UNITED STATES SECURITIES AND EXCHANGE COMMISSION
INVESTMENT ADVISERS ACT OF 1940
Release No. 1985 / September 28, 2001
File No. 3-10607
IN THE MATTER OF CHRIS WOESSNER
The Commission announced today that it has instituted administrative and cease-and-desist proceedings against Chris Woessner of Tiburon, California, a former vice president of sales for Duff & Phelps Investment Management Co., a registered investment adviser, for his role in a scheme to direct approximately $715,000 of Duff's client commissions for the benefit of a broker-dealer and a pension consultant in exchange for the referral of a client to Duff.
In the Order Instituting Proceedings against Woessner, from 1994 through 1997, the Division of Enforcement alleges that Duff directed approximately $613,000 of advisory client commission business for the benefit of East West Institutional Services, Inc., then a registered broker-dealer, in exchange for the referral of a client, a pension fund for the International Brotherhood of Teamsters Union Local 710. East West was able to influence the Local 710 because it had an arrangement with two trustees of the Local 710, who received illegal kickbacks of commissions from East West. During the same time period, the Local 710 hired an unrelated pension consultant to provide advice concerning the selection of new investment advisers. The pension consultant recommended Duff as an adviser to the Local 710. Duff later directed approximately $102,000 of advisory client commission business for the benefit of the pension consultant in exchange for the pension consultant's continued recommendation that the Local 710 retain Duff as an investment adviser.
The Division of Enforcement alleges that Duff did not disclose to its clients its direction of brokerage in exchange for a client referral, and it falsely stated in its Commission filings that it did not direct commissions in exchange for client referrals, in violation of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. Woessner aided and abetted these violations by entering the agreements to direct brokerage for the benefit of East West and the pension consultant in exchange for management of $120 million of the Local 710 pension fund, and by helping to conceal these arrangements from Duff's clients.
In related proceedings, the Commission instituted settled administrative proceedings against Duff and its former president, Wayne C. Stevens. [See In the Matter of Duff & Phelps Investment Management Co., Inc., Rel. IA-1984, IC-25200, File No. 3-10606; In the Matter of Wayne C. Stevens, Rel. IA-1983, File No. 3-10605]. East West and its registered representative, Christopher P. Roach, are respondents in a pending administrative proceeding concerning similar conduct [In re Rothmeier et al., Advisers Act Rel. No. 1823 (September 9, 1999)].
A hearing will be held before an administrative law judge to determine whether the staff's allegations against Woessner are true, to provide an opportunity for Woessner to dispute the allegations, and to determine whether he should be ordered to cease and desist from future violations of Sections 206(1) and 206(2) of the Advisers Act, and whether remedial sanctions and penalties are appropriate and in the public interest.