UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION INVESTMENT ADVISERS ACT OF 1940 Release No. 1574 / August 6, 1996 ADMINISTRATIVE PROCEEDING File No. 3-9053 ___________________________________ : In the Matter of : ORDER INSTITUTING PUBLIC : ADMINISTRATIVE DOUGLAS L. BLAIR : PROCEEDING, MAKING : FINDINGS AND ISSUING Respondent. : CEASE-AND-DESIST ORDER : : : ___________________________________: I. The Securities and Exchange Commission ("Commission") deems it appropriate that a public administrative proceeding pursuant to Section 203(k) of the Investment Advisers Act of 1940 ("Advisers Act") be instituted against Douglas L. Blair ("Blair"). II. In anticipation of the institution of this proceeding, Blair has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. Solely for the purpose of this proceeding and any other proceeding 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 Blair admits the jurisdiction of the Commission over him and over the subject matter of this proceeding, Blair consents to the entry of this Order Instituting Public Administrative Proceeding, Making Findings and Issuing Cease-and- Desist Order ("Order") set forth below. Accordingly, IT IS ORDERED that a proceeding pursuant to Section 203(k) of the Advisers Act be, and hereby is, instituted. ==========================================START OF PAGE 2====== III. On the basis of this Order and the Offer submitted by Blair, the Commission finds that:1 A. Douglas L. Blair ("Blair") is 47 years old and lives in Princeton, New Jersey. Between August 1987 and January 1993, Blair was associated with Refco Securities, Inc. ("RSI"), a broker-dealer registered with the Commission (File No. 8-26718). During the relevant period, Blair was a trader on RSI's government securities options trading desk. B. Between 1987 and 1991, Steven D. Wymer ("Wymer"), the owner of two former California-based registered investment advisory firms, perpetrated a series of schemes by which he defrauded his clients of more than $80 million.2 RSI was one of several broker-dealers at which Wymer maintained customer accounts in connection with his investment advisory business. C. Between August 1987 and May 1988, Wymer conducted a scheme that resulted in his misappropriation of approximately $2.9 million in premiums due his clients from government securities options trading at RSI. As part of and in furtherance of his scheme, Wymer instructed Blair to cause RSI to pay directly to him between 20% and 90% of the premiums from certain options transactions executed on behalf of Wymer's clients. Wymer informed Blair that these payments constituted the remittance of advisory fees owed to him by his clients and which his clients purportedly had authorized to be paid to him. In reliance upon authorization forms provided by Wymer to RSI and purportedly signed by Wymer's clients, Blair caused RSI to pay Wymer his claimed fees directly out of the premiums of specific 1 The findings herein are made pursuant to Blair's Offer and are not binding on any other person or entity named as a respondent in this or any other proceeding. 2 As a result of his conduct, on February 7, 1992, Wymer was permanently enjoined from future violations of the federal securities laws. SEC v. Institutional Treasury Management, Inc., Denman & Company and Steven D. Wymer, Civil Action No. 91-6715 MRP (Ex) (C.D. Cal.). Wymer was also barred from the securities industry on June 9, 1992. Steven D. Wymer, Advisers Act Rel. No. 1315 (June 9, 1992). On September 29, 1992, Wymer pleaded guilty to 9 felony counts and was ordered to disgorge all of his assets and pay restitution and prejudgment interest in the amount of $209 million. He was originally sentenced to a 14 year and 7 month prison term, which was subsequently reduced to 7 years and 3 months. ==========================================START OF PAGE 3====== option transactions.3 RSI then deposited the balance of the premiums into the clients' accounts. The trade confirmations for these transactions reported only the premium amount net of Wymer's purported fees and a price adjusted to reflect the net amount. D. As a result of the conduct identified in paragraph III.C., Wymer violated Sections 206(1) and 206(2) of the Advisers Act, in that Wymer, by use of the means or instrumentalities of interstate commerce, directly or indirectly, employed devices, schemes, or artifices to defraud his clients; and Wymer engaged in transactions, practices or courses of business which operated as a fraud or deceit upon his clients. E. In the course of executing the transactions described in paragraph III.C., Blair caused Wymer's violations of Sections 206(1) and 206(2) of the Advisers Act by causing RSI to pay Wymer between 20% and 90% of the premiums from certain options transactions executed for Wymer's clients which Blair should have known would contribute to Wymer's violations. IV. Based on the foregoing, the Commission deems it appropriate to accept the Offer submitted by Blair and impose the sanctions specified in the Offer. Accordingly, IT IS HEREBY ORDERED that: Pursuant to Section 203(k) of the Advisers Act, Blair cease and desist from committing or causing any violations and any future violation of Sections 206(1) and 206(2) of the Advisers Act. By the Commission. Jonathan G. Katz Secretary 3 The authorization forms, drafted and reviewed by RSI's compliance officer, permitted RSI "to withdraw and pay funds, at the direction of Steven D. Wymer (advisor) from the undersigned account . . . for the payment of certain management fees or incentive fees or both."