UNITED STATES OF AMERICA
|In the Matter of
WILLIAM J. NORDVIK,
ORDER MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONS AGAINST JON F. WILLIAMS.
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 respondent Jon F. Williams ("Williams" or "Respondent") to determine whether he willfully violated Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and, if so, what remedial sanctions, if any, were appropriate.
In response to the institution of these proceedings, Williams 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 in which the Commission is a party, and without admitting or denying the findings herein, except as to the jurisdiction of the Commission over him and the subject matter of the proceeding, which are admitted, Williams consents to the entry of the findings and remedial sanctions set forth below.
On the basis of this Order and the Offer, the Commission makes the following findings:
A. Nature of Proceeding
This matter involves the use of matched trades to buy and sell stock in Orlando Super Card, Inc. ("Orlando"), an over-the-counter ("OTC") Bulletin Board stock, in a scheme similar to check kiting. These matched trades created an appearance of active trading in Orlando stock and incrementally increased the price of the stock. Orlando was a small company that never had more than $20,000 in assets. Orlando sold phone cards and discount vacation packages. From May 1997 through the beginning of August 1997, Williams and respondent John G. Wright, Jr.("Wright") used Orlando stock to transfer debit balances in Canadian brokerage accounts by buying and selling Orlando stock through a series of matched trades. Because the Canadian firms allowed customers several weeks to pay for their stock purchases, Williams and Wright were able to "borrow" money by running significant debit balances in the accounts by taking advantage of this delay in settlement. At the time Williams and Wright obtained the Orlando stock, they already owed money to several Canadian brokerage firms for prior purchases. When one brokerage firm required payment, Williams and Wright would sell Orlando stock from that account to another account he controlled, and would then use the proceeds from the sales to pay off the first brokerage firm. When the second firm required payment, they would sell Orlando stock to a third account he controlled and would pay off the second firm. These matched trades created the appearance of active trading in Orlando stock. It also slowly pushed up the price of Orlando stock because the U.S. market makers, serving as intermediaries for these trades, sold the stock at higher prices than the price at which they had bought it. By early August 1997, Orlando, with less than $20,000 in assets, had a market capitalization of $9.7 million. The price of Orlando stock plummeted in mid-August 1997 when Williams' trading activities ceased.
Williams was, at all relevant times, a purported investment banker who owned GSG Financial, which in turn owned Global Strategies Group ("Global"), a now defunct small brokerage firm headquartered in San Francisco. Global was registered with the Commission as a broker-dealer and Williams was associated with Global. In 1993, the NASD fined Williams $13,500 for violations of the Rules of Fair Practice. In 1996, the NASD fined Williams and Global $18,000 for net capital violations. In 1997, the California Commissioner of Corporations barred Williams from any position of employment, management, or control of any broker-dealer or investment
C. Other Relevant Persons and Entities
D. Williams' "Debit Kiting" And Matched Trades
In view of the foregoing, the Commission finds that Williams violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
Accordingly, IT IS ORDERED THAT Williams cease and desist from committing or causing any violation and any future violation of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.By the Commission.
Jonathan G. Katz
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