SECURITIES AND EXCHANGE COMMISSION
Investment Advisers Act of 1940
Release No. 2095 / December 23, 2002
File No. 3-10996
In the Matter of Gordon J. Rollert
Commission Institutes Public Administrative Proceedings
Against Gordon J. Rollert Based on His Criminal Conviction
The Securities and Exchange Commission today instituted public administrative proceedings against Gordon J. Rollert, the former principal of two registered investment advisers, based on Rollert's criminal conviction in U.S. v. Rollert, Cr. No. 01-10031 (RWZ) (D. Mass.). In the Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 203(f) of the Investment Advisers Act of 1940 ("Order"), the Division of Enforcement alleges that, on September 26, 2002, Rollert pled guilty to two counts of wire fraud and one count of mail fraud in connection with a fraudulent soft dollar scheme he conducted through his investment advisory business.
According to the Order, the criminal indictment alleged that Rollert, an investment professional, formed Fund Acquisition Partners ("FA Partners") in 1994. The indictment also alleged that, among the clients for whom Rollert traded securities was a church that Rollert persuaded to invest directly in the companies he controlled, and also to trade securities through an agent broker. Under applicable Commission rules, the agent broker could lawfully pay for some research and similar costs incurred by a referring investment adviser such as Rollert, a practice known as "soft dollar payments." According to the indictment, Rollert agreed to pay very large commissions to the agent broker, and then directed the broker to make what the broker understood to be soft dollar payments. The soft dollar payments were made to, among others, FA Partners, an entity which Rollert controlled. By January 1996, payments to FA Partners had reached $265,000. In January 1996, the broker questioned Rollert about the payments to FA Partners, and Rollert falsely responded that the payments had been fully authorized by the church and that the church was fully aware of and had authorized the remission of the payments to FA Partners. Instead, the indictment alleged, Rollert took $264,250 of the $265,000 for his personal benefit. The scheme alleged in the indictment lasted from at least 1993 until at least some time in 1998.
According to the Order, on December 10, 2002, Rollert was sentenced to six months of home confinement and to two years of probation and ordered to pay a $15,000 fine and $100,000 in restitution to the church.
A hearing will be scheduled before an administrative law judge to determine what sanctions, if any, are appropriate and in the public interest. For more information, see Litigation Release Nos. 16895 (February 8, 2001) and 17764 (October 2, 2002) and Investment Advisers Act Rel. No. 1954 (July 27, 2001).