-------------------- BEGINNING OF PAGE #1 ------------------- Administrative Proceeding File No. 3-8615 UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 RELEASE 36471 / November 9, 1995 ------------------------------- : In The Matter of : ORDER DENYING REQUEST : TO LIFT DEFAULT JAMES W. BULLARD, JR. : : : ------------------------------- On February 15, 1995, the Securities and Exchange Commission instituted public administrative proceedings pursuant to Section 8A of the Securities Act of 1933 ("Securities Act") and Sections 15(b), 19(h) and 21C of the Securities Exchange Act of 1934 ( Exchange Act ) against respondent James. W. Bullard, Jr. Since its institution, this proceeding has been marked by Bullard's repeated failure to respond to any and all pleadings. Bullard s answer to the Order Instituting Proceedings was due on March 10, 1995. He failed to respond. When Administrative Law Judge Kolko granted an extension of the answering date until June 16, 1995, Bullard again failed to answer. A further extension was granted by Judge Kolko until July 12, 1995. One day before this deadline staff of the Division of Enforcement and Mr. Bullard jointly requested an additional extension , as a settlement of the proceeding had been agreed to in principle. Judge Kolko granted a further extension until August 2, 1995. Mr. Bullard never submitted the required settlement documents to the staff. He also did not file an answer to the Order Instituting Proceedings. Accordingly, on September 11, 1995, staff filed a Motion for Entry of a Default Judgment. Mr. Bullard failed to respond to this motion. Accordingly, on October 5, 1995, an Order Making Findings, Imposing Remedial Sanctions and Issuing a Cease and Desist Order by Default was entered. Mr. Bullard responded to this final order with a letter to Administrative Law Judge Lillian A. McEwen, who had assumed the matter from ALJ Kolko. This letter was forwarded to the Commission s Secretary, who had entered the default order pursuant to delegated authority. Mr. Bullard s letter has been treated as a motion to set aside the default. Rule 12(d) of the Commission's Rules of -------------------- BEGINNING OF PAGE #2 ------------------- Practice-[1]- provides that any motion to set aside a default shall be made within a reasonable time, and shall state the reasons for the failure to file or appear and specify the nature of the proposed defense in the proceedings." Mr. Bullard's letter was received on October 10, 1995 and was clearly timely filed. In his letter, he stated that he was without counsel and had only become aware of his responsibility to file an answer about one month ago. While he averred that he was not guilty he did not specify the nature of his proposed defense, as required by Rule 12(d). Instead he requested a further extension to prepare an answer. While Mr. Bullard has stated that he was unaware of the obligation to file an answer, this requirement was clearly stated in the Order Instituting Proceedings, a copy of which was served directly on Mr. Bullard, as well as his then counsel. At a pre- trial telephone conference on May 31, 1995 , Mr. Arthur P. Fisch, while no longer retained by Mr. Bullard, acted as his liaison. At that time he stated that he had informed Mr. Bullard "that he has to get an answer in." Subsequently, on July 5, 1995, Mr. Bullard participated, pro se, in a telephonic pre-trial conference. At that time the issue of the answer was discussed, again. In granting an extension for an answer, until July 12, ALJ Kolko stated "Please take these down, Mr. Bullard, because everything else falls apart to your detriment if that date isn't met. The July 12th is your answer date, and that's a receipt date." ALJ Kolko also reassured Mr. Bullard that it wasn't necessary to provide documentation at that time, merely the answer. Rule 12(d) provides that a default may be set aside for good cause "in order to prevent injustice and on such conditions as may be appropriate." The authority to set a default aside for good cause has been delegated by the Commission to its Secretary, 17 CFR 200.30-7. This is a broad standard, but one that Mr. Bullard has failed to meet. Contrary to Mr. Bullard's assertions, the record is clear that he knew of his obligation to file an answer. It is also clear that Mr. Bullard had several opportunities to act in this proceeding, all of which he missed. Furthermore, his response each time has been substantially the same, that he wasn't aware and that he needs more time. Under these circumstances, it is not possible to find that Bullard has demonstrated good cause. Accordingly, IT IS ORDERED, that the request to set aside the default is denied. For the Commission, by its Secretary, pursuant to delegated authority. --------- FOOTNOTES --------- -[1]- 17 CFR 201.12(d). On June 9, 1995, the Commission amended it Rules of Practice. Because this proceeding was instituted prior to the effective date of the revised regulations, it will continue to be governed by the previous rules. The comment to new rule 155, notes, however, that the standard for setting aside a default is unchanged,(published on June 23, 1995 at 60 FR 32801, to be codified at 17 C.F.R. 201.155). -------------------- BEGINNING OF PAGE #3 ------------------- Jonathan G. Katz Secretary