SECURITIES EXCHANGE ACT OF 1934
RELEASE NO. 42391 / February 7, 2000
FILE NO. 3-10138
|In the Matter of
ROY E. MATLOCK,
ORDER INSTITUTING PROCEEDINGS,
MAKING FINDINGS AND IMPOSING
REMEDIAL SANCTIONS PURSUANT TO
SECTIONS 15(b) and 19(h) OF THE
SECURITIES EXCHANGE ACT OF 1934
The Securities and Exchange Commission ("Commission") deems it appropriate in the public interest and for the protection of investors that public administrative proceedings be instituted against Roy E. Matlock ("Matlock") pursuant to Sections 15(b) and 19(h) of the Securities Exchange Act of 1934 ("Exchange Act").
In anticipation of the institution of these proceedings, Matlock 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 Paragraphs III.A.,B. and C., which are admitted, Matlock 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 Exchange Act ("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.
On the basis of this Order and Matlock's Offer, the Commission finds that:
A. Matlock was a registered representative for various broker-dealers registered with the Commission from 1984 through 1993.
B. On December 3, 1999, in the case of SEC v. Roy E. Matlock, (Case No. 99 7399), the Honorable Joan Gotschall United States District Judge for the Northern District of Illinois, entered an Order of Permanent Injunction against Matlock, pursuant to his consent and without Matlock's admitting or denying the allegations in the Commission's Complaint, enjoining Matlock from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 promulgated thereunder. The Complaint alleged that Matlock, through Legacy Management Group, Inc. and Legacy Trust defrauded numerous investors to whom he sold certificates of trust. According to the complaint, Matlock represented to investors that Legacy Trust would pool the money raised from investors who purchased the certificates to buy and sell prime bank instruments, specifically, letters of credit, standby letters of credit, and notes issued by the top 100 world banks. The Complaint alleged that Matlock represented to the investors that the profits earned from trading prime bank instruments would then be distributed to the investors. From at least November 1992 through May 1993, the Commission alleged, that Matlock raised about $3.5 million from investors in Legacy Trust. The Complaint alleged that Matlock misrepresented the risk involved in the investment; the expected return on the investment; the existence of a guaranteed return on the investments; the safety of the principal investment; and the use of funds raised from investors. The complaint also alleged that, contrary to his representations, Legacy Trust never bought or sold a prime bank instrument because prime bank instruments do not exist. Further, the Complaint alleged, that Matlock diverted investor proceeds to pay commissions, pay himself consulting fees, pay the operating expenses of Legacy Trust, and pay "returns" to previous investors. The Complaint also alleged that Matlock could not guarantee a return on the investments, or guarantee the safety of the principal investment, in the certificates of trust because he used investor proceeds in this manner. Finally, the Complaint alleged that Matlock made these representations knowing them to be false because prime bank instruments do not exist, and therefore, Legacy Trust could not trade in such instruments.
C. On May 5, 1999, in the case of United States of America v. Roy E. Matlock, et. al. (Case No. 98-Cr-172-1), the Honorable Robert W. Gettleman, United States District Court for the Northern District of Illinois, accepted Matlock's plea of guilty and entered a conviction against Matlock for conspiracy to commit mail, wire, and securities fraud in violation of 18 U.S.C. §§ 2 and 371. The criminal indictment against Matlock in that case was based on conduct similar to that alleged in the complaint described in paragraph 2 above. In October 1999, Matlock was sentenced to 18 months imprisonment.
In light of the foregoing, it is in the public interest to impose the sanctions specified in the Offer submitted by Matlock.
Accordingly, IT IS HEREBY ORDERED that Roy E. Matlock be, and hereby is, barred from association with any broker or dealer.
By the Commission.
Jonathan G. Katz