UNITED STATES SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
RELEASE NO. 49829 / June 8, 2004
FILE NO. 3-11515
SEC INSTITUTES PUBLIC ADMINISTRATIVE PROCEEDINGS AGAINST CHARLES W. CROUSE AND NORMAN R. HESS
On June 8, 2004, the Commission entered an Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933 and Sections 15(b) and 21C of the Securities Exchange Act of 1934 against Charles W. Crouse (Crouse) and Norman R. Hess (Hess). The Division of Enforcement (Division) alleges, among other things, that Crouse, a registered representative at a broker-dealer, willfully aided and abetted and caused violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder in connection with a Ponzi scheme operated by Mark Drucker (Drucker), one of his customers. The Division also alleges that Hess, the former President of the broker-dealer and Crouse's direct supervisor, failed reasonably to supervise Crouse with a view toward preventing his willful aiding and abetting of the antifraud provisions of the federal securities laws.
A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide Crouse and Hess an opportunity to dispute these allegations and to determine what remedial sanctions, if any, are appropriate and in the public interest.
The Order requires the Administrative Law Judge to issue an initial decision no later than 300 days from the date of service of the Order, pursuant to Rule 360(a)(2) of the Commission's Rules of Practice.
See also the Order in this matter