UNITED STATES OF AMERICA
before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 42358 / January 27, 2000

ADMINISTRATIVE PROCEEDING
File No. 3-10135

In the Matter of S. Jay Goldinger, Respondent

Order Instituting a Proceeding, Making Findings and Imposing Remedial Sanctions Pursuant to Sections 15(b)(6) and 19(h)(3) of the Securities Exchange Act of 1934

I.

The Commission deems it appropriate and in the public interest to institute a public administrative proceeding pursuant to Sections 15(b)(6) and 19(h)(3) of the Securities Exchange Act of 1934 (Exchange Act) to determine what action, if any, is necessary in light of the entry of a permanent injunction against S. Jay Goldinger on January 3, 2000, by the United States District Court for the Central District of California.

II.

In anticipation of the institution of this proceeding, Goldinger 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 to which the Commission is a party, and without admitting or denying the findings or conclusions contained herein, except for those contained in Sections III.A., B., and C., which are admitted, Goldinger consents to the issuance of this Order, the entry of the findings contained herein, and the imposition of the sanction set forth below.

III.

The Commission finds that:

A. From at least January 1, 1994 through November 22, 1995, Goldinger was associated with Capital Insight Brokerage, a broker-dealer registered with the Commission pursuant to Section 15(b) of the Exchange Act.

B. Goldinger is permanently enjoined by judgment of the United States District Court for the Central District of California, in the action captioned Securities and Exchange Commission v. S. Jay Goldinger (SEC v. Goldinger), Civil Action No. 99-11593 LGB (CTx) (C.D. Cal., judgment entered January 3, 2000), from violating Section 17(a) of the Securities Act of 1933 (Securities Act) and Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(5), and 15(c)(1) of the Exchange Act and Rules 10b-5, 12b-20, 13a-13, and 13b2-1 thereunder.

C. With respect to Goldinger, the Commission's complaint in SEC v. Goldinger alleges as follows: While acting as an outside money manager for PairGain Technologies, Inc. (PairGain), Goldinger:

(1) engaged in a trade misallocation scheme that involved commingling PairGain's funds with other clients' funds, placing numerous two-sided, self-hedging Treasury bond futures trades with those funds, and then misallocating the losing trades to PairGain and the winning trades to other clients, thereby transferring millions of dollars from PairGain's account to the accounts of other clients;

(2) misrepresented to PairGain that he was investing its funds in low-risk, hedged positions in Treasury securities, while he was in reality investing PairGain's funds in high-risk, unhedged options on Treasury bond futures contracts;

(3) prepared false monthly account statements for PairGain that concealed the misallocation scheme and PairGain's losses;

(4) by this conduct, violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and aided and abetted Capital Insight Brokerage's violations of Section 15(c)(1) of the Exchange Act; and

(5) by sending false monthly account statements to PairGain from 1994 through June 1995, and by failing to send account statements to PairGain from June 1995 through November 1995:

(i) aided and abetted PairGain's violations of Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-13 thereunder for the company's first three quarters in 1994 and its second and third quarters in 1995, and PairGain's violation of Section 13(b)(2)(A) of the Exchange Act during 1994 and 1995; and

(ii) aided and abetted PairGain's Chief Financial Officer's violations of Section 13(b)(5) of the Exchange Act and Rule 13b2-1 thereunder.

IV.

Based on the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions that are specified in Goldinger's Offer.

Accordingly, it is hereby ordered that, effective immediately, Goldinger be, and he hereby is, barred from association with any broker or dealer.

By the Commission.

___________________
Jonathan G. Katz
Secretary