UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 50321 / September 7, 2004
Administrative Proceedings File No. 3-11634
In the Matter of Harold B. Gallison, Jr., Terrence J. Hughes and David Rosenthal
The United States Securities and Exchange Commission (Commission) issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 (the Order) against Harold B. Gallison, Jr. (Gallison), Terrence J. Hughes (Hughes) and David Rosenthal (Rosenthal) (collectively, Respondents) based on the entry of consent judgments of permanent injunction against them.
The Division of Enforcement alleges that, on November 26, 2002, the United States District Court for the District of Utah entered final consent judgments against Gallison, Hughes and Rosenthal that, among other things, permanently enjoin each of the Respondents from violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Each of the Respondents consented to the entry of the respective final consent judgment without admitting or denying the allegations in the underlying complaint (Complaint), except as to jurisdiction.
As stated in the Order, the Complaint alleged that from approximately August 1992 through about April 1999, Gallison was a registered principal and the President of La Jolla Capital Financial Corp. (La Jolla Capital), a broker-dealer formerly registered with the Commission. From approximately August 1992 through about March 1994, Hughes was a registered representative, and for part of that period a branch manager, associated with Burnett Grey & Co., Inc. (Burnett Grey), a registered broker-dealer that ceased operations around March 1994. From approximately February 1993 through February 1997, Rosenthal was a registered representative associated with InterSecurities, Inc., a broker-dealer registered with the Commission. During separate time periods, each of the Respondents engaged in a fraudulent scheme to manipulate the market for the securities of Golf Ventures, Inc. (GVI), a public company located in Salt Lake City, Utah that filed for bankruptcy in July 1999 and subsequently ceased all operations. Gallison executed the scheme by arranging for La Jolla Capital to tout and sell GVI stock to its retail customers during 1994 in exchange for a GVI representative making undisclosed bribe payments to La Jolla Capital; Hughes, from approximately October 1993 through February 1994, arranged for Burnett Grey to tout and sell GVI stock to its retail customers in exchange for undisclosed bribe payments made to Burnett Grey by a GVI representative; and Rosenthal, from approximately October 1995 through October 1996, accepted undisclosed bribes from a GVI representative in exchange for recommending and selling GVI securities to his customers. By their conduct alleged in the Complaint, Gallison and Rosenthal participated in an offering of GVI stock, which was a penny stock for a significant portion of the time period relating to their alleged conduct. During the time period at issue regarding Hughes' alleged conduct, GVI was not a penny stock.
A hearing will be scheduled before an Administrative Law Judge to determine whether the Division's allegations in the Order are true, to provide Respondents an opportunity to dispute the allegations, and to determine what sanctions, if any, are appropriate and in the public interest. The Commission directed that an administrative law judge issue an initial decision in this matter within 210 days from the date of service of the Order.
See also the Order in this matter