UNITED STATES OF AMERICA
In the Matter of
JOHN ADAMS, JR., et al.
|ORDER MAKING FINDINGS AND IMPOSING SANCTIONS BY DEFAULT AGAINST SEAN HART AND DAVID NELSON|
This Order bars Sean Hart and David Nelson from association with a broker-dealer, based on their felony convictions. Each was convicted of conspiracy to commit securities fraud during his employment with a broker-dealer that used fraudulent sales practices to sell speculative securities to unsuspecting investors.
The Securities and Exchange Commission (Commission) issued its Order Instituting Proceedings (OIP) in this matter on February 15, 2002, pursuant to Section 15(b) of the Securities Exchange Act of 1934 (Exchange Act). The OIP alleges that Hart and Nelson were associated with a broker-dealer during the 1990s, and were convicted of conspiracy to commit securities fraud in 2000. Hart and Nelson were served with the OIP on April 9 and April 24, respectively. Each failed to file an Answer, due twenty days after he was served. See 17 C.F.R. § 201.220(b); OIP at 5. On June 10, the Division of Enforcement filed a Motion for Default, asking that Hart and Nelson be barred from association with any broker or dealer. A respondent who fails to file an Answer to the OIP may be deemed to be in default, and the administrative law judge may determine the proceeding against him. See 17 C.F.R. §§ 201.155(a), .220(f). On June 12, Hart and Nelson were ordered to show cause by June 20 why they should not be held in default and barred from association with any broker or dealer. Neither replied.
Hart and Nelson are in default because they failed to file Answers or otherwise to defend the proceeding. See 17 C.F.R. §§ 201.155(a)(2), .220(f). Accordingly, the undersigned finds that the allegations in the OIP as to them are true. The findings of fact and conclusions of law in this order are not binding on any other person in this proceeding.
II. FINDINGS OF FACT
Hart was employed as a registered representative, a co-branch manager, and a regional vice president from May 1992 to October 1995 at a registered broker-dealer, L.C. Wegard & Co., Inc. (Wegard). Nelson was employed as a registered representative and a branch manager from June 1993 to October 1995 at Wegard. Wegard operated as a boiler room, and Hart, Nelson, and others participated in a conspiracy to commit securities fraud by inducing unsuspecting investors to purchase speculative high-risk securities through the use of fraudulent and deceptive sales practices. Hart and Nelson were convicted of conspiracy to commit securities fraud on July 21, 2000, and July 5, 2000, respectively. United States v. Sean Francis Hart, No. 98-414-01 (D. N.J. July 21, 2000); United States v. David Nelson, No. 97-647-02 (D. N.J. July 5, 2000).
III. CONCLUSIONS OF LAW
Hart and Nelson have each been convicted, within ten years of the commencement of this proceeding, of "conspiracy to commit" a felony that "involves the purchase or sale of any security" and also "arises out of the conduct of the business of a broker [or] dealer" within the meaning of Sections 15(b)(4)(B) and 15(b)(6)(A)(ii) of the Exchange Act. Their unlawful conduct was recurring and egregious. There are no mitigating circumstances.
The Division requests that Hart and Nelson be barred from association with any broker or dealer. This sanction will serve the public interest and the protection of investors, pursuant to Sections 15(b) and 19(h) of the Exchange Act. It accords with Commission precedent and the sanction considerations set forth in Steadman v. SEC, 603 F.2d 1126, 1140 (5th Cir. 1979).
IT IS ORDERED that SEAN HART IS BARRED from association with any broker or dealer.
IT IS FURTHER ORDERED that DAVID NELSON IS BARRED from association with any broker or dealer.
Carol Fox Foelak
Administrative Law Judge
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