UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION Securities Act of 1933 Release No. 7240 / November 8, 1995 Securities Exchange Act of 1934 Release No. 36463 / November 8, 1995 ADMINISTRATIVE PROCEEDING File No. 3-8708 ______________________________ : In the Matter of : ORDER MAKING FINDINGS AND : IMPOSING REMEDIAL SANCTIONS TIMOTHY A. HILLS : AND CEASE AND DESIST ORDER ______________________________: I. In connection with public administrative and cease and desist proceedings 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"),-[1]- Timothy A. Hills ("Hills") has submitted an Offer of Settlement which the Commission has determined is in the public interest to accept. Solely for the purpose of these proceedings, and any other proceeding brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings contained in this Order Making Findings and Imposing Remedial Sanctions and Cease and Desist Order ("Order"), Hills consents to the findings, the remedial sanctions and the cease and desist order set forth below. II. On the basis of the Order and the Offer of Settlement, the Commission finds-[2]-that: A. Hills was associated with Stratton Oakmont, Inc. ("Stratton Oakmont"), a registered broker-dealer, as a registered representative from December 1991 through February 1992 and from October 1992 to July 26, 1994. B. During the period from April 1993 through July 1994, Hills willfully violated Section 17(a) of the Securities Act in that, in the offer or sale of securities, by the use of the means or instruments of transportation or communication in interstate commerce or by the use of the mails, directly or indirectly, Hills employed devices, schemes or artifices to defraud; obtained money or property by means of untrue statements of material facts or omitted to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or engaged in transactions, --------- FOOTNOTES --------- -[1]- The Order Instituting Proceedings was issued on June 1, 1995. See Exch. Act. Rel. No. 35791. -[2]- Any findings contained herein are solely for the purpose of these proceedings and are not binding on any other person or entity named as a respondent in any other proceeding. -------------------- BEGINNING OF PAGE #2 ------------------- practices or courses of business which operated or would operate as a fraud or deceit upon the purchaser. For example: 1. Hills made material misrepresentations and omissions of material facts in the offer or sale of various securities to his customers, by, among other things: a. making baseless price predictions; b. making false claims to possess material nonpublic information; c. making false statements regarding his commission earnings on certain trades; d. making false statements about the value of his customers' accounts; e. making a baseless prediction of future increased net worth in a customer's account; and f. discouraging his customers from placing sell orders through materially false and misleading statements; and 2. Hills engaged in a pattern of unauthorized trading in his customers' accounts, which included, among other things: a. making baseless price predictions and false claims to possess material nonpublic information in an effort to induce customers to ratify the trades; and b. representing to various customers that unauthorized trades in their accounts would be reversed or cancelled, and thereafter failing to reverse or cancel the trades. C. During the period from April 1993 through July 1994, Hills willfully violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder in that, directly or indirectly, by use of the means or instrumentalities of interstate commerce, or of the mails, in connection with the purchase or sale of securities, Hills employed devices, schemes or artifices to defraud; made untrue statements of material facts or omitted to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or engaged in acts, practices or courses of business which operated or would operate as a fraud or deceit. For example, Hills engaged in the conduct described in paragraph II.B.1. and 2. above. III. In view of the foregoing, the Commission finds that it is in the public interest to impose the sanctions specified in the Offer of Settlement. Accordingly, IT IS ORDERED that: 2 -------------------- BEGINNING OF PAGE #3 ------------------- 1. Hills be barred from association with any broker, dealer, investment company, investment adviser or municipal securities dealer, effective immediately; 2. Hills shall cease and desist from committing or causing any violation and any future violation of Section 17(a) of the Securities Act or Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; 3. Hills pay disgorgement in the amount of $20,162.00, plus prejudgment interest of $2,941.00. Based upon Hills' sworn Statement of Financial Condition dated August 22, 1995, and submitted to the Commission, payment of the disgorgement and interest thereon is waived, contingent upon the accuracy and completeness of his Statement of Financial Condition; and 4. the Commission does not impose civil money penalties against Hills based upon Hills' sworn representations in his Statement of Financial Condition dated August 22, 1995, and submitted to the Commission. The Commission has reviewed Hills' sworn Statement of Financial Condition and has determined that he does not have the financial ability to pay a civil money penalty. The determination that Hills is unable to pay a civil money penalty and to waive payment of the disgorgement and interest thereon is contingent upon the accuracy and completeness of his Statement of Financial Condition executed under oath by Hills on August 22, 1995. If at any time following the entry of this Order the Division of Enforcement obtains information indicating that Hills' representations to the Commission concerning his income, assets, liabilities or net worth were fraudulent, misleading, inaccurate or incomplete in any material respect as of the time such representations were made, the Division of Enforcement may, at its sole discretion and without prior notice to Hills, petition the Administrative Law Judge for an order requiring Hills to pay disgorgement of $20,162.00, prejudgment interest of $2,941.00, and postjudgment interest thereon, and a civil money penalty. In connection with any such petition, the only issues shall be whether the financial information provided by Hills was fraudulent, misleading, inaccurate or incomplete in any material respect as of the time such representations were made, and the amount of civil penalty to be imposed. In any such petition, the Division of Enforcement may move the Administrative Law Judge to consider all available remedies. Hills may not, by way of a defense to such a petition, contest the allegations of the Order, or the findings contained therein, or assert that disgorgement or the payment of a civil penalty should not be ordered. By the Commission. Jonathan G. Katz Secretary