SECURITIES AND EXCHANGE COMMISSION Washington, D.C. SECURITIES EXCHANGE ACT OF 1934 Rel. No. 37795 \ October 8, 1996 Admin. Proc. File No. 3-8841 ____________________________________ : In the Matter of : : ROBERT I. MOSES : 199 Puritan Avenue : Forest Hills, New York : ____________________________________: OPINION OF THE COMMISSION BROKER-DEALER PROCEEDINGS Sanction Imposed by Administrative Law Judge Where administrative law judge barred respondent from engaging in the telecommunications industry, held, sanction set aside as exceeding the scope of Commission's authority. APPEARANCES: Carmen J. Lawrence, Edwin H. Nordlinger, Henry Klehm, III, James J. Tyne, Robert Knuts, and Richard F. Led‚e, Jr., for the Division of Enforcement. Order for review issued: July 5, 1996 Briefing completed: August 1, 1996 I. On our own motion, we ordered a limited review of the decision of an administrative law judge with respect to Robert I. Moses, who was associated with various broker-dealers. 1/ The law judge found that, on February 23, 1995, Moses was permanently enjoined, with his consent, from violating the registration provisions of Section 5 of the Securities Act and the antifraud provisions of Section 17(a) of that Act and Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder. 2/ The law judge concluded that Moses should be barred from association with 1/ Neither Moses nor the Division of Enforcement sought review of the law judge's decision. 2/ SEC v. Microwave Cable T.V. Partners I, L.P., et al., 94 Civ. 5666 (MGC) (S.D.N.Y.). Moses was ordered to disgorge $251,398 (jointly with another respondent), and to pay a penalty of $206,703. ==========================================START OF PAGE 2====== any broker or dealer. She also concluded that Moses should be barred from participating in any capacity in the purchase or sale of (a) telecommunications licenses or franchises regulated by the Federal Communications Commission ("FCC") or a local franchising authority or (b) businesses conducted or property managed pursuant to such regulation or franchises. We ordered review of the law judge's decision solely with respect to the latter sanction. II. The law judge noted that the allegations in an injunctive complaint settled by consent may be given considerable weight in assessing the public interest in a subsequent proceeding. 3/ Those allegations and the law judge's findings may be summarized as follows. Moses' misconduct stemmed from his sales of limited partnership interests in Microwave Cable T.V. Partners I, L.P. ("Microwave I") and Microwave Cable T.V. Partners II, L.P. ("Microwave II"). Moses was president and controlling stockholder of the general partners of both those entities. A. Microwave I Moses formed Microwave I, drafted its Private Placement Memorandum ("PPM"), and distributed the PPM to prospective investors. During the period July to December 1990, he raised nearly $1 million from the sale of Microwave I limited partnership interests. The PPM stated that Microwave I would engage in the business of acquiring wireless microwave cable T.V. licenses from the federal government for resale at a profit. However, Microwave I never acquired any such licenses. Instead, Moses used $500,000 of investor funds to purchase a 13% interest in a cable television company, and loaned an additional $400,000 to companies affiliated with one of his business associates. The PPM also contained misrepresentations with respect to Moses' educational achievements and work experience, and did not disclose that he had been imprisoned in the 1960s for receiving stolen property. In 1993, on Moses' recommendation, the original Microwave I limited partners exchanged their partnership interests for common stock of American Broadcasting System, Inc. ("ABS"), which owned several radio stations. To induce this exchange, Moses promised that there would be a public offering of ABS stock, and that Microwave I limited partners would be able to trade their new ABS shares on NASDAQ. However, ABS never completed a public offering, and filed for bankruptcy protection in May 1995. 