-1- UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 40425 / September 10, 1998 ADMINISTRATIVE PROCEEDING File No. 3-9701 ______________________________ : In the Matter of : :ORDER INSTITUTING PUBLIC ANDREW PAUL TOMASKO, :PROCEEDING AND OPINION AND :ORDER PURSUANT TO SECTIONS Respondent. :15(b)(6) AND 21C OF THE SECURITIES :EXCHANGE ACT OF 1934 ______________________________: I. The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that a public administrative proceeding be, and hereby is, instituted pursuant to Sections 15(b)(6) and 21C of the Securities Exchange Act of 1934 ("Exchange Act") to determine whether Andrew Paul Tomasko ("Tomasko") caused and aided and abetted violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. II. In anticipation of the institution of this proceeding, Tomasko has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. Solely for the purpose of this proceeding 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 Commission's findings contained herein, except as to the Commission's finding of jurisdiction over him and the subject matter of this proceeding, Tomasko consents to the issuance of this Order Instituting Public Proceeding and Opinion and Order Pursuant to Sections 15(b)(6) and 21C of the Securities Exchange Act of 1934 ("Order") and to the entry of the findings and the imposition of the relief set forth below. -2- III. FACTS Based on the foregoing, the Commission finds that:[1] A.Summary On July 27, 1993, First Eastern Corporation ("First Eastern") announced that it would be purchased by PNC Bank, causing First Eastern's stock to rise substantially. Prior to the public announcement of the merger, Paul Tomasko, a broker in Clarks Summit, Pennsylvania, executed a purchase of 1000 shares of First Eastern stock for a client that he knew was in possession of material nonpublic information obtained from a director of First Eastern. B.Respondent Tomasko is 65 years old and resides in Clarks Summit, Pennsylvania. From March 1993 through the present, Tomasko has been employed as a registered representative in the Clarks Summit, Pennsylvania office of Rutherford, Brown & Catherwood ("Rutherford"), a broker-dealer registered with the Commission pursuant to Section 15(b) of the Exchange Act. C.Other Relevant Persons and Entities First Eastern Corporation was a bank with its headquarters in Wilkes-Barre, Pennsylvania. First Eastern's common stock traded on NASDAQ until August 1994, when it was acquired by PNC Bank ("PNC") of Pittsburgh, Pennsylvania. The purchase of First Eastern by PNC was first publicly disclosed on July 27, 1993. John G. Martines ("Martines"), during the relevant period, was the chairman and CEO of Lake Ariel Bancorp, a public company. Tomasko served as Martines' stockbroker at Rutherford. Martines and Tomasko were also friends, often socializing together at the Scranton Country Club, of which they were both members. Harry C. Morgan ("Morgan"), a Scranton, Pennsylvania businessman, was a director of First Eastern during the relevant period. Morgan was a member of the Scranton Country Club, and had a personal and business relationship with Martines. **FOOTNOTES** [1]:The findings herein are made pursuant to the Offer of Settlement made by Andrew PaulTomasko and are not bindingon any other person or entity in this or any otherproceeding. -3- D.Background On Wednesday, July 21, 1993, a special mergers and acquisitions committee of the board of directors of First Eastern disclosed to the full board at its regular board meeting, attended by Morgan, that it was negotiating for the sale of First Eastern to PNC. The committee sought board authorization to allow PNC to complete due diligence over the following weekend. The board authorized the due diligence, hoping to finalize the transaction over the weekend. Morgan was told at the board meeting that all information regarding the negotiations with PNC was confidential and that he was under a duty to maintain the confidentiality of this material, nonpublic information. In breach of his duty of confidentiality to First Eastern, Morgan disclosed to Martines that First Eastern would be acquired by PNC at a dinner at the Scranton Country Club held on Friday, July 23, 1993.[2] E.Tomasko's Assistance to Martines' Trading After learning from Morgan that PNC would purchase First Eastern, Martines discussed the information he heard from Morgan with Tomasko. Tomasko knew that Morgan was a director of First Eastern, and knew that Morgan had confirmed to Martines that First Eastern would be acquired. Tomasko also knew, or was reckless in not knowing, that Morgan's statement to Martines violated Morgan's duty of trust and confidence to First Eastern. After disclosing his conversation with Morgan, Martines requested that Tomasko execute a purchase of 1000 shares of First Eastern stock for his account on Monday, July 26, 1993, the next trading day. Martines telephoned Tomasko in the morning on July 26, 1993 and again asked him to execute the purchase. At 10:08 a.m. EDT on July 26, 1993, Tomasko executed a purchase of 1000 shares for his client Martines at $17.75 per share, for a total purchase price of $17,750. On July 27, 1993, after the announcement of the merger between First Eastern and PNC, First Eastern's stock price rose to approximately $25 per share. That same day, Tomasko executed a sale of 1000 shares of First Eastern stock for Martines, for a sale price of $25.125 per share, resulting in an overnight profit of $7,375 for Martines. **FOOTNOTES** [2]:On January 2, 1997, Morgan and Martines each consented, without admitting or denying the allegations in the Commission's complaint, to the entry of orders permanently enjoining them from future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, ordering disgorgement plus prejudgment interest, and ordering the payment of civil penalties pursuant to Section 21A of the Exchange Act. SEC v. Morgan, 97- CV-0001 (M.D. Pa.), LR-15203 (January 2, 1997). -4- IV. Registered representatives are the gatekeepers of the retail securities market, and as such have a responsibility to safeguard the market's integrity in all of their professional dealings. They are clearly duty-bound not to engage in conduct that would assist their customers in violating the securities laws. By executing a trade for his customer Martines knowing that Martines was in possession of material nonpublic information obtained in breach of duties Morgan owed to First Eastern, Tomasko caused violations and willfully aided and abetted violations of Section 10(b) and Rule 10b-5 thereunder. V. Accordingly, IT IS HEREBY ORDERED, pursuant to Sections 15(b)(6) and 21C of the Exchange Act, that: A.Tomasko cease and desist from causing or aiding and abetting any violation, and causing or aiding and abetting any future violation, of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; B.Tomasko be suspended from association with any broker or dealer for a period of forty-five (45) days, commencing within ten days of the entry of the Order; and C.Tomasko pay a civil penalty of $10,000. Payment of $10,000 shall be made within thirty (30) days of the entry of the Order. Payment shall be made by U.S. postal money order, certified check, bank cashier's check, or bank money order, made payable to the "Securities and Exchange Commission" and bearing on its face the caption "In the Matter of Andrew Paul Tomasko"; and shall be transmitted by certified mail (return receipt requested) to the Comptroller, U.S. Securities and Exchange Commission, Mail Stop 0-3, 450 Fifth Street, N.W., Washington, D.C. 20549, under cover of a letter that identifies the respondent, the name of the matter and the Administrative Proceeding file number, and the Commission's case number (HO-2861). A copy of the cover letter and the check or money order shall be transmitted simultaneously to Gregory S. Bruch, Esq., at the U.S. Securities and Exchange Commission, Mail Stop 7-3, 450 Fifth Street, N.W., Washington, D.C. 20549. By the Commission. Jonathan G. Katz Secretary