==========================================START OF PAGE 1====== UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 38539 / April 22, 1997 ADMINISTRATIVE PROCEEDING FILE NO. 3-9124 ______________________________ : : In the Matter of : : MICHAEL D.GIBSON, : ORDER MAKING FINDINGS GREGORY C. MOORE : AND IMPOSING REMEDIAL JAY D. LIEBOWITZ, and : SANCTIONS WITH RESPECT DAVID MCCLURE : TO DAVID MCCLURE : Respondents : : ______________________________: I. In these proceedings instituted 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"), Respondent David McClure has submitted an Offer of Settlement which the Securities and Exchange Commission (the "Commission") has determined to accept.-[1]- II. Solely for the purpose of this proceeding, and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings or conclusions contained herein, except those set forth in Section III. A. below, which are admitted, and prior to a hearing pursuant to the Commission's Rules of Practice, 17 C.F.R. 201.1 et seq., McClure, by his Offer, consents to the entry of the findings and the imposition of the remedial sanctions set forth below. ---------FOOTNOTES---------- -[1]- The Order Instituting Public Proceedings was issued by the Commission on September 30, 1996. In the Matter of Michael Gibson et al., Admin. Proc. File No. 3-9124. ==========================================START OF PAGE 2====== III. On the basis of the Order Instituting Public Proceedings Pursuant to Section 8A of the Securities Act and Sections 15(b), 19(h) and 21C of the Exchange Act against McClure, and the Offer submitted by McClure, the Commission finds-[2]- that: A. McClure has been a registered representative since 1983. Since 1987, he has been a registered principal and vice president of The O.N. Equities Sales Company ("Onesco"), a registered broker-dealer. B. From May 1993 through January 1995, C'est Lestial Waters, Inc. ("CWI") raised over $7 million from more than 100 investors through the offer and sale of unregistered collateral trust bonds (the "CWI bonds"), as well as the securities of certain entities related to CWI. In connection with that offering, CWI, certain of its principals and agents, as well as certain other entities and individual sales representatives, violated, variously, the securities registration, antifraud and broker-dealer registration provisions of the federal securities laws. Specifically, these entities and individuals made misrepresentations of material fact and failed to disclose material information concerning the collateral underlying the CWI bonds; the risk inherent in the investments and their relative safety, their status as exempt from registration with the Commission, and the use of offering proceeds. C. From April 1994 through January 1995, Michael D. Gibson ("Gibson"), while then a registered representative associated with Onesco, offered and sold more than $2.7 million in CWI bonds and received approximately $312,000 in commissions therefrom. In connection with his sales of the CWI bonds, Gibson made untrue statements of material fact to investors, including that: 1. the CWI bonds were fully secured through a first and irrevocable lien interest in certain assets of CWI in favor of investors; and 2. the financial stability of CWI was irrelevant because the CWI bonds were fully secured. ---------FOOTNOTES---------- -[2]- The findings herein are made pursuant to McClure's Offer and are not binding on any other person or entity in this or any other proceeding. ==========================================START OF PAGE 3====== D. Through the conduct described above, Gibson violated Sections 5(a), 5(c) and 17(a) of the Securities Act, and Sections 10(b), 15(a) and 15(c) of the Exchange Act and Rules 10b-5 and 15c1-2 thereunder. E. During part of the period in which Gibson sold the CWI bonds, McClure specifically assumed, among other things, the responsibility from Onesco's compliance administrator, who was Gibson's immediate supervisor, of reviewing the Annual Compliance Interview Forms ("Interview Forms") and Outside Business Activity Reports ("OBA Reports") of Onesco registered representatives, including those completed by Gibson during a compliance meeting on June 14, 1994. As a result, from at least June 1994 through at least October 1994, McClure assumed supervisory responsibilities with respect to Gibson. Gibson's sales of CWI bonds were not authorized by Onesco, and Onesco received no commissions from these transactions. F. From at least June 1994 through January 1995, McClure failed reasonably to supervise Gibson with a view to preventing his violations of the federal securities laws. Specifically, McClure failed to detect, investigate and adequately respond to facts and circumstances of which he had notice regarding Gibson's activities, in that: 1. In delegating the task of reviewing the Interview Forms and OBA Reports to a clerical compliance assistant, McClure failed to provide any instructions as to the review of the OBA Reports. As a result, the OBA Reports were not reviewed and Gibson's disclosure in his OBA Report of, among other things," nonsecurity collateral trust bond investments," was not timely detected or investigated; 2. In mid-September 1994, a regional marketing director of Onesco's insurance company parent, informed McClure that Gibson had told the marketing director that he was considering involvement with viatical settlements and that Gibson had mentioned the sale of bonds in that context. Shortly after this conversation, and again in the context of viatical settlements, Gibson informed McClure that he was involved in the sale of bonds. McClure failed to promptly initiate an investigation into this information; and although he thereafter directed that an inquiry be made of Gibson's activities, he failed to insure that such inquiry was promptly and adequately pursued. When the nature of Gibson's securities sales were ultimately discovered, McClure, on his own initiative, implemented a series of steps to strengthen Onesco's procedures and systems to enhance detection and prevent conduct of a similar nature in ==========================================START OF PAGE 4====== the future. IV. In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified in the Offer submitted by McClure. Accordingly, IT HEREBY IS ORDERED that: A. McClure be, and hereby is suspended from association with any broker, dealer, investment adviser, investment company or municipal securities dealer, for a period of three (3) months, effective on the second Monday following entry of this Order. Within thirty (30) days after the end of the suspension period, McClure shall provide the Commission with an affidavit that states that he has complied fully with the suspension. B. McClure be, and hereby is barred from acting in a supervisory capacity with any broker, dealer, investment adviser, investment company or municipal securities dealer for a period of three (3) months immediately following the period of suspension ordered in Section IV. A. above. Within thirty (30) days after the end of the suspension period, McClure shall provide the Commission with an affidavit that states that he has complied fully with the supervisory bar. C. McClure shall pay a civil penalty of $5,000 within thirty (30) days of entry of this Order. Such payment shall be: (a) made by United States postal money order, certified check, bank cashier's check or bank money order; (b) made payable to the Securities and Exchange Commission; (c) delivered to the Comptroller, Securities and Exchange Commission, 450 5th St., N.W., Stop 0-3, Washington D.C. 20549; and (d) submitted under cover letter which identifies McClure as Respondent in these proceedings, and the Commission's file number in these proceedings, a copy of which cover letter and money order or check shall be sent to Michael Newman, Securities and Exchange Commission, The Curtis Center Suite 1005E., 601 Walnut St., Philadelphia, PA 19106. By the Commission. _____________________________ Jonathan G. Katz Secretary