UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION Securities Exchange Act of 1934 Release No. 41154 / March 11, 1999 Administrative Proceeding File No. 3-9847 __________________________ : In the Matter of : ORDER INSTITUTING PUBLIC : PROCEEDINGS PURSUANT TO SECTION GERARD W. KING, : 15(b)(6) OF SECURITIES EXCHANGE : ACT OF 1934, MAKING FINDINGS AND Respondent. : IMPOSING REMEDIAL SANCTIONS AS : TO GERARD W. KING __________________________: I. The Commission is instituting these administrative proceedings pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934 (the "Exchange Act") as to Gerard W. King ("King"). II. King has submitted an Offer of Settlement (the "Offer") which the Commission has determined to accept. Solely for the purposes 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 contained in this Order, except as to jurisdiction which King admits, King consents to the entry of this Order by the Commission. III. On the basis of this Order and King's Offer, the Commission makes the following findings:[1] A. In 1993 and 1994, King was a registered representative with Sunpoint Securities, Inc., a registered broker-dealer, operating from his home in Metuchen, New Jersey. B. In 1993, King and an associate at another brokerage firm negotiated a secret arrangement with the then president of Teletek, Inc.[2] under which they were to receive shares of Teletek stock for selling the stock to their unsuspecting customers. King and the associate thereafter sold Teletek stock without disclosing the arrangement or the compensation received to their customers. King initiated the relationship with the president of Teletek while his associate handled the tasks of receiving and selling the shares and splitting the proceeds. Shares were transferred to the account of a corporation, organized to conceal the participation of King and his associate, at the associate's firm. King received the proceeds of sale of about 50,000 shares in part in an account opened at the associate's firm without disclosing King's association with another brokerage firm. The proceeds exceeded $150,000. C. Section 17(a) of the Securities Act of 1933 (the "Securities Act") and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder prohibit, in the offer and in connection with the purchase or sale of securities, by the use of means or instruments of transportation and communication in interstate commerce or by the use of the mails, directly and indirectly, employing devices, schemes or artifices to defraud; obtaining money and property by means of or making untrue statements of material facts or omitting to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or engaging in acts, transactions, practices or courses of business which operate or would operate as a fraud or deceit. By engaging in the conduct specified in paragraph III.B. above, King willfully violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.[3] D. King has submitted a sworn financial statement and other evidence and has asserted his financial inability to pay disgorgement, prejudgment interest and a civil penalty. The Commission has reviewed the sworn financial statement and other evidence provided by King and has determined that King does not have the financial ability to pay disgorgement, prejudgment interest and a civil penalty. IV. In view of the foregoing, the Commission has determined that it is in the public interest to accept King's Offer and to impose the sanctions specified therein. Accordingly, IT IS ORDERED that: A. King be and he is hereby barred from association with any broker, dealer, municipal securities dealer, investment adviser or investment company and from participating in any offering of penny stock. B. King shall pay disgorgement in the amount of $150,000 plus prejudgment interest, but that payment of such amount be waived based upon King's demonstrated financial inability to pay. C. The Division of Enforcement may, at any time following the entry of this Order, petition the Commission to: (1) reopen this matter to consider whether King provided accurate and complete financial information at the time such representations were made; (2) determine the amount of the disgorgement, prejudgment interest and civil penalty to be imposed; and (3) seek any additional remedies that the Commission would be authorized to impose in this proceeding if King's Offer had not been accepted. No other issues shall be considered in connection with this petition other than whether the financial information provided by King was fraudulent, misleading, inaccurate or incomplete in any material respect, the amount of disgorgement, prejudgment interest and civil penalty to be imposed and whether any additional remedies should be imposed. King may not, by way of defense to any such petition, contest the findings in this Order or the Commission's authority to impose any additional remedies that were available in the original proceeding. By the Commission. ___________________________ Jonathan G. Katz Secretary **FOOTNOTES** [1]: The findings herein are made pursuant to King's Offer and are not binding on any other person or entity in this or any other proceeding. [2]: Teletek, with offices in Las Vegas, Nevada, marketed international telephone calling services. [3]: King was indicted in U.S. v. Damon Cozzolino, et al., CR-S-96-287, a factually related criminal prosecution in the U.S. District Court for the District of Nevada (filed November 6, 1996) and subsequently pleaded guilty to violating the money laundering statute, 18 U.S.C.  1957.