Release No. 1835 / September 27, 1999

File No. 3-10031

In the Matter of




The Securities and Exchange Commission (the "Commission") deems it appropriate and in the public interest to institute public administrative and cease-and-desist proceedings pursuant to Sections 203(f) and 203(k) of the Investment Advisers Act of 1940 (the "Advisers Act") to determine whether William J. Lieberman ("Lieberman" or the "Respondent") willfully aided and abetted violations of Sections 206(1) and 206(2) of the Advisers Act committed by a registered investment adviser.

In anticipation of these proceedings, Lieberman has submitted an Offer of Settlement ("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 in which the Commission is a party, and without admitting or denying the findings contained herein, except that Respondent admits the jurisdiction of the Commission over him and over the subject matter of these proceedings, Respondent consents to the issuance of this Order Instituting Public Proceedings, Making Findings, Imposing Remedial Sanctions, and Issuing a Cease-and-Desist Order ("Order").

Accordingly, IT IS ORDERED that administrative and cease-and-desist proceedings pursuant to Sections 203(f) and 203(k) of the Advisers Act be, and hereby are, instituted.


On the basis of this Order and the Respondent's Offer, the Commission makes the following findings:1

A. Respondent

William J. Lieberman, 34, resides in Corte Madera, California, and was the vice-president of Capital Markets Research Company ("CMR") from April 1994 through August 1998. From May 1994 to August 1998, Lieberman was also a registered representative associated with a broker-dealer. Lieberman no longer works in the securities industry.

B. Related Entity

Capital Markets Research Company, a California corporation located in San Francisco, California, has been registered with the Commission as an investment adviser since March 1994. As of July 1998, CMR provided consulting services to 11 clients with assets of approximately $31,500,000.

C. Lieberman's Participation in the Undisclosed Receipt of Commissions

Lieberman aided and abetted the undisclosed receipt of commissions by CMR, a registered investment adviser. Between May 1994 and December 1997, CMR obtained the commissions while it was providing supposedly unbiased referral of clients to another investment adviser whose role was to manage the clients' funds. Lieberman aided and abetted CMR's violations of the antifraud provisions of the Advisers Act by receiving the commissions knowing, or recklessly failing to know, that CMR had not disclosed them to clients.

CMR does not manage client funds. Instead, it provides consulting services, which includes supposedly unbiased advice about which investment advisers should manage client funds. CMR has referred most of its clients to a particular registered investment adviser. Paul Edward Holl ("Holl"), president of CMR, arranged for that investment adviser to direct trades through a particular brokerage firm, and for the commissions on those trades to be assigned to Lieberman, who was a registered representative of the brokerage firm. Holl directed Lieberman to turn the commission checks that he received from the brokerage firm over to CMR. Between approximately May 1994 and February 1997, Lieberman received $125,747 in commissions and turned them over to CMR. From March through December 1997, Lieberman continued to receive commissions amounting to $4,937. At Holl's direction, Lieberman no longer gave them to CMR, and his CMR salary was reduced by the amount of the commissions. CMR failed to disclose the receipt of these commissions by CMR and Lieberman.


Based on the foregoing, from approximately May 1994 through December 1997, Lieberman willfully aided and abetted CMR's violations of Sections 206(1) and 206(2) of the Advisers Act because of his knowing or reckless participation in a scheme in which CMR failed to disclose a conflict of interest by receiving undisclosed compensation.


In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified by Lieberman in his Offer.

Accordingly, IT IS HEREBY ORDERED that:

A. Lieberman shall be, and hereby is, censured;

B. Pursuant to Section 203(k) of the Advisers Act, Lieberman shall, effective immediately, cease and desist from committing or causing any violation and any future violation of Sections 206(1) and 206(2) of the Advisers Act; and

C. Lieberman shall, within thirty (30) days of the date of this Order, pay a civil money penalty in the amount of $10,000 to the United States Treasury. Such payment shall be : (1) made by United States postal money order, certified check, bank cashier's check or bank money order; (2) made payable to the Securities and Exchange Commission; (3) hand-delivered or mailed to the Comptroller, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Stop 0-3, Alexandria, VA 22312; and (4) submitted under cover letter which identifies Lieberman as a Respondent in these proceedings, and states the file number of these proceedings, a copy of which cover letter and money order or check shall be sent to Helane L. Morrison, Assistant District Administrator, San Francisco District Office, Securities and Exchange Commission, 44 Montgomery Street, Suite 1100, San Francisco, CA 94104.

By the Commission.

Jonathan G. Katz


1 The findings herein are made pursuant to Lieberman's Offer and are not binding on any other person or entity in this or any other proceeding.