U.S. Securities & Exchange Commission
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U.S. Securities and Exchange Commission

United States of America
before the
Securities and Exchange Commission

Securities Act of 1933
Release No. 8143 / November 4, 2002

Securities Exchange Act of 1934
Release No. 46766 / November 4, 2002

Investment Advisers Act of 1940
Release No. 2076 / November 4, 2002

Administrative Proceeding
File No. 3-10231


In the Matter of

WILLIAM M. STEPHENS,

Respondent.


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ORDER MAKING FINDINGS, IMPOSING A CEASE-AND-DESIST ORDER, AND IMPOSING REMEDIAL SANCTIONS

I.

On June 14, 2000, the Securities and Exchange Commission ("Commission") entered an Order Instituting Public Administrative and Cease-and-Desist Proceedings against William M. Stephens ("Stephens") pursuant to Section 8A of the Securities Act of 1933 ("Securities Act"), Section 21C of the Securities Exchange Act of 1934 ("Exchange Act"), Sections 203(f) and 203(k) of the Investment Advisers Act of 1940 ("Advisers Act"), and Section 9(b) of the Investment Company Act of 1940 ("Company Act") ("Initial Order").1

II.

Stephens has submitted an Offer of Settlement (the "Offer") to these administrative proceedings, 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 as to the Commission's jurisdiction over him and the subject matter of these proceedings, Stephens consents to the entry of this Order Making Findings, Imposing A Cease-And-Desist Order, and Imposing Remedial Sanctions, as set forth below.

III.

On the basis of this Order and the Offer, the Commission finds that:

  1. Stephens, age 50, was Executive Vice President and Chief Investment Strategist of an investment adviser registered with the Commission pursuant to Section 203(c) of the Adviser's Act from mid-1998 until June 2000.
     
  2. During March 2000, Stephens met with certain persons who offered to introduce Stephens to the trustees of certain union pension funds (the "Union Funds") so that Stephens and his firm could become financial advisers to the Union Funds. Stephens agreed that, after he and his firm became financial advisers to the Union Funds, he would arrange to divert a portion of the Union Funds into investments controlled by the persons who introduced him to the Union Funds and those persons would pay kickbacks to the pension fund trustees who hired Stephens and his firm.
     
  3. Neither Stephens nor his firm became advisers to the Union Funds. As a result, no payments were ever made to any trustees of the Union Funds.
     
  4. Stephens willfully violated Sections 206(1) and 206(2) of the Advisers Act, which prohibit investment advisers from employing any device, scheme, or artifice to defraud clients or prospective clients, or engaging in any transaction, practice, or course of business which operates as a fraud or deceit upon clients or prospective clients. Stephens also willfully violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.

IV.

Based on the foregoing, the Commission deems it appropriate in the public interest to impose the sanctions specified in the Offer, and

ACCORDINGLY, IT IS ORDERED that:

  1. Pursuant to Section 8A of the Securities Act, Section 21C of the Exchange Act and Section 203(k) of the Advisers Act, Stephens cease and desist from committing or causing any violation and any future violations of Sections 206(1) and 206(2) of the Advisers Act, Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder; and
     
  2. Pursuant to Section 203(f) of the Advisers Act, Stephens is barred from association with any investment adviser, with the right to reapply for association after two years to the appropriate self-regulatory organization, or if there is none, to the Commission.

IT IS FURTHER ORDERED that Stephens shall, within 10 days of the entry of this Order, pay a civil money penalty in the amount of $25,000 to the United States Treasury. Such payment shall be: (A) made by United States postal money order, certified check, bank cashier's check or bank money order; (B) made payable to the Securities and Exchange Commission; (C) hand-delivered or mailed to the Office of Financial Management, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Stop 0-3, Alexandria, VA 22312; and (D) submitted under cover letter that identifies Stephens as a Respondent in these proceedings, the file number of these proceedings, a copy of which cover letter and money order or check shall be sent to Robert Knuts, Senior Trial Counsel, Securities and Exchange Commission, 233 Broadway, New York, NY 10279.

By the Commission.

Jonathan G. Katz
Secretary

Service List

Rule 141 of the Commission's Rules of Practice provides that the Secretary, or another duly authorized officer of the Commission, shall serve a copy of the Order, Making Findings, Imposing A Cease-And-Desist Order, And Imposing Remedial Sanctions ("Order") on each person named as a party in the Order and their legal agents.

The attached Order has been sent to the following parties and other persons entitled to notice:

Honorable Brenda P. Murray
Chief Administrative Law Judge
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549-1106

Lidian Pereira, Esq.
Division of Enforcement
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549

Robert Knuts, Esq.
Northeast Regional Office
Securities and Exchange Commission
233 Broadway
New York, NY 10279

Mr. William M. Stephens
c/o Charles D. Abercrombie, Esq.
Seiff Kretz & Maffeo
645 Madison Avenue
New York, NY 10022-1010

Charles D. Abercrombie, Esq.
Seiff Kretz & Maffeo
645 Madison Avenue
New York, NY 10022-1010

Endnote

1 The Initial Order inadvertently included Section 9(b) of the Investment Company Act as a jurisdictional basis.

 

http://www.sec.gov/litigation/admin/33-8143.htm


Modified: 11/05/2002