year old customer, who did not have sufficient funds to pay for these securities. When this customer contacted Bartholomew about the unauthorized transaction, Bartholomew convinced her to keep the securities by offering to obtain loans from some of his other customers to pay for the securities. In August 1992, Bartholomew persuaded five of his customers to loan this customer a total of $130,000. Bartholomew prepared and delivered to each of the five customers hand written promissory notes, each of which pledged the securities in this customer's account as collateral for the loan. Bartholomew failed to inform any of the five lending customers of the existence of the loans made by the other lending customers or that the securities pledged as collateral had also been pledged to the other lending customers. 4. From at least April 1994 until around October ---------FOOTNOTES---------- -[1]- The findings herein are made pursuant to Bartholomew's Offer and are not binding on any other person or entity named as a respondent in this or any other proceeding. ==========================================START OF PAGE 3====== 1994, Bartholomew sold investments to his customers in his "Memories of Elvis in Concert" act (the "Elvis Act"), an Elvis Presley impersonation act performed by Bartholomew. 5. As a result of conduct described in paragraphs 2, 3, and 4, Bartholomew willfully violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. 6. The Commission has reviewed Bartholomew's sworn financial statement and other evidence adduced by Bartholomew, and, provided that he has submitted a true, accurate and complete sworn affidavit concerning his financial condition, including his assets, liabilities, income and expenses, has determined that Bartholomew does not have the financial ability to pay an administrative penalty. The determination not to impose an administrative penalty is based upon Bartholomew's demonstrated inability to pay an administrative penalty, provided that the Division of Enforcement ("Division") may petition the Administrative Law Judge ("ALJ") to reopen this matter to consider Bartholomew's inability to pay an administrative penalty if the Division obtains information from any source that the financial information provided by Bartholomew was inaccurate or incomplete in any material aspect. In connection with such petition, the ALJ may consider ordering Bartholomew to pay an administrative penalty. Bartholomew, may not, by way of defense to such petition, contest the allegations and findings in this Order or assert that an administrative penalty shall not be ordered for the violations of the federal securities laws alleged therein. IV. In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified in the Offer submitted by Bartholomew. Accordingly, IT IS HEREBY ORDERED that: 1. Bartholomew be, and hereby is, barred from association with any broker, dealer, municipal securities dealer, investment adviser or investment company. ==========================================START OF PAGE 4====== 2. Pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, Bartholomew shall cease and desist from committing or causing any violation or future violation, of Sections 17(a) of the Securities Act and 10(b) of the Exchange Act and Rule 10b-5 thereunder. By the Commission. Jonathan G. Katz Secretary