UNITED STATES OF AMERICA
|In the Matter of
William Lee Jeffers
|ORDER INSTITUTING PUBLIC
ADMINISTRATIVE AND CEASE-
PURSUANT TO SECTION 8A OF
THE SECURITIES ACT OF 1933
AND SECTIONS 15(b), 19(h), AND
21C OF THE SECURITIES
EXCHANGE ACT OF 1934,
MAKING FINDINGS, AND
SANCTIONS AND A CEASE-
The Securities and Exchange Commission ("Commission") deems it appropriate, in the public interest and for the protection of investors that public administrative and cease-and-desist proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act of 1933 ("Securities Act") and Sections 15(b), 19(h) and 21C of the Securities Exchange Act of 1934 ("Exchange Act") to determine whether William Lee Jeffers ("Jeffers" or "Respondent") violated the federal securities laws and, if so, what remedial actions or sanctions are appropriate under the circumstances of this case. Accordingly, it is hereby ORDERED that these proceedings be, and hereby are, instituted.
In anticipation of the institution of these administrative proceedings, Jeffers has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings herein, except that Jeffers admits the Commission's jurisdiction over him and over the subject matter of these proceedings, Jeffers has consented to the entry of the findings and the imposition of the remedial sanctions and cease-and-desist order as set forth below.
On the basis of this Order and the Offer submitted by Jeffers, the Commission finds1 that:
A. William Lee Jeffers ("Jeffers") was associated with broker-dealers registered with the Commission and members of the National Association of Securities Dealers, Inc. In June 1997, Jeffers associated with a broker-dealer firm as a registered representative in that firm's Colorado Springs, Colorado branch office. In August 2000, Jeffers pled guilty to one count of securities fraud under Colorado state law. People v. William Lee Jeffers, 00CR976-5 (Colo.).
B. In 1998, Jeffers engaged in unsuitable trading in the accounts of at least three elderly clients and churned two of those accounts. In one account, Jeffers exercised de facto control and in another he had written discretionary authority.
C. Client AG was 82 years old, with a declared net worth of $50,000 and an annual income of $25,000. Between August and October 1998, under Jeffers' management, the account had a turnover rate of 4.1. Between October and December 1998, that rate increased to 8.99. In 1998, without withdrawals, the account balance in Client AG's account declined from $33,546 to $27,646. Jeffers repeatedly sold, and then repurchased, the same security for the client. During that period Jeffers placed Client AG in unsuitable securities given her age and financial resources and investment objectives. Jeffers also placed Client AG in options and had her trade on margin, again unsuitable trading for an individual of her age and means.
D. Client MH was 85 years old and had given Jeffers a written authorization to trade her account. She had little knowledge of securities and told Jeffers that she was adverse to risk. In 1998, Jeffers excessively traded her account with the result that her account balance, without withdrawals, declined from $72,200 to $42,562. During the same period, Jeffers' commissions were $15,288. Between September and December 1998, the account had a turnover rate of 14.7. As with Client AG, Jeffers had Client MH trade on margin and invest in high-risk funds, unsuitable activity for an individual of her age, means, and investment objectives.
E. Client DB invested his IRA with Jeffers. Client DB was 71, retired and had an annual income of $25,000. While Client DB had expressed to Jeffers that his investment objectives were conservative and oriented towards a preservation of capital, Jeffers placed him in unsuitable high yield securities inconsistent with a conservative investment philosophy. In January 1998, Client DB's account had a value of $29,482. By year's end and with only minimal withdrawals, that balance was reduced to approximately $14,500.
F. Through Jeffers' unsuitable trading in three client accounts and churning in two of those accounts, Jeffers willfully violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder in that, directly or indirectly, in connection with the offer, purchase or sale of securities by use of the means or instrumentalities of interstate commerce or by use of the mails, he employed devices, schemes or artifices to defraud; made untrue statements of material facts or omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or engaged in acts, transactions, practices, or courses of business which would or did operate as a fraud or deceit.
In view of the foregoing, the Commission deems it appropriate, in the public interest and for the protection of investors to accept the Offer submitted by Jeffers and to impose the sanctions specified therein.
Accordingly, IT IS ORDERED that:
A. Jeffers be, and hereby is, barred from association with any broker or dealer; and
B. Pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, Jeffers cease and desist from committing or causing any violation and any future violation of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
By the Commission.
Jonathan G. Katz
|1||The findings herein are made pursuant to Jeffers' Offer of Settlement and are not binding on any other person or entity.|
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