SECURITIES ACT OF 1933
Release No. 7813 / March 17, 2000
SECURITIES EXCHANGE ACT OF 1934
Release No. 42540 / March 17, 2000
File No. 3-10159
|In the Matter of
DAVID C. ERICKSON,
|ORDER INSTITUTING PUBLIC
FINDINGS AND IMPOSING
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that a public administrative and cease-and-desist proceeding pursuant to Section 8A of the Securities Act of 1933 ("Securities Act") and Sections 21C, 15(b) and 19(h) of the Securities Exchange Act of 1934 ("Exchange Act") be instituted against respondent David C. Erickson ("Erickson").
In anticipation of the institution of this administrative and cease-and-desist proceeding, Erickson 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, and without admitting or denying the findings contained herein, except that Erickson admits the jurisdiction of the Commission over him and over the subject matter of this proceeding, Erickson consents to the entry of this Order Instituting Public Administrative and Cease-and-Desist Proceeding, Making Findings and Imposing Sanctions ("Order").
Accordingly, IT IS ORDERED that a proceeding pursuant to Section 8A of the Securities Act and Sections 15(b), 19(h) and 21C of the Exchange Act be, and hereby is, instituted.
On the basis of this Order and Erickson's Offer, the Commission finds that:1
Erickson, age 34, resides in Long Beach, California. From December 1995 to at least March 1998, Erickson was the president, chief operating officer and a director of Face to Face Financial Inc., dba FTF Financial Corp. ("FTF"). During the relevant period, from July 1997 to December 1998, Erickson was seeking to become a registered representative with a registered broker-dealer.
1. From December 1995 to March 1998, FTF conducted four unregistered preferred stock offerings, raising over $4.3 million from approximately 400 investors nationwide. FTF's salespeople solicited potential investors nationwide by, among other things, cold-calling people whose names appeared on lead lists. Erickson, an officer and director of FTF, reviewed FTF's offering documents, authorized the purchase of lead lists for use in FTF's offerings, supervised FTF's sales manager, provided information to FTF's salespeople that was used in their oral sales pitches to potential investors and signed checks payable to FTF's salespeople.
2. In connection with FTF's offerings, three sales scripts falsely represented that FTF was positioning its video conferencing computers at certain business locations, including well-known corporations and banks. Erickson knew, or was reckless in not knowing, that these representations were false. Nevertheless, Erickson gave these sales scripts to FTF's salespeople to use when making oral sales pitches to potential investors. In addition, Erickson filed for Chapter 7 bankruptcy protection in 1993 but failed to ensure that his bankruptcy was disclosed in FTF's offering documents.
C. Legal Analysis
1. Sections 5(a) and 5(c) of the Securities Act prohibit the offer or sale of securities unless the securities are registered with the Commission or are exempt from registration. Erickson, by reviewing FTF's offering documents, authorizing the purchase of lead lists for use in FTF's offerings, supervising FTF's sales manager, providing information to FTF's salespeople that was used in their oral sales pitches to potential investors and signing checks payable to FTF's salespeople, directly or indirectly, through the use of the means or instruments of transportation or communication in interstate commerce or the mails, offered to sell or sold securities, or, directly or indirectly, carried or caused such securities to be carried through the mails or in interstate commerce, for the purpose of sale or for delivery after sale. No registration statement has been filed with the Commission or has been in effect with respect to these securities, and the securities are not exempt from registration. By reason of the foregoing, Erickson willfully violated Sections 5(a) and 5(c) of the Securities Act.
2. Section 17(a) of the Securities Act prohibits fraud "in the offer or sale of any securities," and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder prohibit fraud "in connection with the purchase or sale of any security." Erickson, by giving sales scripts to FTF's salespeople that he knew, or was reckless in not knowing, contained false representations and by failing to ensure that FTF's offering documents disclosed his 1993 personal bankruptcy, employed a device, scheme or artifice to defraud, made untrue statements of material fact, or omitted to state material facts necessary to make the statements made, in light of the circumstances under which they were made, not misleading. By reason of the foregoing, Erickson willfully violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
Based on the foregoing, the Commission deems it appropriate and in the public interest to accept the Offer submitted by Erickson and impose the sanctions specified in the Offer.
Accordingly, IT IS HEREBY ORDERED that:
A. pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, Erickson cease and desist from committing or causing any violation and any future violation of Sections 5(a), 5(c) and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; and
B. Erickson be, and hereby is, barred from association with any broker or dealer, with the right to reapply for association after three years to the appropriate self-regulatory organization, or if there is none, to the Commission.
By the Commission.
Jonathan G. Katz
|The findings herein are made pursuant to Erickson's Offer and are not binding on any other person or entity in this or any other proceeding.