Securities Act of 1933
Release No. 7761 / October 26, 1999
Securities Exchange Act of 1934
Release No. 42059 / October 26, 1999
Administrative Proceeding File No. 3-8575
__________________________________ : In the Matter of : : : JOSEPH J. BARBATO : NEAL C. HARPER : FREDERICK J. KRAUSE : : _________________________________:
NOTICE OF PROPOSED PLAN FOR THE DISTRIBUTION OF DISGORGED FUNDS AND OPPORTUNITY FOR COMMENT BY NON-PARTIES
Notice is given, pursuant to Rule 612 of the Rules of Practice of the Securities and Exchange Commission, 17 C.F.R. §201.612, that the Division of Enforcement has filed its proposed Plan for the Distribution of Disgorged Funds ("Distribution Plan") in the above matter with the Securities and Exchange Commission (the "Commission").
OPPORTUNITY TO COMMENT
Pursuant to this notice, all interested parties are advised that the Distribution Plan may be obtained by submitting a written request to William H. Kuehnle, United States Securities and Exchange Commission, Mail Stop 8-8, 450 Fifth Street N.W., Washington, D.C., 20549-0808. Further, all persons desiring to comment on the Distribution Plan may submit their views, in writing, no later than November 29, 1999 to the Office of the Secretary, United States Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.
THE PROPOSED PLAN OF DISGORGEMENT
On February 10, 1999, on an appeal from an initial decision of an Administrative Law Judge, the Commission found that Respondent Joseph J. Barbato, as a registered representative at Stuart-James Co., Inc., had violated Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder by engaging in fraudulent sales conduct against his customers. In addition to barring Barbato, the Commission ordered him to disgorge $45,142.00, representing profits in the form of commissions earned from his fraudulent conduct. The Commission also ordered the payment of $45,690.05 in prejudgment interest. The order further provided that interest would continue to accrue on all funds owed until they were paid. Because Barbato delayed in making payment, he was required to pay, and did pay, an additional $1,940.03 in postjudgment interest.
The Distribution Plan provides that Barbato's customers who were found in the Commission's decision to have been defrauded shall receive a distribution of the disgorgement in the amount of commissions received by Barbato on their accounts, together with a proportionate share of the prejudgment and postjudgment interest paid by Barbato.1 A Commission employee will act as administrator of the plan and will not receive any compensation other than his regular salary.
A Commission employee will act as administrator of the plan and will not reeive any compensation other than his regular salary.
For the Commission, by its Secretary, pursuant to delegated authority.
Jonathan G. Katz
1 The Commission's decision found that Barbato had defrauded the seven customers who testified for the Division in the proceeding.