Investment Advisers Act of 1940 Release No. 1757 / September 25, 1998 Administrative Proceeding File No. 3-9725 ADMINISTRATIVE PROCEEDINGS INSTITUTED AGAINST SEABOARD INVESTMENT ADVISERS, INC. AND EUGENE W. HANSEN The Commission has instituted public administrative proceedings against Seaboard Investment Advisers, Inc. (Seaboard) and Eugene W. Hansen (Hansen) of Norfolk, Virginia pursuant to Sections 203(e) and 203(f) of the Investment Advisers Act (Advisers Act). The Commission's Order Instituting Public Proceedings (Order) alleges that on July 9, 1998 the United States District Court for the Eastern District of Virginia entered an order permanently enjoining Seaboard and Hansen from violating Sections 206(1), 206(2) and 206(4) of the Advisers Act and Rule 206(4)-1(a)(5) thereunder, and from violating the terms of a cease-and-desist order entered by the Commission against Seaboard and Hansen, among others, on August 3, 1994. In addition to being permanently enjoined, Hansen was ordered to pay a civil penalty in the amount of $50,000. Based upon the entry of this permanent injunction, as well as other factors, the Order alleges that remedial action against Seaboard and Hansen is warranted to protect investors. Previously, on October 22, 1993, the Commission issued an Order Instituting Public Administrative Proceedings (1993 Order) against Seaboard , Hansen and Stewart M. Powers alleging that from 1990 to October 22, 1993, Seaboard, which managed assets totalling over $1.1 billion at the time, willfully violated Section 206(4) of the Advisers Act and Rule 206(4)-1(a)(5) thereunder, by publishing, circulating or distributing advertisements which contain false or misleading performance figures covering the period from 1984 through at least the third quarter of 1991. In addition, the 1993 Order alleged that Seaboard falsely advertised that its performance results were audited, when in fact, they were not audited, and that Seaboard willfully violated Section 204 of the Advisers Act and Rules 204- 2(a)(16) and 2042(e)(3) thereunder by failing to make and keep true, accurate and current records. In the Matter of Seaboard Investment Advisers, Inc., Eugene W. Hansen, and Stewart M. Powers, Jr., Advisers Act Release No. 1388. On August 3, 1994, the Commission issued an Order Making Findings and Imposing Remedial Sanctions and Cease- and-Desist Order (1994 Order) containing findings that Seaboard had willfully violated the antifraud provisions of the Advisers Act as alleged in the 1993 Order and, more specifically, that Hansen had willfully aided and abetted Seaboard's violations of Sections 206(4) and 204 of the Advisers Act and Rules 206(4)-1(a)(5), 204-2(a)(16), and 204-2(e)(3) thereunder. In addition, the Commission's 1994 Order required Seaboard to pay a civil money penalty in the amount of $1 million dollars. The 1994 Order also ordered Seaboard, Hansen and Powers to cease-and-desist from committing or causing any violations and any future violations of the above-referenced provisions of the Advisers Act and to comply with various undertakings. In Matter of Seaboard Investment Advisers, Inc., Eugene W. Hansen, and Steward M. Powers, Jr., Advisers Act Release No. 1431. On September 30, 1996, the Commission filed a complaint in the U.S. District Court for the Eastern District of Virginia (1996 Complaint) against Seaboard and Hansen alleging that from January 1995 through July 1995, Seaboard, aided and abetted by Hansen, engaged in a scheme to defraud Seaboard's investment Advisory clients by sending them false and misleading advertisements in the form of client review letters that reviewed each client's investment portfolio. The complaint charged Seaboard with committing, and Hansen with aiding and abetting, violations of Sections 206(1), 206(2) and 206(4) of the Advisers Act and Rule 206(4)- 1(a)(5), thereunder, and that the defendants violated the terms of the administrative cease-and desist order issued as part of the 1994 Order. In its complaint, the Commission sought a permanent injunction and civil penalties against Seaboard and Hansen. S.E.C. Litigation Release No. 15092. The 1996 Complaint was resolved on July 9, 1998 when the U.S. District Court entered an order permanently enjoining Seaboard and Hansen from violating Sections 206(1), 206(2) and 206(4) of the Advisers Act and Rule 206(4)-1(a)(5) thereunder, and from violating the terms of the administrative cease-and-desist order issued as part of the 1994 Order and requiring Hansen to pay a civil penalty in the amount of $50,000. (1998 Injunction) (SEC v. Seaboard Investment Advisers, Inc. and Eugene W. Hansen, U.S. District Court, Eastern District of Virginia, Civil Action No. 2:96-CV-950). Pursuant to Sections 203(e) and 203(f) of the Advises Act, this Order is based on the entry of the 1998 Injunction. A public hearing will be scheduled to determine whether the Commission's allegations against Seaboard and Hansen are true, and if so, whether any remedial action is appropriate and in the public interest. For further information contact: Brian Carroll (215) 597-3933