Before the SECURITIES AND EXCHANGE COMMISSION INVESTMENT ADVISERS ACT OF 1940 Release No. 1566 / June 11, 1996 INVESTMENT COMPANY ACT OF 1940 Release No. 22008 / June 11, 1996 Administrative Proceedings File No. 3-8954 ------------------------------------ : In the Matter of : ORDER MAKING : FINDINGS AND IMPOSING DOROTHY J. BRENNA : REMEDIAL SANCTIONS : ------------------------------------ I. In connection with public administrative proceedings, Respondent Dorothy J. Brenna ("Brenna") has submitted an Offer of Settlement to the Commission, which the Commission has determined to accept.-[1]- Solely for the purpose of this proceeding 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 allegations contained in this Order, except as to the entry of the permanent injunction set forth in paragraph II.C., which she admits, and the Commission's jurisdiction in this matter pursuant to Section 203(f) of the Investment Advisers Act of 1940 ("Advisers Act"), which she also admits, Brenna consents to the entry of findings and remedial sanctions set forth below. II. On the basis of this Order and the Offer of Settlement submitted by Brenna, the Commission finds that: A. Strategic Management Inc. ("SMI") was registered with the Commission as an investment adviser from September 22, 1975 to February 10, 1995. SMI was principally engaged in the business of rendering investment advice to four registered investment companies which were mutual funds (collectively, "the Funds"). ---------FOOTNOTES---------- -[1]- The Order Instituting Public Proceedings against Brenna was issued by the Commission on February 22, 1996. ==========================================START OF PAGE 2====== B. Brenna was vice president of SMI and a member of its board of directors during the relevant period. C. Brenna has been permanently enjoined by judgment of the United States District Court for the Northern District of Texas, in an action styled Securities and Exchange Commission v. Strategic Management, Inc., et al, USDC, N.D./Tex. [Dallas Division], CA No. 3:91CV2489-R, from future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and (2) of the Advisers Act of 1940 based upon findings of willful violations of the federal securities laws in connection with her participation in the distribution of a fraudulent proxy statement on behalf of the Funds. D. The Commission's complaint alleged that Brenna, and others, caused a fraudulent proxy statement to be issued on behalf of the Funds which failed to disclose to shareholders that Brenna and her husband, Leroy S. Brenna, stood to receive a secret $2 million payment in connection with SMI's assignment of the advisory contracts for the Funds to another registered investment adviser, and failed to disclose to the disinterested directors of the Funds that the Brennas stood to receive the $2 million payment. III. Based upon the foregoing, the Commission deems it appropriate and in the public interest to accept the Offer of Settlement of Brenna. Accordingly, IT IS ORDERED that Respondent Dorothy J. Brenna be, and hereby is, barred from association with any broker, dealer, municipal securities dealer, investment adviser or investment company. By the Commission. Jonathan G. Katz Secretary