UNITED STATES OF AMERICA
In the Matter of
Gerald Lee Pate,
| ORDER INSTITUTING PROCEEDINGS
PURSUANT TO SECTION 15(b) OF THE
SECURITIES EXCHANGE ACT OF 1934,
MAKING FINDINGS AND IMPOSING
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be and hereby are instituted pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934 ("Exchange Act"), against Gerald Lee Pate ("Pate").
In anticipation of the institution of these proceedings, Pate has submitted an Offer of Settlement to the Commission 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, prior to a hearing pursuant to the Commission's Rules of Practice, 17 C.F.R. § 201.100 et seq., and, without admitting or denying the findings contained herein, except as to entry of the injunction described below and the Commission's jurisdiction over him and over the subject matter of this proceeding, which are admitted, Pate consents to the institution of public administrative proceedings, and the findings and remedial sanctions set forth below.
On the basis of this Order and the Offer of Settlement submitted by Pate, the Commission finds that:
A. From approximately September 1997 until March 1999, Pate was acting as an unregistered broker-dealer.
B. On July 6, 2000, Pate was permanently enjoined from violations of Sections 5(a), 5(c) and Sections 17(a) of the Securities Act of 1933 ("Securities Act") and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 promulgated thereunder, by the United States District Court for the Northern District of Texas (Dallas Division) [SEC v. Benjamin Franklin Cook, et al., 399 CV0571-R]. Pate consented to the entry of the permanent injunction without admitting or denying any violation of the federal securities laws, as alleged in the Commission's Complaint.
C. The Commission's Complaint in SEC v. Cook, et al. alleges that from 1997 through at least March 1999, when the Complaint was filed, Pate and other defendants violated the federal securities laws by offering and selling unregistered securities in the form of a fraudulent "prime bank" trading program developed by defendants Benjamin Cook and Dennel Finance Limited. The Complaint alleges that Pate and other defendants obtained at least $30 million from investors by falsely promising to facilitate lucrative, yet completely secure, transactions in fictitious prime bank securities. Pate and other defendants attracted investors by representing that investor funds would be transferred to a London bank and secured by a guarantee issued by a European bank. Pate and other defendants further represented that investor funds would be used to trade financial instruments with top 50 European banks and that these trades would produce investor returns of 24 to 60 percent over the course of the investor's 12 month contract with Dennel. In reality, the Complaint alleges, the prime bank program marketed to investors did not exist and Dennel did not send any funds to Europe for use in a trading program. Rather, the Complaint further alleges, , defendants misappropriated investment funds for personal and unauthorized uses, including making Ponzi payments to existing investors with funds provided by new investors. The Complaint also alleges that Pate, in the course of marketing the Dennel program, acted as an unregistered broker-dealer.
In view of the foregoing, the Commission deems it appropriate and in the public interest to accept the Offer of Settlement of Gerald Lee Pate.
Accordingly, IT IS ORDERED that Respondent Gerald Lee Pate be, and hereby is, barred from association with any broker or dealer.
By the Commission.
Jonathan G. Katz
|Home | Previous Page||