UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION INVESTMENT ADVISERS ACT OF 1940 Release No. 1610 / January 23, 1997 ADMINISTRATIVE PROCEEDING File No. 3-9228 ------------------------------ : In the Matter of : ORDER INSTITUTING PROCEEDINGS, Cecil H. Suter : MAKING FINDINGS AND IMPOSING : SANCTIONS : Respondent. : : ------------------------------- I. The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public proceedings be instituted pursuant to Section 203(f) of the Investment Advisers Act of 1940 (Advisers Act) against Cecil H. Suter ("Suter"). In anticipation of the institution of these administrative proceedings, Respondent had 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 in which the Commission is a party, Respondent by his Offer, without admitting or denying the Commission's findings, except for those findings contained in Section III. which are admitted by Respondent, consents to the entry of this Order Instituting Proceedings, Making Findings and Imposing Sanctions ("Order"). II. Accordingly, IT IS ORDERED that proceedings pursuant to Section 203(f) of the Advisers Act be, and hereby are, instituted. III. On the basis of this Order and the Offer submitted the Commission finds that: Suter is a 68-year-old resident of Deerfield, Illinois and has been a member of the Board of Directors of I.I.S. Intelligent ==========================================START OF PAGE 2====== Information Systems Ltd. ("IIS") since 1987. At all times relevant herein, he was Executive Vice President of an investment adviser which is registered pursuant to Section 203 of the Advisers Act. On January 8, 1997, based upon allegations that Suter engaged in insider trading of IIS securities, the United States District Court for the Northern District of Illinois entered a Final Judgment and Order of Permanent Injunction and Other Equitable Relief against Suter in the case of Securities and Exchange Commission v. Cecil H. Suter (Civil Action No. 96 C 8449). The District Court's order enjoins Suter from future violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and Section 16(a) of the Exchange Act and Rules 16a-2 and 16a-3 thereunder, and requires him to pay disgorgement, prejudgment interest and civil penalties. IV. On the basis of this Order and the Offer submitted the Commission further finds that: In February and March 1994, Suter, in breach of his fiduciary duty or similar duty arising from his position of trust and confidence to IIS and/or its shareholders, traded in the securities of IIS on the basis of material, nonpublic information. On or before February 25, 1994, Suter obtained material, nonpublic information that IIS' earnings for the fourth quarter of 1993 were lower than its earnings for the fourth quarter of 1992. On February 25, 1994, through the agency of a broker-dealer registered with the Commission pursuant to Section 15(b) of the Exchange Act, Suter entered limit orders to sell 9,000 shares of IIS stock at $18.75 per share. On February 28, 1994, Suter was in Israel to attend an IIS Board of Directors meeting regarding, among other things, IIS' 1993 fourth quarter earnings. While in Israel on February 28, 1994, Suter instructed the Chicago office of his broker-dealer to change the price specification in his limit orders to $18.50 per share. On March 1, 1994, Suter's sell orders were executed at $18.50 per share. On March 7, 1994, IIS issued a public announcement disclosing that its earnings for the fourth quarter of 1993 were $.01 per share, down from the $0.18 per share reported for the comparable period of 1992. On the day of the announcement, IIS' stock closed at $9 5/8. Suter avoided a loss of $79,875.00 by selling 9,000 shares of IIS stock on the basis of material, nonpublic information which he acquired in his capacity as a member of IIS' Board of Directors. Suter failed to file with the Commission a Form 4, required pursuant to Section 16(a) of the Exchange Act and Rules 16a-2 and ==========================================START OF PAGE 3====== 16a-3 thereunder, to disclose his March 1, 1994 sale of IIS stock. As a result of the foregoing conduct, Suter willfully violated Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Suter also willfully violated Section 16(a) of the Exchange Act and Rules 16a-2 and 16a-3 thereunder by failing to file a Form 4 in connection with his sale of IIS stock. V. In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified in this Order. VI. Accordingly, IT IS HEREBY ORDERED that: Respondent is hereby barred from association with any broker, dealer, investment company, investment adviser or municipal securities dealer. By the Commission. Jonathan G. Katz Secretary