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
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:
In the Matter of : ORDER INSTITUTING PROCEEDINGS,
Kevin Bartholomew, : MAKING FINDINGS AND IMPOSING
: SANCTIONS
:
:
Respondent. :
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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.
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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.
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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.
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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