UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 38258 / February 7, 1997 ADMINISTRATIVE PROCEEDING File No. 3-9242 ------------------------------- : In the Matter of : ORDER INSTITUTING PROCEEDINGS, Lyle Moss : 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 Sections 15(b) and 19(h) of the Securities Exchange Act of 1934 ("Exchange Act") against Lyle Moss ("Moss"). In anticipation of the institution of these administrative proceedings, Moss 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, Moss, by his Offer, without admitting or denying the Commission's findings as to him, except for those findings contained in Sections III.A., which are admitted by Moss, consents to the entry of this Order Instituting Proceedings, Making Findings and Imposing Sanctions ("Order"). 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 Offers submitted the Commission finds -[1]- that: A. Moss is 41 years old and is employed by PaineWebber Incorporated ("PaineWebber") as a registered representative ("RR") in its Seattle, Washington office. Moss was the branch office manager of PaineWebber's Seattle, Washington office from 1984 until 1995. In November 1989, Moss was assigned supervisory responsibility over PaineWebber's Spokane, Washington office. B. During the period from July 19, 1991 until May 5, 1992, an RR in PaineWebber's Spokane office recommended and sold speculative biotechnology and technology stocks to several customers for whom the investments were not suitable in light of their stated age, financial condition, sophistication and investment objectives. The recommendations and sales were unsuitable in some cases because they were inconsistent with the customers' stated desire for low risk, conservative investments, and in other instances, the recommendations and sales were unsuitable because they resulted in concentrations of speculative securities in the customers' accounts that were excessive in light of the customers' age, financial condition, sophistication, and investment objectives. In addition the RR made unauthorized and unsuitable margin trades in the account of one such customer who was retired and in poor physical condition. C. As a result of the foregoing conduct, the RR willfully violated Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. D. The RR was subject to Moss's supervision from at least November 1989 until the RR's termination from PaineWebber in May 1992. E. From July 19, 1991, until May 5, 1992, Moss failed reasonably to supervise the RR within the meaning of Section 15(b)(4)(E) of the Exchange Act, with a view to preventing the RR's violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act ---------FOOTNOTES---------- -[1]- The findings herein are made pursuant to Moss'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====== and Rule 10b-5 thereunder. The high concentration and unsuitable nature of the investments the RR recommended and sold to the foregoing customers were apparent from a review of their account records. Nonetheless, Moss failed to conduct a reasonable inquiry into the suitability of the RR's trading of speculative investments and therefore failed to detect the RR's unsuitable trading in several customers' accounts. IV. In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanction specified in the Offer submitted by Moss. Accordingly, IT IS HEREBY ORDERED that: A. Moss be, and hereby is, suspended from association with any broker, dealer, investment company, investment adviser or municipal securities dealer, for a period of 30 days, effective on the second Monday following entry of this Order. Moss agrees to deliver an affidavit of compliance to Adriane W. Burkland at the Securities and Exchange Commission, Midwest Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois, 60661- 2511, within ten (10) days following the suspension period stating that he has complied fully with the terms of the suspension; and B. Immediately following the period of his suspension from association Moss be, and hereby is, barred from acting in a supervisory capacity with any broker, dealer, investment company, investment adviser or municipal securities dealer, provided that after one year Moss may make application to reapply to the appropriate self-regulatory organization, or where there is none, to the Commission; and C. Moss shall, within 15 days of the entry of this Order, pay a civil money penalty in the amount of $10,000, pursuant to Section 21B of the Exchange Act, 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 United States Securities and Exchange Commission; (C) delivered to the Office of the Secretary, Securities and Exchange Commission, 450 Fifth Street, N.W., Rm. 6183, Washington, D.C. 20549, and (D) submitted under cover letter that identifies the Respondent in these proceedings, the file number of these proceedings, a copy of which cover letter, money order, or check shall be ==========================================START OF PAGE 4====== sent to Adriane W. Burkland, Securities and Exchange Commission, Midwest Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60610-2511. By the Commission. Jonathan G. Katz Secretary