Overview

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

Securities Act of 1933
Release No. 8384 / February 12, 2004

Securities Exchange Act of 1934
Release No. 49250 / February 12, 2004

Administrative Proceeding
File No. 3-11413

 
 
In the Matter of
 
H. D. VEST INVESTMENT
SECURITIES, INC.
 
     Respondent.
 
 
 

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ORDER UNDER SECTION 27(A)(b) OF THE SECURITIES ACT OF 1933 AND SECTION 21E(b) OF THE SECURITIES EXCHANGE ACT OF 1934, GRANTING
WAIVERS OF THE DISQUALIFICATION PROVISIONS OF SECTION 27A(b)(1)(A)(ii) OF THE SECURITIES ACT OF 1933 AND SECTION 21E(b)(1)(A)(ii) OF THE SECURITIES EXCHANGE ACT OF 1934

H. D. Vest Investment Securities, Inc. ("Vest") has submitted a letter, dated January 7, 2004, for a waiver of the disqualification provisions of Section 27A(b)(1)(A)(ii) of the Securities Act of 1933 ("Securities Act") and Section 21E(b)(1)(A)(ii) of the Securities Exchange Act of 1934 ("Exchange Act") arising from its settlement of an administrative proceeding commenced by the Commission. On February 12, 2004, pursuant to the Offer of Settlement by Vest, the Commission issued an Order Instituting Administrative and Cease-and-Desist Proceedings, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order Pursuant to Section 8A of the Securities Act of 1933 and Sections 15(b)(4) and 21C of the Securities Exchange Act of 1934 as to H. D. Vest Investment Securities, Inc. (the "Order"). In the Order, the Commission found that Vest willfully violated Section 17(a)(2) of the Securities Act and Rule 10b-10 of the Exchange Act.

The Order also: (a) censured Vest; (b) required Vest to pay a civil penalty in the amount of $1,054,420 to the United States Treasury; (c) required Vest to pay disgorgement and prejudgment interest thereon, which obligation shall be satisfied by compliance with the customer refund program summarized in the Order; (d) required Vest to offer certain customers that bought Class B mutual fund shares in amounts of $100,000 or more, the opportunity to convert their B share investment to A shares; (e) required Vest to retain an Independent Consultant to conduct a review of, and make recommendations concerning Vest's Class B share policies and procedures; and (f) required Vest's chief executive officer to certify in writing to the Commission staff not later than 6 months after the date of the Order that Vest has: (1) implemented procedures, and a system for applying such procedures, that can reasonably be expected to prevent and detect failures by Vest to provide appropriate breakpoint discounts for which customers are eligible on purchases of front-end load mutual funds, based on information reasonably ascertainable by Vest, and (2) taken all necessary and appropriate steps to adopt and implement all recommendations and proposals of the Independent Consultant.

The safe harbor provisions of Section 27A(c) of the Securities Act and Section 21E(c) of the Exchange Act are not available for any forward looking statement that is "made with respect to the business or operations of an issuer, if the issuer . . . during the 3-year period preceding the date on which the statement was first made . . . has been made the subject of an . . . administrative decree or order arising our of a governmental action that (I) prohibits future violations of the antifraud provisions of the federal securities laws; (II) requires that the issuer cease and desist from violating the antifraud provisions of the securities laws; or (III) determines that the issuer violated the antifraud provisions of the securities laws[.]" Section 27A(b)(1)(A)(ii) of the Securities Act and Section 21E(b)(1)(A)(ii) of the Exchange Act. The disqualifications may be waived "to the extent otherwise specifically provided by rule, regulation, or order of the Commission." Section 27A(b) of the Securities Act and Section 21E(b) of the Exchange Act.

Based on the representations set forth in the request made by Vest, the Commission has determined that, under the circumstances, the request for a waiver of the disqualifications resulting from the entry of the Order is appropriate and should be granted.

Accordingly, IT IS ORDERED, pursuant to Section 27A(b) of the Securities Act and Section 27E(b) of the Exchange Act, that a waiver from the disqualification provisions of Section 27A(b)(1)(A)(ii) of the Securities Act and Section 21E(b)(1)(A)(ii) of the Exchange Act as to Vest resulting from the entry of the Order is hereby granted.

By the Commission.

 

Jonathan G. Katz
Secretary

 

Details

Rule Type
Order Regarding Waiver
Feb. 12, 2004