UNITED STATES OF AMERICA
SECURITIES EXCHANGE ACT OF 1934
INVESTMENT ADVISERS ACT OF 1940
The Securities and Exchange Commission ("Commission") deems it appropriate in the public interest and for the protection of investors that administrative proceedings be instituted pursuant to Sections 15(b)(6), 15B(c)(4) and 19(h) of the Securities Exchange Act of 1934 ("Exchange Act") and Section 203(f) of the Investment Advisers Act against Ricardo Ballesteros Gutierrez ("Ballesteros").
In anticipation of these proceedings, Ballesteros has submitted an Offer of Settlement ("Offer") to the Commission, 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 that Ballesteros admits the jurisdiction of the Commission over him and over the subject matter of these proceedings and the entry of the Final Judgment of Permanent Injunction and Other Relief as to Defendant Ricardo Ballesteros Gutierrez set forth in Section III.D, Ballesteros consents to the entry of this Order Instituting Public Administrative Proceedings Pursuant to Sections 15(b)(6), 15B(c)(4) and 19(h) of the Securities Exchange Act of 1934, and Section 203(f) of the Investment Advisers Act of 1940, Making Findings And Imposing Sanctions ("Order") and to the entry of the findings and sanctions set forth below.
Accordingly, IT IS HEREBY ORDERED that the said administrative proceedings against Ballesteros be, and hereby are, instituted.
The Commission makes the following findings:
A. From July 1998 through March 10, 2000, Ballesteros was associated with Lehman Brothers Inc., a broker, dealer, investment adviser and municipal securities dealer registered with the Commission, and a member of both a national securities exchange and a registered securities association.
B. On May 8, 2001, the Commission filed a complaint in the United States District Court for the Southern District of New York styled Securities and Exchange Commission v. Jorge Eduardo Ballesteros Franco, et al., 01CV 3872 (JGK) (S.D.N.Y.), alleging, among other things, that on June 24 and June 25, 1999 Ballesteros engaged in insider trading in violation of Sections 10(b) and 14(e) of the Exchange Act and Rules 10b-5 and 14e-3 thereunder in connection with transactions in the securities of Nalco Chemical Company ("Nalco").
C. Specifically, the Commission's complaint alleged that Ballesteros bought 1,200 Nalco shares on June 24, 1999 through an account in the name of Interconsulting Limited at Stanford Group Company in Houston, Texas. Then on June 25, 1999, together with two of his brothers, Jose Luis Ballesteros Gutierrez and Alejandro Ballesteros Gutierrez, he jointly purchased an additional 3,564 Nalco shares through the same account. The Complaint further alleges that Ballesteros purchased these Nalco securities while in possession of material, nonpublic information concerning a proposed tender offer for Nalco that was then being considered by Suez Lyonnaise des Eaux ("Suez"). Ballesteros knew or had reason to know that this information was nonpublic and knew or had reason to know that it was obtained, directly or indirectly, from his father, Jose Luis Ballesteros Franco, who was then a member of Nalco's Board of Directors. On June 28, 1999, Nalco and Suez jointly announced that a Suez subsidiary would make a tender offer within five business days for all outstanding Nalco common stock at a price of $53.00 per share. On July 1, 1999, Ballesteros sold his Nalco shares and realized illegal profits of $20,853.17.
D. On May 31, 2001, a Final Judgment of Permanent Injunction and Other Relief as to Defendant Ricardo Ballesteros Gutierrez was entered by the United States District Court for the Southern District of New York in the action styled Securities and Exchange Commission v. Jorge E. Ballesteros Franco, et al., 01CV 3872 (JGK) (S.D.N.Y.), which, among other things, permanently enjoins Ballesteros from violating Sections 10(b) and 14(e) of the Exchange Act and Rules 10b-5 and 14e-3 thereunder.
Based on the foregoing, the Commission deems it appropriate, in the public interest and for the protection of investors, to impose the following sanction specified in Ballesteros' Offer.
ACCORDINGLY, IT IS ORDERED that Ballesteros be barred from association with any broker, dealer, investment adviser, municipal securities dealer, or member of a national securities exchange or registered securities association, with the right to reapply for association after five years to the appropriate self-regulatory organization, or if there is none, to the Commission.
By the Commission.