Stuart E. Winkler

SECURITIES ACT OF 1933
Rel. No. 8348 / December 17, 2003

SECURITIES EXCHANGE ACT OF 1934
Rel. No. 48940 / December 17, 2003

Admin. Proc. File No. 3-9933

ORDER IMPOSING REMEDIAL SANCTION AND NOTICE OF FINALITY

On the basis of the Commission's opinion issued this day, it is

ORDERED that Stuart E. Winkler be, and he hereby is, assessed a civil money penalty of $800,000.

No appeal was taken with respect to the remainder of the administrative law judge's initial decision with respect to Winkler, and the Commission did not choose to review the decision as to him on its own initiative. Accordingly, notice is hereby given, pursuant to Rule 360(e) of the Commission's Rules of Practice, that the remainder of the law judge's decision with respect to Winkler has become the final decision of the Commission. * The order contained in that decision (1) barring Winkler from association with any broker or dealer, and (2) ordering Winkler to cease and desist from committing or causing any violations or any future violations of Sections 5 and 17(a) of the Securities Act of 1933, Sections 10(b) and 17(a) of the Securities Exchange Act of 1934, and Rules 10b-5, 10b-6, 17a-3 and 17a-4 is hereby declared effective.

Payment of the civil money penalty shall be: (i) made by United States postal money order, certified check, bank cashier's check, or bank money order; (ii) made payable to the Securities and Exchange Commission; (iii) mailed or delivered by hand to the Office of Financial Management, Securities and Exchange Commission, 6432 General Green Way, Alexandria, VA 22312 within thirty days of the date of this order; and (iv) submitted under cover letter that identifies the respondent and the file number of this proceeding. A copy of the cover letter and check shall be sent to Robert Kaplan, counsel for the Division of Enforcement, Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549-0911.

By the Commission.

Endnotes

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¹ Goldmen was a respondent in this proceeding. Its broker-dealer registration was revoked pursuant to an offer of settlement. A.S. Goldmen & Co., Inc., Securities Act Release No. 8165 (December 19, 2002), 79 SEC Docket 557.

² Indictment No. 4914/OO (N.Y. Sup. Ct., N.Y. County, Crim. Term).

³ New York v. A.S. Goldmen & Co., Inc., Indictment No. 4772/99 (N.Y. Sup. Ct., N.Y. County, Crim. Term).

⁴ 17 C.F.R. § 201.250.

⁵ New York General Business Law §§ 352-C(5) and C(6).

⁶ 15 U.S.C. § 77q(a).

⁷ 15 U.S.C. § 78j(b).

⁸ 17 C.F.R. § 240.10b-5.

⁹ Rule 10b-6 has been recodified as Rule 101 of Regulation M. 17 C.F.R. § 242.101.

¹⁰ 15 U.S.C. § 77(e).

¹¹ 15 U.S.C. § 78q.

¹² 17 C.F.R. §§ 240.17a-3 and 17a-4.

¹³ The Division did not seek disgorgement in view of the fact that Winkler had paid the restitution ordered by the Court.

¹⁴ It appears that the law judge understood that Winkler would be sent the Commission's Disclosure of Assets and Financial Information Form ("Form D-A"). However, the Division sent Winkler a Division form entitled "Statement of Financial Condition." Nevertheless, both forms require disclosure of nearly identical information, and both are routinely filled out by defendants and respondents in enforcement proceedings.

¹⁵ Winkler did not have counsel at that time, and asked the law judge to appoint one. The law judge denied that request.

¹⁶ To date, Winkler has not submitted a financial disclosure form.

¹⁷ 15 U.S.C. § 78u-2(c).

¹⁸ The factors may be summarized as follows:

1. whether the act involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement;
    
2. the harm to other persons resulting from the conduct;
    
3. the extent to which any person was unjustly enriched, taking any restitution into account;
    
4. whether the person previously has been found by the Commission or other regulatory agency to have violated the securities laws;
    
5. the need to deter such person and other persons from committing such acts; and
    
6. such other matters as justice may require.

¹⁹ Winkler claims that $500,000 of this amount was a penalty. The Division believes that the $500,000 that Winkler paid (in addition to the $3 million that was clearly restitution) may have been earmarked for a special restitution fund set up by the District Attorney. The record does not resolve this issue.

²⁰ It thus appears that, contrary to the letter Winkler wrote to the law judge, he knew what the phrase "since the date of the alleged violation" meant.

²¹ See Brian A. Schmidt, Securities Act Rel. No. 8061 (January 24, 2002), 76 SEC Docket 2255, 2273 ("[S]ince the respondent carries the burden of demonstrating inability to pay, financial information supporting that argument must be presented before the law judge . . ."). See also Terry T. Steen, 53 S.E.C. 618, 628 (1998).

Winkler blames the Division for not answering his "simple questions" about the financial disclosure form. However, the record does not show that Winkler addressed any questions about the form to the Division. In any event, Winkler cannot shift his burden of demonstrating his inability to pay to the Commission's staff.

²² Rule 630(e) of our rules (17 C.F.R. § 201.630(e)) provides that any respondent who, after making a claim of inability to pay a penalty, fails to file a financial disclosure statement when such a filing has been ordered may, in the discretion of the Commission or the hearing officer, be deemed to have waived the claim of inability to pay.

²³ See State Farm Mut. Auto. Ins. Co. v. Campbell, 123 S. Ct. 1513, 1519 (2003); Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 432 (2001); BMW of North America, Inc. v. Gore, 517 U.S. 559, 568 (1996).

²⁴ See n.19, supra.

²⁵ See Hudson v. U.S., 522 U.S. 93, 100-105 (1997); William F. Lincoln, 53 S.E.C. 452, 459-462 (1998).

²⁶ See Section 21B(3) of the Exchange Act (15 U.S.C. § 78u-2(b)(3)). As the law judge noted, the maximum third-tier penalty for most of the period at issue in this matter was $100,000 for each violative act. The charges against Winkler in the order for proceedings herein, which the law judge found to be established by Winkler's conviction for enterprise corruption, allege that Winkler committed more than eight violative acts. Thus the $800,000 penalty is clearly warranted.

²⁷ We have considered all of the arguments advanced by the parties. They are rejected or sustained to the extent that they are inconsistent or in accord with the views expressed herein.

Since Winkler sought review only with respect to the civil money penalty imposed on him by the law judge, our order shall give the requisite notice that the remainder of the law judge's decision with respect to him has become the final decision of this Commission. The law judge's order barring Winkler from association with any broker or dealer and ordering him to cease and desist from further violations of the provisions he was found to have violated shall be declared effective.