SECURITIES EXCHANGE ACT OF 1934
RELEASE NO. 43845 / January 16, 2001
INVESTMENT ADVISERS ACT OF 1940
RELEASE NO. 1917 / January 16, 2001
ADMINISTRATIVE PROCEEDING
FILE NO. 3-10405
In the Matter of NICHOLAS LOBUE Respondent. |
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ORDER INSTITUTING PROCEEDINGS,
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The Securities and Exchange Commission ("Commission") deems it appropriate in the public interest and for the protection of investors that public administrative proceedings be instituted against Respondent Nicholas LoBue ("Respondent LoBue") pursuant to Sections 15(b) and 19(h) of the Securities Exchange Act of 1934 ("Exchange Act") and Section 203(f) of the Investment Advisers Act of 1940 ("Advisers Act").
II.In anticipation of the institution of these proceedings, Respondent LoBue has submitted an Offer of Settlement ("LoBue 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 the Commission's findings contained herein, except as to jurisdiction and the facts set forth in Paragraph III(B) below, which are admitted, Respondent LoBue consents to the entry of this Order Instituting Proceedings, Making Findings and Imposing Remedial Sanctions pursuant to Sections 15(b) and 19(h) of the Exchange Act and Section 203(f) of the Advisers Act ("Order") and the imposition of sanctions as set forth below.
Accordingly, IT IS HEREBY ORDERED THAT proceedings pursuant to Sections 15(b) and 19(h) of the Exchange Act and Section 203(f) of the Advisers Act be, and hereby are, instituted.
III.On the basis of this Order and the Offer submitted by Respondent LoBue, the Commission finds that:1
A. From approximately December 1996 through May 1997, Respondent LoBue and Todd Hansen ("Hansen") were employed by Pavilion Securities Corporation ("Pavilion Securities") which was: (1) a broker-dealer registered with the Commission; and (2) an unregistered investment adviser to Pavilion LP, a partnership they created.
B. On December 15, 2000, in the case of SEC v. Hansen and LoBue., (Case No. 99 C 6386), the Honorable Milton I. Shadur, Senior United States District Judge for the Northern District of Illinois, entered a Final Judgment and Order of Permanent Injunction and Other Equitable Relief against Respondent LoBue ("LoBue Final Judgment"), pursuant to his consent but without admitting or denying the allegations in the Commission's Complaint except as to jurisdiction. The LoBue Final Judgment enjoined Respondent LoBue from violating Section 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and from aiding and abetting violations of Section 15(b)(7) of the Exchange Act and Rule 15b7-1 thereunder.
C. The Complaint alleged that: (1) Respondent LoBue and Hansen, while employed by Pavilion Securities, raised more than $660,000 through the sale of limited partnership interests in Pavilion LP, a partnership they created, to eight investors (the "Investors") from December 1996 through May 1997; (2) Respondent LoBue and Hansen told the Investors that their funds would be used to trade stocks, options and futures on various exchanges; (3) Pavilion Securities was the general partner of Pavilion LP and was responsible for determining how the Investors' money would be utilized; (4) Respondent LoBue and Hansen willfully made fraudulent misrepresentations and omissions of material fact in the offer and sale of the Pavilion LP limited partnership interests to the Investors; and (5) Respondent LoBue and Hansen willfully misappropriated $234,000 of the Investors' funds without the Investors' knowledge or consent.
IV.In light of the foregoing, the Commission finds that it is in the public interest and for the protection of investors to impose the sanctions specified in the LoBue Offer.
ACCORDINGLY, IT IS HEREBY ORDERED THAT Nicholas LoBue be, and hereby is, barred from association with any broker, dealer or investment adviser.
By the Commission.
Jonathan G. Katz
Secretary
Footnote
1 The findings herein are not binding on anyone other than Respondent LoBue.