UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 41156 / March 11, 1999 Administrative Proceeding File No. 3-9691 : ORDER MAKING FINDINGS AND In the Matter of : IMPOSING REMEDIAL SANCTIONS : AND CEASE-AND-DESIST ORDER : PURSUANT TO SECTIONS 17A(c)(3), INTERSTATE TRANSFER CO. : 17A(c)(4)(C), 21B AND 21C OF THE : SECURITIES EXCHANGE ACT OF 1934 JANIS A. PATTERSON : : I. In these public administrative proceedings ordered on September 1, 1998, pursuant to Sections 17A(c)(3), 17A(c)(4)(C), 21B and 21C of the Securities Exchange Act of 1934 ("Exchange Act"), Respondents Interstate Transfer Co. ("ITC") and Janis A. Patterson ("Patterson"), have submitted Offers of Settlement 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, without admitting or denying the findings herein, except for those findings contained in paragraphs II.A. and B. below and the jurisdiction of the Commission over this matter which are admitted, ITC and Patterson consent to the entry of this Order Making Findings and Imposing Remedial Sanctions and Cease and Desist Order ("Order"). II. Based on this Order and the Order Instituting Proceedings Pursuant to Sections 17A(c)(3), 17A(c)(4)(C), 21B and 21C of the Exchange Act and ITC and Patterson’s Offers, the Commission finds that: A. Respondent ITC is headquartered in Salt Lake City, Utah, and has been registered as a transfer agent with the Commission since April 13, 1995. B. Respondent Janis A. Patterson is the President and sole owner of ITC. She personally carries out or supervises all aspects of ITC’s transfer agent business. C. As described below, Respondents have failed to: (1) turnaround, within three business days, 90% of the routine items presented to ITC for transfer; (2) log in all routine and non- routine requests for transfer, make a record of the firm’s calculations of monthly turnaround, and obtain letters of appointment from the issuers for which it acts as transfer agent; (3) maintain current control books with respect to all issues of securities for which ITC acts as transfer agent; (4) submit fingerprints for processing; (5) establish written standards for the acceptance of signature guarantees; and (6) give notice of ITC’s assumption or termination of business. D. During January and February of 1998 ITC turned around only 56% of the routine items presented to it for transfer within three business days. The remaining 44% of the sampled items were turned around in from four to thirteen business days. ITC also failed to file with the Commission, within 10 business days of the end of those months, notices which: (1) detailed the manner in which the ITC had failed to comply with the turnaround requirements of Rule 17Ad-2 under the Exchange Act; (2) the reasons for the failure, and (3) the steps being taken by ITC to rectify its non-compliance. E. During January and February 1998, ITC failed to log in all requests for transfer which were received by mail and failed to log in any requests for transfer which were hand-delivered to the transfer agent. During this period ITC failed to accurately record: (1) the correct number of routine items received for transfer during each month, (2) the correct number of non-routine items received for transfer during each month, (3) the correct number of routine items received during each month which were turned around in three business days, (4) the correct number of routine items received during each month which were not turned around within three business days, (5) the correct number of non- routine items received during each month which were turned around, (6) the correct number of routine items which, as of the close of business on the last business day of each month had been in ITC’s possession more than four business days, and (7) the correct number of non-routine items which at the end of each month had been in the firm’s possession. In addition, ITC failed to make a record of the firm’s calculations of monthly turnaround, and it failed to obtain letters of appointment from at least 17 of the issuers for which it transfers securities. F. As of March 1997 and March 1998 the number of shares outstanding for many issuers, as reflected on ITC’s control books, did not agree with the outstanding shares as listed in the transfer agent’s securityholder files. As of March 1998, with respect to at least 14 of the issues of securities for which ITC acts as transfer agent, ITC did not even maintain a control book. As of March 1998, with respect to at least six additional issues of securities, ITC’s records evidenced discrepancies between the control book and securityholder file as to the number of shares outstanding. In five of these six instances, the discrepancy was the result of ITC’s failure to post share changes authorized by the issuer to the control book within 30 days. G. Since it became registered as a transfer agent, ITC has failed to submit fingerprints of its officers, directors and employees to the National Association of Securities Dealers ("NASD"), which is the designee of the Attorney General of the United States, for identification and processing. H. Since at least March 1997, ITC has failed to establish written standards for the acceptance of signature guarantees and written procedures and guidelines to ensure that those standards are used in determining whether to accept or reject signature guarantees. I. Since March 1997, ITC has been terminated as transfer agent by at least three issuers and has assumed transfer duties for 36 issuers. ITC has failed to notify, within ten calendar days of the effective date of being terminated as transfer agent by issuers, the appropriate securities depository of such termination. ITC has also failed to file reports with the appropriate securities depository of its assumption of transfer agent duties for issuers for which the transfer agent has begun to perform transfer services. J. On March 27, 1997, ITC was notified that it was not in compliance with Rules 17f-2, 17Ad-6, 17Ad-10, 17Ad-15 and 17Ad- 16. In a letter dated May 2, 1997, Patterson indicated ITC either had taken, or was about to take, action to bring itself into compliance with those regulations. As of March 1998, ITC was still not in compliance with those regulations, and, contrary to the representations in Patterson’s May 2, 1997 letter, with respect to several of the violations of which it was notified in March 1997, ITC and Patterson had taken no action to bring ITC into compliance. K. As set forth above, (1) Respondent ITC has willfully violated Sections 17(a)(3), 17(f)(2) and 17A(d) of the Exchange Act and Rules 17f-2, 17Ad-2, 17Ad-6, 17Ad-10, 17Ad-15 and 17Ad-16 thereunder; and (2) Respondent Patterson has caused and willfully aided and abetted violations of Sections 17(a)(3), 17(f)(2) and 17A(d) of the Exchange Act and Rules 17f-2, 17Ad-2, 17Ad-6, 17Ad- 10, 17Ad-15 and 17Ad-16 thereunder. III. In view of the foregoing, it is in the public interest to impose the sanctions specified in the Offers submitted by ITC and Patterson. Accordingly, IT IS ORDERED that: A. The Respondent ITC, be and hereby is: 1. Censured; and 2. Ordered, pursuant to Section 21C of the Exchange Act, to cease and desist from committing or causing any violations or any future violations of Sections 17(a)(3), 17(f)(2) and 17A(d) of the Exchange Act and Rules 17f-2, 17Ad-2, 17Ad-6, 17Ad-10, 17Ad-15 and 17Ad- 16 thereunder. B. The Respondent Patterson, be and hereby is: 1. Censured; 2. Ordered, pusuant to Section 21C of the Exchange Act, to cease and desist from committing or causing any violations or any future violations of Sections 17(a)(3), 17(f)(2) and 17A(d) of the Exchange Act and Rules 17f-2, 17Ad-2, 17Ad-6, 17Ad-10, 17Ad-15 and 17Ad- 16 thereunder; and 3. Ordered to pay, within thirty (30) days of the Order, pay a civil money penalty in the amount of $5,000 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 Comptroller, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Stop 0-3, Alexandria, VA 22312; and (D) submitted under cover letter that identifies Janis Patterson 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 Kenneth D. Israel, District Administrator, Securities and Exchange Commission, 50 South Main Street, Suite 500, Salt Lake City, UT 84144. The sanctions ordered herein shall become effective immediately. By the Commission. Jonathan G. Katz Secretary