UNITED STATES OF AMERICA
In the Matter of
EDWARD F. GOBORA,
|ORDER INSTITUTING PROCEEDINGS PURSUANT TO SECTION 203(f) OF THE INVESTMENT ADVISERS ACT OF 1940, MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONS|
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted against Edward F. Gobora ("Gobora" or "Respondent") pursuant to Section 203(f) of the Investment Advisers Act of 1940 ("Advisers Act").
In anticipation of the institution of these public administrative proceedings, Gobora has submitted an Offer of Settlement which the Commission has determined to accept. Solely for the purposes 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, except that Gobora admits to the entry of the permanent injunction set forth in Section III.B., and Gobora admits the jurisdiction of the Commission over himself and over the subject matter of this proceeding, Gobora consents to the entry of this Order Instituting Proceedings Pursuant to Section 203(f) of the Investment Advisers Act of 1940, Making Findings and Imposing Remedial Sanctions ("Order").
On the basis of this Order and Gobora's Offer of Settlement, the Commission makes the following findings:
A. Gobora, age 35, is a resident of Newtown, Pennsylvania, and was associated with Merrill Lynch Investment Managers, LP ("Merrill Lynch") as a Director and Managing Director until April 30, 2001. Merrill Lynch is an investment adviser registered with the Commission under Section 203(c) of the Advisers Act.
B. On June 11, 2002, the Commission filed a complaint against Gobora in Securities and Exchange Commission v. Edward F. Gobora ("SEC v. Gobora"), in the United States District Court for the District of Columbia, Civil Action
No. 1:02-CV-01136. On May 1, 2002, Gobora consented to the entry of the Final Judgment against him in SEC v. Gobora, without admitting or denying the allegations in the complaint, except as to jurisdiction, which Gobora admitted. On June 12, 2002, the United States District Court for the District of Columbia entered the Final Judgment of Permanent Injunction and Other Relief, which permanently enjoins Gobora from violating Section 10(b) of the Securities Exchange Act of 1934 [15 U.S.C. § 78j(b)], Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5], and further enjoins him from aiding and abetting violations of Sections 204, 206(1), 206(2), and 207 of the Advisers Act [15 U.S.C. §§ 80b-4, 80b-6(1), 80b-6(2) and 80b-7], Rule 204-2 thereunder [17 C.F.R § 275.204-2], Sections 31(a) and 34(b) of the Investment Company Act of 1940 [15 U.S.C. §§ 80a-32(a) and 80a-35(b)] and Rule 31a-1 thereunder [17 C.F.R. § 270.31a-1].
C. The Commission's complaint in SEC v. Gobora alleges, among other things, that Gobora defrauded several Merrill Lynch clients by engaging in two improper foreign exchange trading schemes. The first scheme involved delaying the execution of foreign exchange trades on behalf of U.S. registered investment companies and then allocating some of the trades to certain private (non-investment company) clients if the trades became profitable and allocating the trades to the registered investment companies if they became unprofitable. The second scheme involved the misallocation of tactical foreign exchange trades and hedging transactions, with profitable trades allocated to certain registered investment companies and other clients and losing trades allocated to certain other clients.
Based on the foregoing, the Commission deems it appropriate and in the public interest to accept the Offer of Settlement submitted by Gobora and accordingly,
IT IS ORDERED, that Gobora be, and hereby is, barred from association with any investment adviser, with the right to reapply for association after five years to the appropriate self-regulatory organization, or if there is none, to the Commission.
By the Commission.
Jonathan G. Katz
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