UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 50051 / July 21, 2004
File No. 3-11552
In the Matter of Ronald D. Brouillette, Jr.
On July 21, 2004, the Commission issued an Order Instituting Public Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 (Exchange Act) against Ronald D. Brouillette (Brouillette).
The Division of Enforcement (Division) alleges that on July 1, 2004, Brouillette was enjoined by the U.S. District Court for the District of Columbia from future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder. The Commission filed its complaint against Brouillette and others on September 25, 2003.
The Division alleges that the complaint in the underlying injunctive action alleged that Brouillette was involved in a fraudulent pump and dump scheme to sell the securities of Pay Pop, Inc., a now defunct company, to the market. The complaint alleged, among other things, that Brouillette, as a broker at Centex Securities, set up accounts in the name of Pay Pop principals, as well as nominee accounts based on false information, and effected trades between these accounts to create the appearance of genuine demand for Pay Pop stock. The complaint further alleged that Brouillette drafted the trade or transfer authorizations required by his firm's clearing broker, and secured the required nominee signatures, knowing that these would be forged by, or at the direction of, one of the Pay Pop principals. The complaint also alleged that Brouillette was active in assuring that there were buyers for Pay Pop stock by making false representations to his customers or by omitting material information, in addition to making numerous baseless assurances of quick gains to encourage customer purchases of Pay Pop stock, and making unauthorized trades in his clients' accounts in pay pop stock. The complaint further alleged that Brouillette never disclosed to customers to whom he sold Pay Pop stock that he was simultaneously selling millions of Pay Pop shares on behalf of Pay Pop principals or for his own benefit.
A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide the Respondent an opportunity to dispute these allegations, and to determine what remedial sanctions, if any, are appropriate.
The Commission directed that an administrative law judge shall issue an initial decision no later than 210 days from the date of service of this order.
See also the Order in this matter