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U.S. Securities and Exchange Commission

Before the

Securities Act of 1933
Release No. 8235 / May 15, 2003

Administrative Proceeding
File No. 3-11125

In the Matter of    




The Securities and Exchange Commission ("Commission") deems it appropriate that public administrative proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act of 1933 ("Securities Act") against Respondent Paul Tetu ("Tetu" or "Respondent").


In anticipation of the institution of these administrative proceedings, Tetu has submitted an Offer of Settlement ("Offer") to the Commission, 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, Tetu, without admitting or denying the findings herein, except as to the jurisdiction of the Commission over him and the subject matter of the proceeding, which are admitted, consents to the issuance of this Order Instituting Proceedings Pursuant to Section 8A of the Securities Act of 1933, Making Findings and Imposing A Cease-and-Desist Order ("Order").


On the basis of this Order and the Respondent's Offer of Settlement, the Commission hereby finds that:

A. Respondent

Paul Tetu, age 63, resides in Hollywood, California. Tetu is currently an aspiring screenplay writer, novelist, and movie producer.

B. Tetu's Misconduct

  1. During the course of the past five years, Tetu solicited potential investors through classified advertisements he placed in the Wall Street Journal, the most recent of which ran on March 20, 2003, offering "excellent returns" to anyone willing to invest a minimum of $10 million.
  2. To individuals who responded to his advertisements, Tetu promoted what he called "High Yield Transactions," which could generate annual returns of 70 to 100%, and claimed that investors would receive payments monthly or weekly. Tetu claimed that these exclusive offerings involved secret trading programs that only a few sophisticated financiers understood and promised that investors' principle investment would never be at risk. With respect to all of these representations, Tetu relied on the promises of various other promoters.
  3. In furtherance of his scheme and to reassure investors of the offering's credibility, Tetu represented that he and his associates were working with the State Department and the International Monetary Fund and that he had facilitated previous transactions in excess of $100 million.
  4. In reality, i) Tetu's purported secret trading programs did not exist, and Tetu did not have the ability to generate the returns he promised; ii) Tetu never understood the precise nature of these so-called secret trading programs, and never met any of the promoters who told him about the transactions; iii) Tetu never made any attempt to verify the existence of these secret programs, to explore the credibility of the promoters or to substantiate the likelihood of the promised returns; iv) Tetu never had any dealings with anyone at the State Department or the International Monetary Fund; and v) Tetu never consummated any of the types of transactions that he promoted, much less those in excess of $100 million. Despite his best efforts, Tetu failed to convince anyone to invest in his scheme.
  5. Sections 17(a)(1) and (3) of the Securities Act prohibit any person from employing any device, scheme, or artifice to defraud, or engaging in any transaction, practice or course of business which operates or would operate as a fraud or deceit upon a purchaser in the offer or sale of a security. Tetu's proposed transactions constituted the sale of a security under the test set out in SEC v. W.J. Howey Co., 328 U.S. 293, 298-99 (1946). Further, Tetu cannot escape liability under the securities laws by arguing that the security did not exist. See SEC v. Lauer, 864 F. Supp. 784, 792 (N.D. Ill. 1994), aff'd, 52 F.3d 667 (7th Cir. 1995).
  6. Tetu violated Section 17(a)(1) of the Securities Act by acting with scienter in misrepresenting or omitting material facts in connection with the offer of securities. Aaron v. SEC, 446 U.S. 680, 695-97 (1980). Scienter is not required for violations of Section 17(a)(3). Tetu knew or was reckless in not knowing that the so-called investments he offered did not exist and could not have yielded the high, riskless rates of return promised by him. Moreover, Tetu failed to verify whether any factual basis existed for his representations concerning the existence, viability or purported profitability of his investment offerings. Each of the misrepresentations described above was material.
  7. Based on the foregoing, the Commission finds Tetu violated Sections 17(a)(1) and (3) of the Securities Act.


In view of the foregoing, the Commission deems it appropriate to impose the sanction that is set forth in the Offer submitted by Tetu.

Accordingly, it is ORDERED that pursuant to Section 8A of the Securities Act that Tetu be, and hereby is, ordered to cease and desist from committing or causing any violation and any future violation of Sections 17(a)(1) and (3) of the Securities Act.

By the Commission.


Jonathan G. Katz




Modified: 05/15/2003