UNITED STATES OF AMERICA
|In the Matter of||: ORDER INSTITUTING PUBLIC|
|: ADMINISTRATIVE AND|
|: CEASE-AND-DESIST PROCEEDINGS|
|JOHN H. KIM,||: PURSUANT TO SECTION 8A OF THE|
|: SECURITIES ACT OF 1933 AND|
|: SECTIONS 15(b)(6), 19(h) AND 21C|
|: OF THE SECURITIES EXCHANGE ACT|
|Respondent.||: OF 1934, MAKING FINDINGS AND|
|: IMPOSING REMEDIAL SANCTIONS|
The Securities and Exchange Commission ("Commission") deems it appropriate in the public interest and for the protection of investors that a public administrative and cease-and-desist proceeding be, and hereby is, instituted pursuant to Section 8A of the Securities Act of 1933 ("Securities Act") and Sections 15(b)(6), 19(h) and 21C of the Securities Exchange Act of 1934 ("Exchange Act") against Respondent John H. Kim ("Kim"). II.
In anticipation of the institution of these administrative proceedings, the Respondent has submitted an Offer of Settlement (the "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 in which the Commission is a party, and without admitting or denying the findings, Respondent consents to the entry of this Order Instituting Public Administrative and Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933 and Sections 15(b)(6), 19(h) and 21C of the Securities Exchange Act of 1934, Making Findings and Imposing Remedial Sanctions (the "Order"). III.
On the basis of this Order and the Respondent's Offer, the Commission makes the following findings:1
This matter involves violations by Kim of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder in connection with transactions in the common stock of The Tracker Corporation of America ("Tracker"). In November and December 1994, Kim, a registered representative, recommended and sold shares of Tracker common stock to his customers. Kim failed to disclose to his clients that he had been or would be compensated by Corporate Relations Group, Inc. ("CRG"), a public relations firm that was promoting Tracker, for inducing his clients to buy this stock. Kim accepted $4,870.75 from CRG.
John H. Kim was a registered representative from 1985 through January 1995. During the relevant time, Kim was a registered representative at A.G. Edwards.
1. Corporate Relations Group, Inc. is a public relations firm located in Winter Park, Florida. During the relevant time, CRG provided public relations services for its clients through various financial publications and through its sales personnel, whose primary function was to interest brokers in soliciting their clients to purchase the stocks CRG was promoting.
2. The Tracker Corporation of America was, during the relevant time, a Delaware corporation whose common stock, which was not registered with the Commission, traded on the OTC Bulletin Board. The company provided services to locate lost property.
Tracker retained CRG in early 1994 to promote the company, which campaign CRG began that summer. In November 1994, CRG opened an account with Kim at A.G. Edwards, and deposited 25,000 shares of purportedly free-trading Tracker common stock. CRG offered Kim money to cause his clients to buy Tracker stock and to cross those purchases with stock from CRG's Tracker position. From November 25, 1994 to December 27, 1994, Kim sold 6,700 Tracker shares to his clients from CRG's position. CRG paid him a total of $4,870.75. Kim did not disclose to his clients these payments or the agreement to be paid.
A registered representative's failure to disclose to his customers that he has received or will receive compensation to recommend a security violates Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Respondent willfully violated, and committed or caused violations of, these antifraud provisions by accepting payments from CRG or agreeing to accept payment for inducing his clients to buy Tracker common stock and failing to disclose this material information to his clients.
Respondent has submitted a sworn financial statement and other evidence and has asserted his financial inability to pay a civil penalty. The Commission has reviewed the sworn financial statement and other evidence provided by Respondent and has determined that Respondent does not have the financial ability to pay a civil penalty. IV.
Based on the foregoing, the Commission deems it appropriate in the public interest and for the protection of investors to accept the Respondent's Offer and to impose the remedial relief specified in the Offer.
Accordingly, it is ordered, pursuant to Section 8A of the Securities Act, that Respondent John H. Kim cease and desist from committing or causing any violation, and any future violation, of Section 17(a) of the Securities Act.
Accordingly, it is ordered, pursuant to Section 21C of the Exchange Act, that Respondent John H. Kim cease and desist from committing or causing any violation, and any future violation, of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
It is further ordered that Respondent John H. Kim shall, within thirty (30) days of the entry of this Order, pay disgorgement and prejudgment interest in the total amount of $7,259.44 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 O-3, Alexandria, Virginia 22312; and (D) submitted under cover letter that identifies John H. Kim as a Respondent in these proceedings and the file number of these proceedings, a copy of which shall be sent to Thomas Newkirk, Division of Enforcement, Securities and Exchange Commission, 450 5th Street, N.W., Mail Stop 8-1, Washington, D.C. 20549.
It is further ordered that 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 Respondent John H. Kim provided accurate and complete financial information at the time such representations were made; (2) determine the amount of the civil penalty to be imposed; and (3) seek any additional remedies that the Commission would be authorized to impose in this proceeding if Respondent's offer of settlement had not been accepted. No other issues shall be considered in connection with this petition other than whether the financial information provided by Respondent was fraudulent, misleading, inaccurate or incomplete in any material respect, the amount of civil penalty to be imposed and whether any additional remedies should be imposed. Respondent 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.
It is further ordered that Respondent John H. Kim be, and hereby is, barred from association with any broker or dealer with the right to reapply for association after three years to the appropriate self-regulatory organization, or if there is none, to the Commission.
By the Commission.
Jonathan G. Katz
1 The findings herein are made pursuant to the Respondent's Offer of Settlement and are not binding on any other person or entity in this or any other proceeding.
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