UNITED STATES OF AMERICA Before The SECURITIES AND EXCHANGE COMMISSION March 15, 1996 Securities Act of 1933 Release No. 7274 Securities Exchange Act of 1934 Release No. 36978 Administrative Proceeding File No. 3-8974 ------------------------- : ORDER INSTITUTING PUBLIC ADMINISTRA- In the Matter of : TIVE PROCEEDINGS PURSUANT TO SECTION : 8A OF THE SECURITIES ACT OF 1933 AND SETH R. ROBERTS : SECTIONS 15(b), 19(h) AND 21C OF THE : SECURITIES EXCHANGE ACT OF 1934, : MAKING FINDINGS, IMPOSING REMEDIAL : SANCTIONS AND CEASE AND DESIST ORDER ------------------------- OF THE COMMISSION I. The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public proceedings be instituted pursuant to Section 8A of the Securities Act of 1933 ("Securities Act") and Sections 15(b), 19(h) and 21C of the Securities Exchange Act of 1934 ("Exchange Act") against Seth R. Roberts ("Respondent Roberts"). In anticipation of these proceedings Respondent Roberts has submitted an Offer of Settlement which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings 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 as to the jurisdiction of the Commission over him and over the subject matter of these proceedings and as to findings contained in paragraph III.A. which are admitted, Respondent Roberts by his Offer of Settlement consents to the entry of this Order Instituting Public Proceedings, Making Findings, Imposing Remedial Sanctions and Cease and Desist Order of the Commission ("Order"). II. Accordingly, IT IS HEREBY ORDERED, that proceedings pursuant Section 8A of the Securities Act and Sections 15(b), 19(h) and 21C of the Exchange Act be, and they hereby are, instituted. III. On the basis of this Order and the Offer of Settlement sub- mitted by Respondent Roberts, the Commission finds that: A. Between January 1990 and January 1994, Respondent Roberts was a registered representative associated with various broker-dealers registered with the Commission. B. Between January 1993 and May 1993, Respondent Roberts solicited 65 retail purchases of common stock of Nona Morelli II, Inc. in part because of the promise of receiving additional compensation. Respondent Roberts failed to disclose to his customers, or to the firm for which he worked, that he anticipated receiving and, in fact, did receive $51,640 in addi- tional compensation for making the purchase recommendations to his retail customers. C. Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder prohibit, in the offer, purchase or sale of securities, by the use of the means and instruments of transportation and communication in interstate commerce and by the use of the mails, directly and indirectly, employing devices, schemes and artifices to defraud; obtaining money and property by means of untrue statements of material facts or omitting to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or engaging in acts, transactions, practices or courses of business which operate or would operate as a fraud and deceit. By engaging in the acts specified in paragraph III.B. above, Respondent Roberts willfully violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. D. The Commission has reviewed Respondent Roberts' sworn financial statement and other evidence adduced by Respondent Roberts, and, provided that Respondent Roberts has submitted a true, accurate and complete sworn affidavit establishing his ina- bility to pay concerning his financial condition, including his assets, liabilities, income and expenses, has determined that he does not have the financial ability to pay: (1) disgorgement of $51,400 in ill-gotten gains which he received as a result of his activities described in paragraph III.B. above; and (2) a civil penalty. The Division of Enforcement ("Division") may petition the Administrative Law Judge ("ALJ") to reopen this matter to consider Respondent Roberts' inability to disgorge funds if the Division obtains information from any source that the financial information provided by Respondent Roberts was inaccurate or incomplete in any material aspect. In connection with such petition, the ALJ may consider ordering Respondent Roberts to pay the above disgorgement, plus interest. Respondent Roberts may not, by way of defense to such petition, contest the findings in the Order or assert that disgorgement and/or a civil penalty should not be ordered for the violations of the federal securities laws alleged therein. IV. In view of the foregoing, it is in the public interest to impose the sanctions specified in the Offer of Settlement. According, IT IS HEREBY ORDERED THAT: A. Respondent Roberts, effective immediately, cease and desist from committing or causing any violation or any future violation of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; B. Respondent Roberts, effective immediately, be and hereby is, barred from association with any broker, dealer, investment company, investment adviser or municipal securities dealer; and C. Respondent Roberts disgorge $51,400, plus interest, dating to the date of this Order, at the prejudgment rate, provided, however, that the payment of such disgorgement is waived based upon Respondent Roberts' demonstrated inability to pay disgorgement and an administrative penalty. By the Commission. Jonathan G. Katz Secretary