UNITED STATES OF AMERICA
INVESTMENT ADVISERS ACT OF 1940
In the Matter of
|ORDER INSTITUTING PROCEEDDINGS, MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONS PURSUANT TO SECTION 203(f) OF THE INVESTMENT ADVISERS ACT OF 1940.|
The Securities and Exchange Commission finds it appropriate and in the public interest that public administrative proceedings be instituted pursuant to Section 203(f) of the Investment Advisers Act of 1940 ("Advisers Act") against Bing Sung ("Sung").
In anticipation of the institution of these administrative proceedings, Sung has submitted an Offer of Settlement (the "Offer") which the Commission has determined to accept. Solely for the purpose of these proceedings, 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 contained herein, except as to the jurisdiction of the Commission over him and the subject matter of these proceedings and the entry of the permanent injunction as described in paragraph II.D, below, which he admits, Sung consents to the entry of this Order Instituting Proceedings, Making Findings and Imposing Remedial Sanctions Pursuant to Section 203(f) of the Advisers Act.
Accordingly, IT IS HEREBY ORDERED that public administrative proceedings be, and hereby are, instituted against Sung pursuant to Section 203(f) of the Advisers Act.
On the basis of this Order and Sung's Offer, the Commission finds that:
(A) Sung, age 52 and a resident of Andover, Massachusetts was, during relevant times, the Chief Investment Officer of RhumbLine Advisers ("RhumbLine"), a registered investment located in Boston, Massachusetts.
(B) On September 30, 1998, the Commission filed a complaint in the United States District Court for the District of Massachusetts against Sung, SEC v. Bing Sung (Civil Action No. 98-11985 (MEL), alleging that Sung violated the antifraud provisions of Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act ("Exchange Act") and Rule 10b-5 thereunder and aided and abetted violations of Sections 206(1) and 206(2) of the Advisers Act.
(C) Specifically, the Commission alleged that:
(1) Sung developed and managed options trading accounts for two of RhumbLine's pension fund clients -- AT&T Investment Management Corporation ("AT&T") and the Massachusetts Pension Reserves Investment Trust ("PRIT").
(2) Both clients had written guidelines which prohibited Sung from entering into certain types of risky trades and limited the potential losses to which Sung could expose the accounts.
(3) In early 1995, stock market movements began causing losses in the AT&T and PRIT accounts. To make up the losses, Sung deviated from risk-limiting guidelines, engaged in unauthorized trading and caused the PRIT account to exceed a pre-established loss constraint.
(4) Sung also fraudulently obtained exemptions from position limits at the Chicago Board Options Exchange and the Philadelphia Stock Exchange to facilitate his risky, unauthorized trading.
(5) When losses caused by his trading began to mount, Sung concealed, misrepresented and failed to disclose the true performance of the accounts.
(6) As a result of Sung's misconduct, the AT&T account sustained losses through September 1996 of approximately $150 million. The PRIT account sustained losses of approximately $12 million.
(D) On July 1, 1999, without admitting or denying any of the allegations contained in the complaint, except as to jurisdiction, which he admitted, Sung consented to the entry of a final judgment of permanent injunction. On July 29, 1999, the United States District Court for the District of Massachusetts entered a final judgment: (i) permanently enjoining Sung from violating Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act; and (ii) directing Sung to pay a civil monetary penalty of $50,000.
In view of the foregoing, the Commission deems it appropriate and in the public interest to accept Sung's Offer of Settlement and impose the sanction agreed to in the Offer.
Accordingly, IT IS HEREBY ORDERED, pursuant to Section 203(f) of the Advisers Act, that Sung be, and hereby is, barred from association with any investment adviser.By the Commission.
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