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U.S. Securities and Exchange Commission

United States of America
before the
Securities and Exchange Commission

Securities Exchange Act of 1934
Release No. 47519 / March 18, 2003

Administrative Proceeding
File No. 11068


In the Matter of

DISCOVERY CAPITAL GROUP, INC. and ERIK WALSH

Respondent.


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ORDER INSTITUTING PUBLIC ADMINISTRATIVE PROCEEDINGS PURSUANT TO SECTION 15(b) OF THE SECURITIES EXCHANGE ACT OF 1934, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS

I.

The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest to institute public administrative proceedings pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act") against Respondents Discovery Capital Group, Inc. ("Discovery Capital") and Erik Walsh ("Walsh") (collectively, "Respondents").

II.

In anticipation of the institution of these proceedings, Respondents have submitted Offers of Settlement ("Offers") 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 Respondents and over the subject matter of this proceeding, and as to the entry of Final Judgments of Permanent Injunction and Other Relief as set forth in Sections III. E. and F. below, which are admitted by Respondents Discovery Capital and Walsh, respectively, Respondents consent 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"), as set forth below.

III.

On the basis of this Order and the Offers submitted by Respondents, the Commission finds that:

A. At all relevant times, Respondent Discovery Capital was a broker-dealer registered with the Commission.

B. At all relevant times, Respondent Walsh was a registered representative associated with Discovery Capital, a registered broker-dealer.

C. On March 14, 2002, the Commission filed a Complaint seeking a permanent injunction, disgorgement and prejudgment interest thereon, and imposition of a civil money penalty against Respondents Discovery Capital, Walsh and others. Securities and Exchange Commission v. Discovery Capital, Inc., et al., Case No. 02-60363-Civ-Huck (S.D. Fla.). In its Complaint, the Commission alleged that registered and unregistered representatives associated with Respondent Discovery Capital made material misrepresentations and omissions in connection with the sale of securities issued by Respondent Discovery Capital in the form of preferred stock and promissory notes, in violation of the antifraud provisions of the federal securities laws. The Complaint further alleged net capital and books and records violations on the part of Respondent Discovery Capital.

D. The Complaint further alleged that Respondent Walsh, while associated with Discovery Capital, made material misrepresentations and omissions in connection with the sale of securities issued by Discovery Capital in the form of preferred stock and promissory notes, in violation of the antifraud provisions of the federal securities laws.

E. On October 4, 2002, by Respondent Walsh's consent and without admitting or denying the allegations of the Commission's Complaint, the United States District Court for the Southern District of Florida entered a Judgment of Permanent Injunction and Other Relief, enjoining Respondent Walsh from any future violations of Section 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder.

F. On October 24, 2002, by Respondent Discovery Capital's consent and without admitting or denying the allegations of the Commission's Complaint, the United States District Court for the Southern District of Florida entered a Final Judgment of Permanent Injunction and Other Relief, enjoining Respondent Discovery Capital from any future violations of Section 17(a) of the Securities Act, Sections 10(b), 15(c)(1), 15(c)(3), and 17(a) of the Exchange Act, and Rules 10b-5, 15c1-2, 15c3-1, 17a-3, 17a-4, 17a-5, and 17a-11 thereunder.

IV.

Based on the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified in Respondents' Offers.

Accordingly, IT IS ORDERED that:

Respondent Discovery Capital's registration with the Commission be, and hereby is, revoked; and

Respondent Walsh be, and hereby is, barred from association with any broker or dealer.

For the Commission, by its Secretary, pursuant to delegated authority.

Jonathan G. Katz
Secretary

 

http://www.sec.gov/litigation/admin/34-47519.htm


Modified: 04/10/2003