SECURITIES AND EXCHANGE COMMISSION Washington, DC Litigation Release No. 15985 / November 23, 1998 SECURITIES AND EXCHANGE COMMISSION v.WILLIAM C. BETHEA, United States District Court for the Northern District of Florida, Civil Action No. 3:98CV457 \LAC\MD The Securities and Exchange Commission today filed and settled a pay-to-play case against William C. Bethea, the former head of Stephens Inc.'s Public Finance Department, for giving secret payments to certain Florida public officials in exchange for municipal securities business. The Complaint, filed in the Northern District of Florida, alleges the following: While serving as head of the Public Finance Department of Stephens, Bethea authorized secret payments to one Florida public official (Terry Busbee of the Escambia County Utilities Authority) and facilitated the secret compensation of another (Larry O'Dell of Osceola County), for the purpose of obtaining or retaining municipal securities business for Stephens. Bethea's failure to disclose the arrangements, the payments, and the actual and potential conflicts of interest they created, violated the antifraud provisions as well as fair dealing and gratuities rules of the Municipal Securities Rulemaking Board. Bethea also defrauded the issuer and purchasers of a 1992 Walton County, Florida bond issue by failing to disclose-in the face of a duty to do so-Stephens' compensation of a consultant and an employee of another underwriting firm, in violation of the same provisions. In addition, Bethea: endorsed the conferral of an undisclosed favor upon a third Florida public official; enlisted third parties to serve as conduits for campaign contributions; and created false and misleading books and records at Stephens to cover up the illicit payments, in further violation of fair-dealing rules. Simultaneous with the filing of the Complaint, and without admitting or denying the allegations contained in the Complaint, Bethea agreed to the entry of a final judgment of permanent injunction barring future violations of Section 17(a) of the Securities Act, Sections 10(b) and 15B(c)(1) of the Exchange Act and Rule 10b-5 thereunder, and MSRB rules G-17 and G-20; and ordering him to pay a civil penalty of $30,000. As part of his settlement with the Commission, Bethea has agreed to the entry of a Commission order barring him from the securities business. The Commission's Complaint against Bethea includes certain conduct alleged in the civil actions styled Securities and Exchange Commission v. Preston C. Bynum and Terry D. Busbee, Civil Action No. 95-30024-RV (N.D. Fla.); Lit. Rel. No. 14387/January 23, 1995; and Securities and Exchange Commission v. Larry K. O'Dell, Civil Action No. 98-948-Civ-Orl-18A (M.D. Fla.); Lit. Rel. No. 15858/August 24, 1998; and in the administrative proceeding styled, In the Matter of Stephens Inc., Exchange Act Rel. No. 40699/Nov. 23, 1998. Also today, the United States Attorney for the Northern District of Florida ("USAO") announced a civil settlement with Stephens, and the Commission instituted and settled an administrative proceeding against Stephens. Both the USAO's civil settlement, and the Commission's administrative settlement, are based on some of the same conduct alleged in the Commission's Complaint against Bethea. As part of the USAO's civil settlement, Stephens has agreed to forfeit to the Department of Justice $2.25 million in revenues of its Public Finance Department, to make payments to three Florida issuers in the aggregate amount of $886,672.16, to refrain from conducting municipal securities business in Florida for five years; and to refrain indefinitely and throughout the United States from utilizing consultants within the meaning of MSRB rule G-38. The Commission's pay-to play investigation in the Southeastern United States continues.