SECURITIES AND EXCHANGE COMMISSION Washington, D.C. Securities Act of 1933 Release No. 7584 / September 23, 1998 Securities Exchange Act of 1934 Release No. 40466 / September 23, 1998 Investment Advisers Act of 1940 Release No. 1755 / September 23, 1998 Investment Company Act of 1940 Release No. 23463 / September 23, 1998 In the Matter of Sean P. Brennan and Keith E. Walsh Administrative Proceeding File No. 3-9716 ADMINISTRATIVE PROCEEDINGS INSTITUTED AGAINST FORMER PORTFOLIO MANAGER AND SALESMAN IN CONNECTION WITH CS FIRST BOSTON OFFSHORE CASH RESERVE FUND On September 23, 1998, the Commission instituted contested administrative and cease-and-desist proceedings against Sean P. Brennan and Keith E. Walsh. In the Order, the Division of Enforcement alleges that Brennan and Walsh in late 1993 and early 1994 engaged in fraudulent conduct with respect to an offshore fund known as The CS First Boston Offshore Cash Reserve Fund (the "Fund"). The Division alleges that, contrary to the Fund's offering circular and investment policies, Walsh invested most of the Fund's net assets in risky derivative securities. Net losses in the Fund were approximately $24 million. The Division also alleges that Walsh inflated the values of certain securities in the Fund's investment portfolio. With respect to Brennan, the Division alleges that he distributed false and misleading marketing materials and that he knowingly misrepresented, among other things, the size of the Fund, the number of investors in the Fund, and the content and composition of the Fund. The Division alleges that Brennan and Walsh violated or caused, and willfully violated, aided, abetted, counseled, commanded, induced or procured violations of the antifraud provisions -- Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act. The Division seeks civil money penalties and administrative sanctions against both respondents. A hearing will be held before an administrative law judge to determine if the allegations are true and if true, what if any remedial relief is appropriate and in the public interest. In a related settled administrative and cease-and-desist proceeding (In the Matter of CS First Boston Investment Management Corporation, Administrative Proceeding File No. 3- 9715) the Commission found that CS First Boston Investment Management Corporation ("CSFBIMC"), the Fund's investment adviser, willfully violated Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act in connection with the fraudulent conduct of Walsh and Brennan described above, and that CSFBIMC failed reasonably to supervise its employees with a view to preventing violations of the federal securities laws. Without admitting or denying the allegations CSFBIMC consented to cease and desist from committing or causing any violations of, and committing or causing any future violations of, Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act and to pay a civil money penalty of $500,000. CSFBIMC also consented to be censured. In another related settled administrative proceeding (In the Matter of Nicholas C. Bogard, Administrative Proceeding File No. 3-9717), the Commission found that Nicholas C. Bogard, Brennan's supervisor during the relevant time, failed reasonably to supervise him with a view to preventing his violations. The Commission found that Bogard, who had received information that Brennan had previously misrepresented facts to clients, failed to adequately increase his supervision of Brennan's activities to prevent distribution of false information to clients. Without admitting or denying the allegations, Bogard consented to pay a civil money penalty of $10,000 and to the imposition of a three- month suspension from association with a broker, dealer or investment adviser and a six-month supervisory suspension.