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U.S. Securities and Exchange Commission

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

INVESTMENT ADVISERS ACT OF 1940
Release No. 2245 / June 4, 2004

ADMINISTRATIVE PROCEEDING
File No. 3-11509


In the Matter of

ISAAC SOFAIR,

Respondent.


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ORDER INSTITUTING ADMINISTRATIVE PROCEEDINGS PURSUANT TO SECTIONS 203(e) AND 203(f) OF THE INVESTMENT ADVISERS ACT OF 1940, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS

I.

The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Sections 203(e) and 203(f) of the Investment Advisers Act of 1940 ("Advisers Act") against Isaac Sofair ("Sofair" or "Respondent").

II.

In anticipation of the institution of these proceedings, Respondent 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 herein, except as to the Commission's jurisdiction over him and the subject matter of these proceedings, and the findings contained in Section III.B below, which are admitted, Respondent consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Sections 203(e) and 203(f) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions ("Order"), as set forth below.

III.

On the basis of this Order and Respondent's Offer, the Commission finds that:

A. Sofair, age 62, resides in Bethesda, Maryland. Sofair is a naturalized U.S. citizen who was born in Iraq and has spent much of his life in England. In 1990, Sofair was convicted of fraud in London. Sofair has been registered with the Commission as an investment adviser since February 24, 1994.

B. On March 17, 2003, an Order of Permanent Injunction and Judgment (Reserving the Issues of Disgorgement and Civil Penalty) was entered by consent against Sofair, permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 204, 206(1), 206(2), 206(4), and 207 of the Advisers Act, and Rules 204-2(a)(1), (2), (6), (7) and (8), 204-2(b), 206(4)-1(a)(5) and 206(4)-2(a) thereunder, in the civil action entitled Securities and Exchange Commission v. Isaac Sofair, et al., Civil Action No. 02-CV-7444 (GEL), in the United States District Court for the Southern District of New York.

C. The Commission's complaint alleged that from at least September 1997 until May 2001, Sofair, operating through Landway Estates, Inc. ("Landway"), an entity he owned and controlled, engaged in a scheme to defraud investors, ultimately obtaining approximately $4.7 million from ten advisory clients and misappropriating approximately $2.3 million from two of them. The complaint alleged that Sofair induced investors to become his advisory clients by falsely portraying himself as a wealthy and successful international investment adviser, and by falsely portraying Landway as a wealthy and successful international investment advisory firm that catered to high net worth clients. As part of the alleged fraudulent scheme, Sofair prepared and distributed to existing and potential clients false and misleading report brochures which contained, among other things, false performance returns, gross overstatements of assets under management, fictitious securities holdings, misrepresentations about Sofair's educational background, a description of a fictitious professional staff, and fictitious audit opinions. The complaint also alleged that once Sofair obtained the funds, he commingled nearly all of the money in a single brokerage account held in Landway's name and controlled by him, and used the funds to trade aggressively in the stock market and to pay his personal expenses, including, to repay credit card and other personal debt, to purchase an automobile, to pay rent on two penthouse apartments, and to purchase household furnishings, art, wine and to finance trips.

D. The Complaint further alleged that Sofair repeatedly filed false investment adviser registration forms with the Commission, and failed to maintain accurate and complete books and records including those related to custody of client funds; failed to maintain cash receipts and disbursement journals; general and auxiliary ledgers reflecting assets, liabilities, capital income, and expense accounts; trial balances; written communications relating to advice given and recommendations made; and records of all accounts in which he was vested with discretionary authority.

IV.

In view of the foregoing, the Commission deems it appropriate and in the public to impose the sanctions specified in Respondent Sofair's Offer.

ACCORDINGLY, IT IS HEREBY ORDERED:

Pursuant to Sections 203(e) and 203(f) of the Advisers Act, that Respondent Sofair's registration as investment adviser is hereby revoked, and that Respondent Sofair be, and hereby is, barred from association with any investment adviser.

Any reapplication for association by the Respondent will be subject to the applicable laws and regulations governing the reentry process, and reentry may be conditioned upon a number of factors, including, but not limited to, the satisfaction of any or all of the following: (a) any disgorgement ordered against the Respondent, whether or not the Commission has fully or partially waived payment of such disgorgement; (b) any arbitration award related to the conduct that served as the basis for the Commission order; (c) any self-regulatory organization arbitration award to a customer, whether or not related to the conduct that served as the basis for the Commission order; and (d) any restitution order by a self-regulatory organization, whether or not related to the conduct that served as the basis for the Commission order.

By the Commission.

Jonathan G. Katz
Secretary

 

http://www.sec.gov/litigation/admin/ia-2245.htm


Modified: 06/04/2004