UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 RELEASE NO. 40986 / January 28, 1999 ADMINISTRATIVE PROCEEDING FILE NO. 3-9821 _____________________________ : ORDER INSTITUTING PROCEEDINGS, In the Matter of : MAKING FINDINGS AND IMPOSING : REMEDIAL SANCTIONS PURSUANT TO JAMES C. MORRIS, : SECTIONS 15(b) and 19(h) OF : THE SECURITIES EXCHANGE ACT : OF 1934 Respondent. : : _____________________________ : I. The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be instituted against James C. Morris ("Morris") pursuant to Sections 15(b) and 19(h) of the Securities Exchange Act of 1934 ("Exchange Act"). II. In anticipation of the institution of these proceedings, Morris 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 to which the Commission is a party, and without admitting or denying the Commission's findings contained herein, except the Commission's findings set forth in Paragraph III. A. and C., which are admitted, Morris consents to the entry of this Order Instituting Proceedings, Making Findings and Imposing Remedial Sanctions pursuant to Sections 15(b) and 19(h) of the Securities Exchange Act of 1934 ("Order"). Accordingly, IT IS HEREBY ORDERED that proceedings pursuant to Sections 15(b) and 19(h) of the Exchange Act be and hereby are instituted. III. On the basis of this Order and Morris' Offer, the Commission finds that:[1] A. From at least December 1990 to in or about November 1992, Morris was not registered as a broker or a dealer with the Commission pursuant to the Exchange Act. During all relevant times, Morris used Excellence in Planning Associates, LTD. ("EIP") to effect transactions in, or induce or attempt to induce the purchase or sale of, certain securities, at a time when neither Morris nor EIP was registered with the Commission as a broker or dealer pursuant to the Exchange Act. B. From at least September 1990 to in or about December 1992, no registration statement had been filed with the Commission or was in effect under the Securities Act of 1933 ("Securities Act") with respect to the securities of Canadian Trade Bank, Ltd. ("CTB") C. On January 19, 1999, in the case of SEC v. Michael J. Randy, (Civil Action File No. 94 C 5902), the United States District Court for the Northern District of Illinois, entered an Order of Permanent Injunction and Other Equitable Relief against Morris, pursuant to his consent, enjoining Morris from violating Sections 5(a), 5(c) and 17(a) of the Securities Act, Sections 10(b) and 15(a)(1) of the Exchange Act and Rule 10b-5 promulgated thereunder. The Court entered the Order without hearing and made the following Findings of Fact and Conclusions of Law. From at least September 1990 to December 1992, Michael J. Randy ("Randy") offered and sold over $16 million of certificates of deposit ("CDs") issued by CTB to over 500 investors in many states. Randy represented that CTB was a bank licensed in Monserratt and later Grenada. Randy offered CTB CDs to investors through a nationwide sales network, including Morris. In fact, CTB was not a bank licensed in Montserrat or Grenada. Instead, Randy operated CTB from his residence and offices in Illinois as a classic Ponzi scheme, paying his personal expenses, unrelated business expenses, making speculative investments and loans, and paying earlier investors. Morris and his eight sales agents, doing business as EIP, without conducting an adequate investigation as to the legitimacy of CTB, its CDs or Randy, offered and sold at least $1.2 million of these bogus CTB CDs from at least December 1990 to November 1992. As part of that offer and sale, Morris provided investors with promotional materials provided by Randy or which parotted Randy’s statements that falsely represented the existence and location of CTB, its bank licensing, the insurance and reserves backing the CDs, the safety and returns on the investment and the use of investor proceeds and omitted to state other material facts. Morris further represented that CTB CDs were safe and insured against default, and stressed the high rate of return. As a result, the Court found that Morris violated the antifraud provisions. The Court further found that CTB securities were not registered with the Commission nor was Morris or EIP registered with the Commission as a broker-dealer. Thus, the Court found that Morris violated the securities registration and broker-dealer registration provisions of the federal securities laws. D. During the period from at least December 1990 to in or about November 1992, Morris willfully violated Sections 5(a) and 5(c) of the Securities Act, in that he offered to sell, offered to buy, sold and delivered after the sale to members of the public through the use or medium of any prospectus or otherwise certain CTB securities, at a time when no registration statement was on file or in effect with the Commission with respect to such securities. As part of this conduct, Morris engaged in the acts and practices detailed in paragraph III.C. above. E. During the period from at least December 1990 to in or about November 1992, Morris willfully violated Section 17(a) of the Securities Act in that he, in the offer or sale of certain CTB securities, directly or indirectly, employed devices, schemes or artifices to defraud; obtained money or property by means of untrue statements of material facts, or omissions 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 transactions, practices or courses of business which would or did operate as a fraud or deceit. As part of this conduct, Morris engaged in the acts and practices detailed in paragraph III.C. above. F. During the period from at least December 1990 to in or about November 1992, Morris willfully violated Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder in that he, in connection with the purchase or sale of certain CTB securities, directly or indirectly: employed devices, schemes or artifices to defraud; obtained money or property by means of untrue statements of material fact 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, practices or courses of business which would or did operate as a fraud or deceit. As part of this conduct, Morris engaged in the acts and practices detailed in paragraph III.C above. G. During the period from at least December 1990 to in or about November 1992, Morris willfully violated Section 15(a)(1) of the Exchange Act in that he effected transactions in, or induced or attempted to induce the purchase or sale of, certain CTB securities (other than an exempted security or commercial paper, bankers' acceptances, or commercial bills), at a time when Morris was not registered with the Commission as a broker or dealer. As part of this conduct, Morris engaged in the acts and practices detailed in paragraph III.C. above. H. While engaged in the activities described in paragraphs III.D. through III.G., Morris, directly or indirectly, made use of any means or instruments of transportation or communication in interstate commerce or of the mails. IV. In light of the foregoing, it is in the public interest to impose the sanctions specified in the Offer submitted by Morris. ACCORDINGLY, IT IS HEREBY ORDERED that James C. Morris be, and hereby is, barred from association with any broker, dealer, municipal securities dealer, investment company or investment adviser. By the Commission. Jonathan G. Katz Secretary **FOOTNOTES** [1]: The findings herein are made pursuant to Morris’ Offer and are not binding on any other person or entity named in this or any other proceeding.