3/ See Charles Phillip Elliott, 50 S.E.C. 1273, 1277 (1992), aff'd, 36 F.3d 86 (11th Cir. 1994). ==========================================START OF PAGE 3====== B. Microwave II Moses drafted the Microwave II PPM and an Amendment to that document, and caused them to be distributed to prospective investors. From May 1992 to March 1993, he raised close to $1 million from the sale of Microwave II limited partnership interests. The Microwave II PPM contained the same misrepresentations and omissions concerning Moses' background as the Microwave I PPM. Moreover, it falsely stated that, through Microwave I, Moses had successfully acquired the entire microwave cable television system in Atlanta. The Microwave II PPM further stated that Microwave II would engage in the business of acquiring wireless microwave cable T.V. licenses from the federal government for resale. However, Microwave II never intended to acquire any such licenses. The PPM Amendment stated that, instead, the proceeds of the offering would be used to implement a merger with ABS; that an ABS initial public offering was tentatively set for the end of October 1992; and that ABS intended to have the stock it transferred to Microwave II registered in a public offering. In fact, no public offering of ABS stock was ever completed, and ABS never intended to register the shares it issued to Microwave II. The law judge noted that Moses has never paid the disgorgement and penalty ordered in the injunction entered against him, 4/ having stripped himself of assets by ostensibly transferring his ownership interests in several businesses to an associate. She further noted that Moses currently serves as president of CM Capital Management Associates, Inc., one of the companies whose ownership he transferred, and that CM Capital is actively soliciting investors for The Windgate Fund, LLC, which seeks to raise money from the investing public to (a) develop licenses granted by the FCC to provide interactive video and data services, and (b) invest in interactive television and virtual reality companies. Based on Moses' admissions and other evidence, the law judge found that, following the injunction, Moses continued to engage in misconduct in his roles as president of CM Capital and "senior consultant" to Windgate. III. On the basis of Moses' misconduct involving the telecommunications industry, the law judge barred him from further activity in that area. We ordered review of the law judge's decision to consider the propriety of that sanction. If this Commission finds that a person associated with a broker-dealer has been enjoined from any conduct in connection with the sale of a security, Section 15(b)(6) of the Exchange Act 4/ See n.2, supra. ==========================================START OF PAGE 4====== authorizes us to "censure, place limitations on the activities or functions of such person, or suspend for a period not exceeding 12 months, or bar such person from being associated with a broker or dealer...." The Division of Enforcement asserts that the telecommunications bar imposed on Moses by the law judge "could arguably be deemed" a limitation within the meaning of Section 15(b)(6). We cannot agree. The "place limitations" language, which was added to the Act in 1975, was designed to give us greater flexibility in dealing with misconduct by devising appropriate remedies to deter and prevent its recurrence in the securities industry. Congress has granted us broad authority to regulate the various aspects of that industry. However, there is nothing in the legislative history to suggest that Congress intended to expand our authority beyond the parameters of the securities business into wholly unrelated fields of endeavor, and we see no basis for doing so here. We shall accordingly set aside the law judge's restriction on Moses' telecommunications activities. An appropriate order will issue. 5/ By the Commission (Chairman LEVITT and Commissioners WALLMAN, JOHNSON, and HUNT). Jonathan G. Katz Secretary 5/ Since the parties did not petition for review of the law judge's initial decision, and we ordered review solely with respect to Moses' bar from telecommunications activities, our order shall give the requisite notice that the law judge's decision, as modified herein, has become the final decision of this Commission. UNITED STATES OF AMERICA before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Rel. No. Admin. Proc. File No. 3-8841 ____________________________________ : In the Matter of : : ROBERT I. MOSES : 199 Puritan Avenue : Forest Hills, New York : ____________________________________: ORDER SETTING ASIDE SANCTION AND NOTICE OF FINALITY On the basis of the Commission's opinion issued this day, it is ORDERED that the sanction imposed by the administrative law judge on Robert I. Moses barring him from participating in any capacity in the purchase or sale of (a) telecommunications licenses or franchises regulated by the Federal Communications Commission or a local franchising authority or (b) businesses conducted or property managed pursuant to such regulation or franchises be, and it hereby is, set aside. Notice is hereby given, pursuant to Rule 360(e) of the Commission's Rules of Practice, that, as modified above, the initial decision of the administrative law judge has become the final decision of the Commission. The order contained in that decision barring Robert I. Moses from association with any broker or dealer is hereby declared effective. By the Commission. Jonathan G. Katz Secretary