UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

Securities Exchange Act of 1934
Release No. 51117 / February 1, 2005

Admin. Proc. File No. 3-10624

I.

On August 20, 2004, an administrative law judge issued an order granting a motion filed by the Division of Enforcement to dismiss this proceeding with prejudice with respect to Respondents Adams, Bila, Blake, and Mannino (the "Respondents"). By order dated September 2, 2004, we determined to review the law judge's order.¹ We now remand the proceeding to the law judge.

II.

On October 18, 2001, the Commission instituted this administrative proceeding against the Respondents. The order instituting proceedings alleged that the Respondents, while associated with Preston Langley Asset Management, Inc., a former broker-dealer firm, violated antifraud provisions of the federal securities laws in connection with the offer and sale of Americom Networks International, Inc. securities.

The Respondents, together with other individuals, were also the subject of another administrative proceeding instituted on March 8, 2001 (the "March proceeding"). The order instituting proceedings in the March proceeding charged the Respondents with fraud in connection with the offer and sale of different securities while they were employed at a different broker-dealer. Both this proceeding and the March proceeding were stayed pending the resolution of a criminal prosecution in which the Respondents and others were charged with the same fraudulent scheme alleged in this proceeding, as well as other offenses.

After the stay in the March proceeding was lifted, the Division of Enforcement obtained in that proceeding partial summary disposition and default judgments against the Respondents.² Those default judgments imposed broker-dealer bars and cease-and-desist orders against the Respondents. The Division has also sought broker-dealer bars and cease-and-desist orders in this proceeding.

On August 20, 2004, the Division filed with the law judge its motion to dismiss this proceeding with prejudice against the Respondents. The Division asserted that any relief it could obtain against the Respondents in this proceeding would be duplicative of the relief already obtained against them in the March proceeding. The law judge granted the Division's motion.

III.

An administrative proceeding is initiated when the Commission issues an order instituting proceedings ("OIP"), which sets forth the parameters for the proceeding.³ The OIP reflects the Commission's conclusion that the facts set forth, if proven, would establish that the respondents named violated the provisions charged. For that reason, the OIP orders "that a public hearing for the purposes of taking evidence" on the questions set forth therein shall be convened.

Once the Commission has issued an OIP, the Division of Enforcement is responsible for attempting to establish the charges contained therein, which the Commission has authorized. The Division has no independent authority to ask the law judge to modify the OIP by seeking to dismiss charges as to a respondent.⁴ Any such change from the OIP must be authorized by the Commission.⁵ Thus, the Division's motion should have been addressed to the Commission, not to the law judge.⁶

IV.

Because the Division's motion was not properly before the law judge, the law judge lacked the authority to grant the relief requested. Our determination to review this matter vacated the law judge's order. The Respondents therefore remain in this proceeding, even absent any further action on our part. While our review has been pending, however, the proceeding has been before us, not the law judge. Having concluded that the Division's motion was not properly granted, we therefore remand this proceeding to the law judge.

V.

Accordingly, IT IS ORDERED that this proceeding be, and it hereby is, remanded to the administrative law judge for further proceedings in accordance with this order.

By the Commission.

Endnotes

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¹ Hunter Adams, Securities Exchange Act Rel. No. 50306 (Sept. 2, 2004), ___ SEC Docket ___.

² The Division represents that the stay was lifted after the Respondents pleaded guilty in the parallel criminal proceeding.

³ 17 C.F.R. § 201.200.

⁴ Cf. 17 C.F.R. § 201.200(d)(2) (limiting law judge's authority to amend OIP to include new matters of fact or law to instances where such new matters are "within the scope of" original OIP).

⁵ But see 17 C.F.R. § 200.30-14(g)(1)(vi) (Commission's delegation to General Counsel of authority to "grant motions of staff counsel to discontinue administrative proceedings as to a particular respondent who has died or cannot be found, or because of a mistake in the identity of a respondent named in the order for proceedings").

⁶ Any such motion addressed to the Commission should set forth in detail the relief previously granted and explain how that relief would render the relief sought in the ongoing proceeding duplicative. For example, if violations of the same statutory provisions are based on different conduct in each proceeding, then awarding relief in each proceeding would not necessarily be duplicative. Any such motion should also discuss whether relief granted in the ongoing proceeding, if any, could help protect investors in the event of an attack on the default judgments previously entered. Additionally, any such motion should discuss whether obtaining a judgment in the ongoing proceeding would be important in establishing a respondent's disciplinary history, in the event additional disciplinary actions are taken in future.

We note that the Commission's acceptance of an offer of settlement may also terminate a respondent's involvement in a disciplinary proceeding before the issuance of a law judge's initial decision. See 17 C.F.R. § 201.240. The rules make clear, however, that such an offer must be presented to the Commission, not to the law judge.

http://www.sec.gov/litigation/admin/34-51117.htm