==========================================START OF PAGE 1====== UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 38061 / December 19, 1996 ADMINISTRATIVE PROCEEDING File No. 3-9207 -------------------------------- : ORDER INSTITUTING PROCEEDINGS In the Matter of : PURSUANT TO SECTIONS : 15(b) AND 19(h) OF THE : SECURITIES EXCHANGE ACT OF DALE E. BARLAGE, : 1934, MAKING FINDINGS AND : IMPOSING REMEDIAL SANCTIONS Respondent. : : : -------------------------------- I. The Commission deems it appropriate and in the public interest that public administrative proceedings be instituted pursuant to Sections 15(b) and 19(h) of the Securities Exchange Act of 1934 ("Exchange Act") against Dale E. Barlage ("Barlage"). In anticipation of the institution of these administrative proceedings, Barlage has submitted an Offer of Settlement 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 III A and III B below, which Barlage admits, he consents to the entry of this Order Instituting Proceedings, Making Findings and Imposing Remedial Sanctions. II. Accordingly, it is ordered that proceedings pursuant to Sections 15(b) and 19(h) of the Exchange Act be, and hereby are, instituted. ==========================================START OF PAGE 2====== III. On the basis of this Order and the Respondent's Offer of Settlement, the Commission makes the following findings: -[1]- A. From November 1971 to in or about August 1989 and from in or about January 1990 to in or about May 1993, Barlage was a registered representative of several broker-dealers registered with the Commission pursuant to Section 15(b) of the Exchange Act. B. On May 2, 1996, the Commission filed a lawsuit against Barlage and others captioned Securities and Exchange Commission v. Steven McMichael, et al., Case No. 3-96-405, in the United States District Court for the District of Minnesota. On December 12, 1996, the court entered a permanent injunction against Barlage, with his consent and without admitting or denying the allegations contained in the complaint, except as to jurisdiction, enjoining him from violating Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The Commission's complaint was based upon the conduct described below. C. The Commission's complaint alleged that from in and around 1989 until June 1991, several individuals engaged in an elaborate fraudulent scheme involving the common stock of Angeion Corporation ("Angeion"). The purpose of the scheme was to create the appearance of active trading in the stock of Angeion and thus create the impression on the investing public of a demand for the stock. This was done by engaging in manipulative devices including matched orders, wash trades and stock parking. -[2]- Further, as the scheme began to unravel in May 1991, ---------FOOTNOTES---------- -[1]- The findings herein are made pursuant to Respondent Barlage's Offer of Settlement and are not binding on any other person or entity named as a respondent in this or any other proceeding. -[2]- A matched order is the entering of a sell (or buy) order knowing that a corresponding buy (or sell) order of substantially the same size, at substantially the same time and at substantially the same price either has been or will be entered. A wash trade is a securities transaction which involves no change in the beneficial ownership of the security. Parking is the sale of securities subject to an agreement or understanding that the securities will be repurchased by the seller at a later time and at a price which leaves the economic risk on the seller. ==========================================START OF PAGE 3====== certain individuals engaged in free-riding. -[3]- The manipulative activities stopped when the manipulators could no longer pay for their purchases of Angeion stock or satisfy their margin calls. After the manipulative activities ceased, the stock price of Angeion fell from a high of $10 3/8 in March 1991, to a low of $2 3/4 on July 3, 1991. D. Specifically, the Commission's complaint alleged that Barlage arranged, through his customers' accounts, for matched orders involving 220,000 shares of Angeion stock valued at approximately $1 million. Further, Barlage arranged at least one wash sale for a customer involving 35,000 shares of Angeion. Moreover, in order to relieve a broker-dealer's large inventory position in Angeion, Barlage arranged for 275,000 shares of the broker-dealer's excess Angeion shares to be parked in customer accounts. IV. In view of the foregoing, it is in the public interest to impose the sanction specified in the Offer of Settlement. Accordingly, IT IS HEREBY ORDERED, effective immediately: That Barlage be barred from associating with any broker, dealer, investment company, investment adviser, or municipal securities dealer. By the Commission. ---------FOOTNOTES---------- -[3]- Free riding is the practice whereby a stock is purchased without sufficient funds available to pay for it, the stock is sold prior to settlement date, and the proceeds of the sale are used to pay for the original purchase.