UNITED STATES OF AMERICA
|In the Matter of
John B. Longman and
|Order Instituting Proceedings Pursuant to Sections 15(b)(4) and 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order|
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be instituted pursuant to Sections 15(b)(4) and 21C of the Securities Exchange Act of 1934 ("Exchange Act") against Respondents John B. Longman and Longman & Associates, Inc. (together "Respondents").
In anticipation of the institution of these administrative proceedings, Respondents have submitted a joint Offer of Settlement ("Offer"), 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, and without admitting or denying the findings herein, except for those findings contained in paragraphs II. A. and B. below and the jurisdiction of the Commission over them and over the subject matter of these proceedings, which are admitted, Respondents have consented to the entry of the findings and the imposition of the remedial sanctions and cease-and-desist order as set forth below.
On the basis of this Order and the Offer submitted by each Respondent, the Commission makes the following findings:
A. John B. Longman ("Longman"), age 60, resides in Parker, Colorado, is the president of Longman & Associates. Since March 2, 2000, Longman has been associated with Harrison Douglas, Inc., a broker-dealer located in Colorado. Longman was last associated with a broker-dealer from 1981 to 1988.
B. Longman & Associates, Inc. is a Parker, Colorado management consulting corporation that, since 1992, specializes in helping companies become publicly traded by finding public shell merger candidates. Longman controls Longman & Associates. Longman & Associates has never been registered as a broker-dealer.
C. Longman provided information to a third party that was contained on an Internet website. The portion of that website entitled, Public Shells and Reverse Mergers, stated that the third party provided reverse merger shells for private companies as public company merger candidates. The third party's website stated that it had reporting and audited public shells available for purchase for $110,000 to $140,000. All of the offered shell companies had an identical corporate structure including: 50 million shares of common stock authorized, 1 million shares of common stock issued, 20 million shares of preferred stock authorized but none issued, zero assets and zero liabilities, and an audit by an "SEC qualified" accounting firm. The website also included the third party's phone number and address so that interested parties could contact the third party. When parties interested in purchasing a public shell company contacted the third party, that third party would then contact Longman.
D. Longman would then put the parties in contact with another third party, who created all of the offered shell companies (hereinafter, "shell source"). Longman also introduced, separately from the third party discussed in paragraph C. above, other parties interested in purchasing a public shell company to the shell source.
E. Longman performed additional services for interested parties, including calculating the value of any proposed merger, mediating between the parties, consulting regarding the structure of the post-merger entity, and making arrangements for an initial market maker.
F. Between May 1999 and January 2000, Longman earned $167,500 for brokering the sale of ten public shell companies.
G. Section 15(a) of the Exchange Act requires that any person or entity engaged in the interstate business of effecting securities transactions for the account of others must register with the Commission as a broker or dealer or, if a natural person, be associated with an entity that is registered with the Commission as a broker or dealer. By virtue of the conduct described above, the Respondents willfully violated Section 15(a) of the Exchange Act.
In view of the foregoing, the Commission deems it appropriate and in the public interest to accept the Offer submitted by Respondents and to impose the sanctions specified therein.
Accordingly, IT IS ORDERED that:
A. Pursuant to Section 15(b)(4) of the Exchange Act, the Respondents be censured;
B. Pursuant to Section 21C of the Exchange Act, the Respondents cease and desist from committing or causing any violation or future violation of Section 15(a) of the Exchange Act;
C. Pursuant to Section 21B and Section 15(b)(4) of the Exchange Act, within thirty (30) days of the entry of this Order, Longman and Longman & Associates shall together pay a civil money penalty in the amount of $10,000 to the United States Treasury. Such payment shall be: (1) made by United States postal money order, certified check, bank cashier's check or bank money order; (2) made payable to the Securities and Exchange Commission; (3) hand-delivered or mailed to the Office of the Comptroller, U.S. Securities and Exchange Commission, Operations Center, 6432 General Green Way, Stop 0-3, Alexandria, VA 22312; and (4) submitted under cover letter which identifies Longman and Longman & Associates as the Respondents in this proceeding, the file number of the proceeding, a copy of which cover letter and money order or check shall be sent to Donald M. Hoerl, Associate Regional Director, Securities and Exchange Commission, Central Regional Office, 1801 California Street, Suite 4800, Denver, Colorado 80202.
By the Commission.
Jonathan G. Katz
|Home | Previous Page||