UNITED STATES OF AMERICA
In the Matter of
ORDER INSTITUTING PUBLIC
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be instituted against Claude Cossu ("Cossu" or "Respondent") pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act").
In anticipation of the institution of these proceedings, Cossu has submitted an Offer of Settlement (the "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 to which the Commission is a party, and without admitting or denying any of the findings contained herein, except as to the jurisdiction of the Commission over him and over the subject matter of these proceedings, the findings contained in paragraph III.1. below, and the entry of the injunction set forth in paragraph III.4. below, which are admitted, Cossu consents to the entry of this Order Instituting Public Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions ("Order") by the Commission.
Accordingly, IT IS HEREBY ORDERED that proceedings pursuant to Section 15(b) of the Exchange Act be, and hereby are, instituted.
On the basis of this Order and the Respondent's Offer, the Commission finds that:
1. At all relevant times, Respondent Cossu was associated as a registered representative of a broker-dealer registered with the Commission pursuant to the Exchange Act.
2. On May 31, 2000, the Commission filed a complaint ("Complaint") in the United States District Court for the Eastern District of California, SEC v. Claude Cossu, No. CIV S-00-1198 WBS GGH. On November 28, 2000, the Commission filed an Amended Complaint, which, among other things, charged Respondent with violations of Sections 5(a), 5(c), 17(a)(1), 17(a)(2) and 17(a)(3) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and Section 15(a)(1) of the Exchange Act.
3. The Commission's Amended Complaint alleged, among other things, that between March 1998 and May 1999, Respondent made material misrepresentations and omissions in connection with the offer and sale of unregistered securities, in the form of purportedly high interest promissory notes, in Sebastian International Enterprises, Inc. ("SIE"). Cossu's misrepresentations concerned the risk and safety of SIE's securities, the ability of SIE to pay interest and principal on the notes, and the alleged existence of a surety bond guaranteeing the notes. The Commission's Amended Complaint also alleged that Cossu acted without the specific approval of a registered broker-dealer in the sale of the SIE notes. Finally, the Commission's Amended Complaint alleged that Cossu received ill-gotten gains in the form of commission payments from his sale of SIE's securities.
4. On November 29, 2000, the Court permanently enjoined Respondent from future violations of Sections 5(a), 5(c), 17(a)(1), 17(a)(2) and 17(a)(3) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and Section 15(a)(1) of the Exchange Act. Cossu consented to the entry of the permanent injunction without admitting or denying the allegations of the Commission's Amended Complaint.
On the basis of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified in the Respondent's Offer.
ACCORDINGLY, IT IS ORDERED that Cossu be, and hereby is, barred from association with any broker or dealer, with the right to reapply for association after three (3) years to the appropriate self-regulatory organization, or if there is none, to the Commission.
By the Commission.
Jonathan G. Katz
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