UNITED STATES OF AMERICA before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 38227 / February 3, 1997 INVESTMENT ADVISERS ACT OF 1940 Release No. 1613 / February 3, 1997 Administrative Proceeding File No. 3-9233 ------------------------------------ : ORDER INSTITUTING PUBLIC In the Matter of : PROCEEDINGS PURSUANT TO : SECTIONS 15(b) AND 19(h) James Zimmerman and Old Naples : OF THE SECURITIES EXCHANGE Securities, Inc., : ACT OF 1934, AND SECTIONS : 203(e) and 203(f) OF THE : INVESTMENT ADVISERS ACT : OF 1940, MAKING FINDINGS Respondents : AND IMPOSING REMEDIAL : SANCTIONS : ------------------------------------ I. The Securities and Exchange Commission ("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") and Sections 203(e) and 203(f) of the Investment Advisers Act of 1940 ("Advisers Act") against Old Naples Securities, Inc. ("Old Naples") and James Zimmerman ("Zimmerman"), and such proceedings are hereby instituted. II. In anticipation of the institution of these proceedings, Respondents Old Naples and Zimmerman have submitted an Offer of Settlement ("Offer"). The Commission has determined that it is appropriate and in the public interest to accept such Offer. By their Offer, Respondents Old Naples and Zimmerman, without admitting or denying the findings hereinafter set forth, except as to the jurisdiction of the Commission over the Respondents and over the matters set forth in this Order Instituting Public Proceedings Pursuant to Sections 15(b) and 19(h) of the Securities Exchange Act of 1934 and Sections 203(e) and 203(f) of the Investment Advisers Act of 1940, Making Findings and Imposing Remedial Sanctions ("Order"), which are admitted, and the matters contained in paragraphs III.A. and III.B., below, which are also admitted, and solely for the purposes of these proceedings and any other proceedings brought by or on behalf of the Commission ==========================================START OF PAGE 2====== or in which ==========================================START OF PAGE 3====== the Commission is a party, consent to the entry of this Order, and consent to the imposition of the sanctions set forth in Section IV., below. III. Based on the foregoing and the Offer submitted by Respondents Old Naples and Zimmerman, the Commission finds that: A. Respondent Old Naples has been registered with the Commission as a broker-dealer since February 1986, and as an investment adviser since May 1993. Since March 1992 Respondent Zimmerman has been the registered principal, sole owner and president of Old Naples. B. On January 24, 1997, a final judgment of permanent injunction was entered, by consent, against Old Naples and Zimmerman, permanently enjoining Old Naples and Zimmerman from violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and also enjoining Old Naples from violations of Sections 15(c) and 17(a) of the Exchange Act and Rules 15c3-1, 17a-3 and 17a-5 thereunder. C. The Commission's complaint alleged, in part, that Respondents Zimmerman and Old Naples, during the period from in or about July 1992 to in or about August 5, 1996: (a) received in excess of $3.5 million dollars from investors by misrepresenting to prospective investors and investors that the funds received for investments had been or were to be used to purchase securities, when, in fact, no securities were purchased and the funds had been misappropriated and/or used to pay previous investors and personal expenses; and (b) created and distributed to investors fictitious periodic account statements misrepresenting the financial condition of the customers' accounts in order to create the appearance that the purported investments were increasing in value. The complaint also alleged that Respondent Old Naples, during the period from in or about July 1992 to in or about August 5, 1996: (a) failed to create accurate books and records with respect to (i) its net capital computation, and (ii) its blotters or other records of original entry; (b) filed Part IIA of Form X-17A-5, with the National Association of Securities Dealers, Inc., which contained inaccurate net capital computations; and (c) effected transactions in, or induced or attempted ==========================================START OF PAGE 4====== to induce the purchase and sale of securities at a time when Old Naples did not have and did not maintain the required minimum net capital to legally transact a securities business. IV. In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified in the Offer. Accordingly, IT IS ORDERED THAT: Respondent Zimmerman be and hereby is barred from association with any broker, dealer, municipal securities dealer, investment company or investment adviser, and Respondent Old Naples' broker-dealer and investment adviser registrations be and hereby are revoked. By the Commission. Jonathan G. Katz Secretary