UNITED STATES OF AMERICA
|In the Matter of
James K. McKillop d/b/a
|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 James K. McKillop d/b/a BKL BrokerLink Capital Research and Communications ("Respondent").
In anticipation of the institution of these administrative proceedings, Respondent has submitted an Offer of Settlement ("Offer"), which the Commission has accepted. 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 the jurisdiction of the Commission over him and over the subject matter of these proceedings, which are admitted, Respondent has 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 Respondent, the Commission makes the following findings:
A. James K. McKillop ("Mckillop") d/b/a/ BKL BrokerLink Capital Research and Communications ("BKL BrokerLink"), age 41, of Los Angeles, California, is the sole owner of BKL BrokerLink. McKillop was associated with a broker-dealer for fifteen months from approximately 1984 to 1986.
B. BKL BrokerLink is an investment banking and public relations consulting firm. It derives over 90 percent of its income from introducing private companies to a securities lawyer who takes the companies public via a reverse merger with a public shell.
C. Respondent engaged in the business of effecting interstate transactions in connection with the sale of stocks in public shells for the accounts of others for compensation in the form of stock and/or cash.
D. From at least January 1999 and continuing in 2000, Respondent assisted in the sale of twenty-one public shell companies, earning approximately $992,000 plus 125,000 shares of stock. Respondent not only brought purchasers and sellers together, he also screened potential purchasers, met with potential purchasers, helped negotiate fees and generally acted as an intermediary.
E. Respondent solicited purchasers of shell companies through an Internet website, www.bkl.com, The Wall Street Journal, and other media. The website, which Respondent drafted, stated that BKL BrokerLink "primarily assist(s) companies in going public quickly via a merger with a public shell." The website offered advice regarding alternative methods for privately held companies to become public, including merging with an existing shell company. The website instructed potential purchasers to send Respondent an executive summary or business plan or to fill out a questionnaire provided on the website. After screening potential purchasers, Respondent referred them to a securities lawyer who created public shells for this purpose. Most of the shells were Delaware corporations with 5,000,000 shares issued and outstanding, with no operating histories, no liabilities and no material assets. Respondent negotiated the prices offered for some of the public shells, ranging from approximately $100,000 to $250,000, plus attorneys fees. Respondent earned one third of the first $100,000 in fees and one half of all amounts over $100,000.
F. Section 15(a) of the Exchange Act requires that any person or entity engaged in the interstate business of effecting securities transactions for the accounts 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, Respondent 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 Respondent and to impose the sanctions specified therein.
Accordingly, IT IS ORDERED that:
A. Pursuant to Section 15(b)(4) of the Exchange Act, Respondent be censured;
B. Pursuant to Section 21C of the Exchange Act, Respondent cease and desist from committing or causing any violation or future violation of Section 15(a) of the Exchange Act; and
C. Pursuant to Section 21B and Section 15(b)(4) of the Exchange Act, within thirty (30) days of the entry of this Order, Respondent shall 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 James K. McKillop d/b/a BKL BrokerLink Capital Research and Communications as the Respondent 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
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