UNITED STATES OF AMERICA
SECURITIES EXCHANGE ACT OF 1934
On February 22, 2000, the Securities and Exchange Commission ("Commission") instituted public administrative and cease-and-desist proceedings pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 ("Exchange Act") against All-Tech Direct, Inc. f/k/a All-Tech Investment Group, Inc., Harry Lefkowitz, Mark Shefts, Lisa Esposito, Ralph Zulferino, David Waldman, Adam Leeds, and Barry Parish ("Parish").
Parish has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceeding brought by or on behalf of the Commission, or in which the Commission is a party, and without admitting or denying the findings contained herein, except for the jurisdiction of the Commission over him and over the subject matter of these proceedings, which are admitted, Parish consents to the entry of the findings, a cease-and-desist order, and the imposition of the remedial sanctions set forth herein.
On the basis of this Order and the Offer submitted by Parish, the Commission finds that:1
Parish, 46, resides in San Diego, California and was the branch manager of All-Tech Direct, Inc., f/k/a All-Tech Investment Group, Inc. ("All-Tech") in All-Tech's San Diego branch office from January 2, 1997 until December 31, 1999. Parish is currently self-employed as a day-trader.
OTHER RELEVANT RESPONDENTS
1. All-Tech, during the relevant period, has been a broker-dealer registered with the Commission and is incorporated under the laws of the State of Delaware. All-Tech offers day-trading services to customers through twenty-one branch offices throughout the United States and through direct line electronic access similar to an internet connection.
2. Adam Leeds ("Leeds"), 31, resides in San Diego, California and was a registered representative in All-Tech's San Diego branch from January 20, 1998 until June 25, 1999.
UNLAWFUL EXTENSION OF MARGIN CREDIT
1. Throughout 1998, when the equity in certain customer margin accounts fell below the minimum required by Regulation T ("Regulation T"), promulgated by the Board of Governors of the Federal Reserve ("Federal Reserve"), 12 C.F.R. §§ 220.1 - 220.12, All-Tech, directly or indirectly, extended uncollateralized loans from the accounts of associated persons to those customers, who could not otherwise cover the resulting margin calls issued by All-Tech's clearing firm, Southwest Securities, Inc. ("Southwest"). Under Regulation T, All-Tech should not have supplied those customers with additional extensions of credit.
2. Leeds's account was one of the associated person accounts from which All-Tech drew funds when extending credit to customers who otherwise could not cover Regulation T margin calls. Specifically, from in or about April through September 1998, while Leeds was an associated person and registered representative of All-Tech, Leeds funded six loans to All-Tech customers to enable them to cover their margin calls.
3. Parish specifically knew about, approved, and helped effect these loans from Leeds's All-Tech account.
4. Parish knew that All-Tech's policies, among other things, prohibited the transfer of funds from the accounts of registered employees to the accounts of customers.
5. By reason of the foregoing, All-Tech willfully violated Section 7(c) of the Exchange Act in that it directly or indirectly extended uncollateralized margin call loans to customers in contravention of the rules and regulations which the Federal Reserve has prescribed, namely Regulation T. By reason of the foregoing, Parish willfully aided and abetted, and was a cause of, All-Tech's violations of Section 7(c) of the Exchange Act and Regulation T.
On the basis of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified in the Offer submitted by Respondent Parish.
ACCORDINGLY, IT IS ORDERED that:
1. Parish be, and hereby is, censured.
2. Parish cease and desist, pursuant to Section 21C of the Exchange Act, from causing any violations and any future violations of Section 7(c) of the Exchange Act and Regulation T promulgated by the Federal Reserve.
3. Parish shall, within thirty days of the entry of this 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, Virginia 22312; and (D) submitted under cover letter that identifies Parish 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 Mark Danzi, Staff Attorney, Northeast Regional Office, Securities and Exchange Commission, 7 World Trade Center, New York, NY 10048.
4. Parish be, and hereby is, suspended from association with any broker or dealer for a period of two months, effective on the second Monday following the entry of the Order.
5. Parish be, and hereby is, suspended from association in a supervisory capacity with any broker or dealer for an additional period of one month, effective upon the termination of the suspension ordered in paragraph 4 above.
6. Parish shall provide to the Commission, within thirty days after the end of the one month suspension period described in paragraph 5 above, an affidavit that he has complied fully with the sanctions described in Section IV.
By the Commission.
Jonathan G. Katz
1 The findings herein are made pursuant to the Offer submitted by Parish and are not binding on any other person or entity in this or any other proceeding.