UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No.40818 / December 21, 1998 ADMINISTRATIVE PROCEEDING File No. 3-9792 : ORDER INSTITUTING A PROCEEDING, In the Matter of : MAKING FINDINGS AND IMPOSING : REMEDIAL SANCTIONS PURSUANT TO WILLIAM C. BETHEA, : SECTIONS 15(b)(6), 15B(c)(4) AND Respondent. : 19(h)(3) OF THE SECURITIES EXCHANGE : ACT OF 1934 : : I. The Commission deems it appropriate and in the public interest to institute a public administrative proceeding pursuant to Sections 15(b)(6), 15B(c)(4) and 19(h)(3) of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. 78o(b)(6), 78o-4(c)(4) and 78s(h)(3)] to determine what action, if any, is necessary in light of the entry of a final judgment of permanent injunction against Bethea on November 30, 1998, and the judgment of conviction of Bethea for bribery in violation of 18 U.S.C. 666 on April 30, 1998, both judgments having been entered in the United States District Court for the Northern District of Florida. II. In anticipation of the institution of this proceeding, Bethea 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 findings or conclusions contained herein, except for those contained in Sections III.1., 2. and 3., which are admitted, Bethea consents to the issuance of this Order, the entry of the findings contained herein, and the imposition of the sanction set forth below. III. On the basis of this Order and Bethea's Offer, the Commission finds [1]/ that: 1. From April 1985 through August 1997, Bethea was associated with Stephens Inc. ("Stephens"), a broker-dealer and municipal securities dealer registered with the Commission pursuant to Sections 15 and 15B(a) of the Exchange Act; 2. Bethea is permanently enjoined by judgment of the United States District Court for the Northern District of Florida, in the action styled Securities and Exchange Commission v. William C. Bethea ("SEC v. Bethea"), Civil Action No. 3:98cv457/LAC/MD (N.D. Fla.), judgment entered November 30, 1998, from violating Section 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Section 15B(c)(1) of the Exchange Act and Rules G-17 and G-20 of the Municipal Securities Rulemaking Board ("MSRB"); 3. On April 30, 1998, Bethea entered a plea of guilty to one count of bribery in violation of 18 U.S.C. 666, in United States District Court for the Northern District of Florida in the action styled United States v. William C. Bethea, File No. 3:98-cr7/LAC (N.D. Fla.). 4. With respect to Bethea, the Commission's complaint in SEC v. Bethea alleges as follows: While serving as head of the public finance department of Stephens, a brokerage firm, Bethea authorized secret payments to one Florida public official and facilitated the secret compensation of another, for the purpose of obtaining or retaining municipal securities business for Stephens. Bethea's failure to disclose the arrangements, the payments, and the actual and potential conflicts of interest created thereby, violated Section 17(a) of the Securities Act [15 U.S.C. 77q(a)], Section 10(b) of the Exchange Act [15 U.S.C. 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. 240.10b-5]. By this conduct, Bethea also violated Section 15B(c)(1) of the Exchange Act [15 U.S.C. 78o-4(c)(1)] and MSRB Rules G-17 and G- 20. Bethea also defrauded the issuer and purchasers of a 1992 Walton County, Florida bond issue by failing to disclose - in the face of a duty to do so - Stephens' compensation of a consultant and an employee of another underwriting firm, in violation of Section 17(a) of the Securities Act, Sections 10(b) and 15B(c)(1) of the Exchange Act and Rule 10b-5 thereunder, and MSRB Rule G- 17. Bethea's compensation of the employee of the other underwriting firm was made in the absence of any written contract and without the written permission of the other underwriting firm, in violation of Section 15B(c)(1) of the Exchange Act and MSRB Rule G-20. In addition, Bethea: endorsed the conferral of an undisclosed favor upon a third Florida public official; enlisted third parties to serve as conduits for campaign contributions; and created false and misleading books and records at Stephens to cover up the illicit payments, all in violation of Section 15B(c)(1) of the Exchange Act and MSRB Rule G-17. IV. Based on the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions that are specified in Bethea's Offer. Accordingly, IT IS HEREBY ORDERED that, effective immediately, Bethea be, and he hereby is, barred from association with any broker, dealer, municipal securities dealer, investment adviser, or investment company. By the Commission. Jonathan G. Katz Secretary **FOOTNOTES** [1]: The findings herein are made pursuant to Bethea's Offer and are not binding on any other person or entity in this or any other proceeding.