SECURITIES AND EXCHANGE COMMISSION
Securities Act of 1933
Securities Exchange Act of 1934
Investment Advisers Act of 1940
Investment Company Act of 1940
Admin. Proceeding File No. 3-10231
In the Matter of William M. Stephens
The Securities and Exchange Commission today instituted public administrative proceedings against William M. Stephens, the Chief Investment Strategist of Husic Capital Management, a registered investment adviser located in San Francisco, California. The Order instituting proceedings alleges that, from March 2000 to the present, Stephens engaged in the following unlawful conduct:
Stephens entered into a kickback and bribery scheme concerning the investment of assets of certain labor union pension funds (the “Union Funds”). In order to attract the Union Funds as advisory clients, Stephens agreed to channel a portion of the Union Fund assets into rigged investment vehicles that would generate bribe payments to certain members of the boards of trustees of the Union Funds.
Stephens had initial discussions with an intermediary who was able to influence the Union Funds’ selection of investment advisers. Stephens agreed, before entering into any advisory relationship, to direct a portion of the Union Funds to investment vehicles (the “Fraudulent Investments”) that would be presented to him by the intermediary. Stephens understood that a portion of the client assets that he would place in the Fraudulent Investments would then be siphoned out and paid to certain Union Fund trustees as bribes or kickbacks.
The Fraudulent Investments were designed to appear legitimate, so as to withstand scrutiny by Union Fund officials who were not complicit in the bribery scheme. The Fraudulent Investments included:
The Order alleges that Stephens willfully violated Sections 206(1) and 206(2) of the Investment Advisers Act of 1940, Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
A hearing will be held before an Administrative Law Judge to determine whether the allegations against Stephens are true and, if so, what remedial action, if any, is appropriate.