UNITED STATES OF AMERICA
SECURITIES EXCHANGE ACT OF 1934
The Securities and Exchange Commission ("Commission") deems it appropriate in the public interest and for the protection of investors to institute public administrative proceedings pursuant to Sections 15(b) and 19(h)(3) of the Securities Exchange Act of 1934 ("Exchange Act") against Respondent W. Scott Long, III ("Long").
In anticipation of the institution of these proceedings, Respondent Long submitted an Offer of Settlement ("Offer") to the Commission, which the Commission has determined to accept. Solely for the purpose of this proceeding and any other proceeding brought by or on behalf of the Commission, or in which the Commission is a party, and without admitting or denying the findings contained herein, except as to the jurisdiction of the Commission over Respondent Long and over the subject matter of this proceeding, the findings contained in Section III.1.-2. below, the entry of an Order of Permanent Injunction and Other Relief as set forth in Section III.7. below and as to the Final Judgment Relating to Disgorgement and Civil Penalties set forth in Section III.9. below which are admitted, Respondent Long by his Offer consents to the entry of this "Order Instituting Public Administrative Proceedings Pursuant To Sections 15(b) and 19(h)(3) of the Securities Exchange Act of 1934, Making Findings and Imposing Remedial Sanctions" by the Commission.
Accordingly, IT IS ORDERED that proceedings pursuant to Sections 15(b) and 19(h)(3) of the Exchange Act be, and hereby are, instituted.
On the basis of this Order and the Offer of Settlement submitted by Respondent Long, the Commission finds:
1. At all relevant times, Kennedy, Mathews, Landis, Healy & Pecora, Inc. ("Kennedy Mathews"), was a registered broker-dealer.
2. At all relevant times, Long was the president of Kennedy Mathews; and, he was also associated with Kennedy Mathews as a registered representative.
3. At all relevant times, Kennedy Mathews was the underwriter for The AppleTree Companies, Inc.'s ("AppleTree") August 1992 registered offering.
4. On or about August 20, 1992, the date of the closing of AppleTree's registered offering, AppleTree loaned $250,000 to an unrelated company made from the proceeds from AppleTree's offering (the "loan").
5. At all relevant times, Long, among others, knew or should have known, but failed, to disclose the loan to any prospective or actual investors in AppleTree's 1992 offering.
6. On September 30, 1996, the Commission filed an action seeking, among other things, a Final Judgment of Permanent Injunction against Long and others. Securities Exchange Commission v. The AppleTree Companies, Inc., f/k/a Modami Services, Inc., Michael H. Salit, David B. Lobel, Paul B. Kravitz and W. Scott Long III, No. 96-8675-CIV-Ryskamp (S.D. Fla.). In pertinent part, the Commission alleged in its complaint that Long (in his capacity as an underwriter) fraudulently, knowingly, willfully and recklessly failed to cause the loan to be disclosed to any prospective investors or investors in AppleTree's 1992 offering.
7. On January 29, 1999, an Order of Permanent Injunction and Other Relief was entered against Long, by consent, enjoining him from future violations of Sections 17(a)(1)-(3) of the Securities Act of 1933, Section 10(b) of the Exchange Act and Rule 10(b)-5 thereunder.
8. On February 23, 2000, the Commission accepted Long's offer to disgorge $26,000 with payment waived based on his demonstrated inability to pay.
9. On March 3, 2000, the Court entered a Final Judgment Relating to Disgorgement and Civil Penalties, by consent, against Long.
Based on the foregoing, the Commission deems it appropriate in the public interest and for the protection of investors to impose the sanction specified by Respondent Long in his Offer of Settlement. Accordingly, IT IS ORDERED that:
Respondent Long 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.