UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 36779 / January 26, 1996 ADMINISTRATIVE PROCEEDING File No. 3-8940 --------------------------------- : ORDER INSTITUTING PROCEEDINGS In the Matter of : PURSUANT TO SECTIONS : 15(b) AND 19(h) OF THE : SECURITIES EXCHANGE ACT OF ROBERT VECCHIONI, : 1934, MAKING FINDINGS AND : IMPOSING REMEDIAL SANCTIONS Respondent. : : : --------------------------------- I. The Commission deems it appropriate and in the public interest that public administrative proceedings be instituted pursuant to Sections 15(b) and 19(h) of the Securities Exchange Act of 1934 ("Exchange Act") against Robert Vecchioni ("Vecchioni"). In anticipation of the institution of these administrative proceedings, Vecchioni has submitted an Offer of Settlement which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceeding brought by or on behalf of the Commission or to which the Commission is a party, and without admitting or denying the findings herein, except for those set forth in Section III A and III B below, which Vecchioni admits, he consents to the entry of this Order Instituting Proceedings, Making Findings and Imposing Remedial Sanctions. II. Accordingly, it is ordered that proceedings pursuant to Sections 15(b) and 19(h) of the Exchange Act be, and hereby are, instituted. ==========================================START OF PAGE 2====== III. On the basis of this Order and the Respondent's Offer of Settlement, the Commission makes the following findings: -[1]- A. From 1992 to at least in or about November 2, 1994, Vecchioni was a registered representative of a broker-dealer registered with the Commission pursuant to Section 15(b) of the Exchange Act. Additionally, Vecchioni was licensed and acted as the principal of a branch office of such broker-dealer. B. On November 2, 1994, the Commission filed a lawsuit against Vecchioni and others captioned Securities and Exchange Commission v. Basic Energy & Affiliated Resources, Inc., et al., Case No. 94-CV-74434 DT, in the United States District Court for the Eastern District of Michigan. On December 22, 1995, the court entered a permanent injunction against Vecchioni, with his consent and without admitting or denying the allegations contained in the complaint, except as to jurisdiction, enjoining him from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The Commission's complaint was based upon the conduct described below. C. During the period from at least 1992 through November 2, 1994, Basic Energy & Affiliated Resources, Inc. (BEAR) offered and sold at least 14 unregistered oil and gas programs through a multi-level marketing structure consisting of at least 150 marketers. Vecchioni was in charge of BEAR's sales force and recruited salespersons to market BEAR programs. Vecchioni received commissions for the sales of all BEAR programs by all BEAR marketers. D. During the period from at least 1992 through November 2, 1994, Vecchioni willfully violated Sections 5(a) and 5(c) of the Securities Act in that he, directly or indirectly, made use of the means or instruments of transportation or communication in interstate commerce or the mails to offer, sell or deliver after sale to members of the public the securities of BEAR in the form of investment contracts or undivided interests or participation in oil and gas rights and leases when no registration statement was filed or in effect as to said securities pursuant to the Securities Act. As part of such conduct, Vecchioni, and others, offered and sold the unregistered BEAR securities to at least ---------FOOTNOTES---------- -[1]- The findings herein are made pursuant to Respondent Vecchioni's Offer of Settlement and are not binding on any other person or entity named as a respondent in this or any other proceeding. ==========================================START OF PAGE 3====== 1000 investors thereby raising approximately $27 million. Vecchioni's commissions from such activities totalled $7,947,247. E. During the period from at least 1992 through November 2, 1994, Vecchioni willfully violated Section 17(a) of the Securities Act in that he, in the offer or sale of the BEAR securities, by use of the means or instruments of transportation or communication in interstate commerce or of the mails, directly or indirectly: employed devices, schemes, or artifices to defraud; obtained money or property by means of untrue statements of material facts or omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or engaged in transactions, practices or courses of business which operated as a fraud or deceit upon purchasers or prospective purchasers. As part of his conduct, Vecchioni made misrepresentations or omissions of material fact, concerning, among other things, the risks associated with investing in BEAR programs; the financial condition of BEAR; the use of investor funds; and the estimated oil and gas reserves of properties leased or owned by BEAR. F. During the period from at least 1992 through November 2, 1994, Vecchioni willfully violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in that he, in connection with the purchase or sale of the BEAR securities, by use of the means or instrumentalities of interstate commerce, or by use of the mails, directly or indirectly: employed devices, schemes or artifices to defraud; made untrue statements of material facts or omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or engaged in acts, practices, or courses of business which would or did operate as a fraud or deceit. As part of his conduct, Vecchioni engaged in the activities described in Paragraph III(E) above. ==========================================START OF PAGE 4====== IV. In view of the foregoing, it is in the public interest to impose the sanction specified in the Offer of Settlement. Accordingly, IT IS HEREBY ORDERED: That Vecchioni be barred from associating with any broker, dealer, investment company, investment adviser, or municipal securities dealer, effective immediately; provided that after five years Vecchioni may make application to reapply to the appropriate self-regulatory organization, or where there is none, to the Commission. Further, effective immediately, Vecchioni be barred from acting in a supervisory capacity with any broker, dealer, investment company, investment adviser, or municipal securities dealer. Application to reapply with any regulated entity will be prohibited until disgorgement is paid as set forth in the Final Order of Permanent Injunction against Vecchioni. By the Commission. Jonathan G. Katz Secretary