UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
Securities Exchange Act of 1934
Release No. 47666 / April 11, 2003
Investment Advisers Act of 1940
Release No. 2122 / April 11, 2003
Investment Company Act of 1940
Release No. 26004 / April 11, 2003
File No. 3-11086
Proceedings Instituted Against Douglas W. Powell, Charles D. Elliott, III, and Russell S. Tarbett
The Commission announced that it has instituted administrative and cease-and-desist proceedings against Douglas W. Powell ("Powell"), Charles D. Elliott, III ("Elliott"), and Russell S. Tarbett ("Tarbett"), all of whom are residents of Texas (hereinafter, "the Respondents"). In its Order Instituting Public Administrative Proceedings Pursuant to Sections 15(b)(6) and 21C of the Securities Exchange Act of 1934, Section 203(f) of the Investment Advisers Act of 1940, and Section 9(b) of the Investment Company Act of 1940 ("Order"), the Division of Enforcement ("Division") alleges that the Respondents willfully aided and abetted and caused various securities law violations arising from Powell and Elliott's undisclosed ownership and control of Northstar Securities, Inc. ("Northstar"), a registered broker-dealer, between 1998 and early 2001.
Among other things, the Division alleges that, without the consent of the Commission, Powell and Elliott willfully associated with Northstar in contravention of a Commission Order entered on May 13, 1999 suspending them from association with any broker or dealer for three months, and, thereafter, from associating in a supervisory or proprietary capacity for an additional six months. The Division further alleges that the Respondents caused Northstar to make inaccurate filings that (a) failed to list Powell and Elliott as owners and executive officers of Northstar; and (b) falsely failed to disclose them as persons who controlled Northstar's management or policies, or wholly or partially financed its business. Moreover, the Division alleges that the Respondents willfully aided and abetted and caused Northstar's failure to register Powell and Elliott as principals with the firm while they were managing Northstar's securities business and effecting securities transactions on the firm's behalf. Finally, the Division alleges that Respondents aided and abetted Northstar's failure to maintain adequate books and records regarding Powell and Elliott, as well as its failure to file a mandatory annual report for the 2000 fiscal year. According to the Order, Tarbett, who became Northstar's nominal owner and titular chief executive officer in 1999, permitted Powell and Elliott to associate with Northstar in contravention of the Commission' Order, and otherwise aided and abetted and caused the above violations.
As a result, the Division alleges that Powell and Elliott willfully violated Section 15(b)(6)(B)(i), and willfully aided and abetted and caused Northstar's violations of Sections 15(b)(1), 15(b)(6)(B)(ii), and 17(a)(1) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 15b3-1, 15b7-1, 17a-3 and 17a-5 thereunder, and that Tarbett aided and abetted and caused violations of Sections 15(b)(1), 15(b)(6)(B)(i), 15(b)(6)(B)(ii), and 17(a)(1) of the Exchange Act and Rules 15b3-1, 15b7-1,17a-3 and 17a-5 thereunder.
A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide Powell, Elliott and Tarbett an opportunity to dispute these allegations, and to determine what sanctions, if any, are appropriate and in the public interest.