UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 43270 / September 11, 2000

ADMINISTRATIVE PROCEEDING
File No. 3-9168

In the Matter of ANDREW BRESSMAN, ROMAN OKIN, RICHARD ACOSTA, RICHARD SIMONE, BURTON BLANK, MARK GOLDMAN and JACK WOLYNEZ Respondents.

ORDER MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONS AS TO JACK WOLYNEZ

I.

On December 6, 1996 the Securities and Exchange Commission ("Commission") issued an order postponing these proceedings at the request of the District Attorney of the County of New York to permit the grand jury impaneled by the District Attorney to complete its investigation into the conduct of the respondents in this action and to file any resulting indictments.¹ Since that time, respondents Andrew A. Bressman, Roman Okin, Richard Acosta, Richard Simone, Mark Goldman and Jack Wolynez have been indicted by the grand jury and criminally convicted in connection with their activities while employed at A.R. Baron & Co., Inc.²

In anticipation of the reopening of this proceeding by the Commission, Respondent Jack Wolynez ("Wolynez" or "Respondent") has submitted an offer of settlement which the Commission has determined to accept ("Offer"). Accordingly, the Commission deems it appropriate to reopen the proceeding as to Respondent Wolynez for the purpose of accepting his Offer. 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, and without admitting or denying the findings contained herein, except as to jurisdiction of the Commission over the Respondent and the subject matter of this proceeding, and as to the entry of the conviction set forth in paragraph II.B.1. and II.F. below, which are admitted, Wolynez, by his Offer, consents to the findings and the imposition of the sanctions and other relief contained in this Order Making Findings and Imposing Remedial Sanctions As To Jack Wolynez ("Order").

Accordingly, IT IS ORDERED that said proceeding be, and hereby is reopened with regard to Wolynez.

II.

On the basis of this Order and the Offer submitted by Wolynez, the Commission finds the following:³

A. SUMMARY

While Respondent Wolynez served in the compliance department of the New York brokerage firm A.R. Baron & Co., Inc. ("Baron"), several registered representatives and principals at Baron, among them, respondents Bressman, Okin, Acosta and Simone, violated the antifraud and other provisions of the federal securities laws repeatedly by manipulating the market price of several securities and by engaging in egregious sales practice abuses. Wolynez, who served as chief compliance officer during a portion of his employment at Baron, failed to detect or prevent these securities violations despite the fact that he had notice of numerous instances of broker misconduct including frequent complaints of unauthorized trading in customer accounts. By ignoring red flags which should have put him on notice of the brokers' misconduct, Wolynez, as a registered principal and supervisor of Baron, failed reasonably to supervise these brokers with a view to preventing their violations of Section 17(a) of the Securities Act and Section 10(b) and Rule 10b-5 thereunder as well as these brokers' aiding and abetting and causing violations of Sections 7(c) and 15(c)(1) of the Exchange Act and Rules 15c1-2 thereunder and Regulation T promulgated by the Federal Reserve Board.

B. RESPONDENT AND OTHER RELEVANT ENTITIES

1. Respondent

Jack Wolynez, age 33, resides in New York, New York. Wolynez was a registered principal with Baron from September 1993 through his departure in November 1995. Wolynez served as Baron's compliance officer from September 1993 through September 1994, and from July 1995 until his departure in November 1995. Between September 1994 and July 1995, Wolynez worked in the firm's compliance department and reported to the compliance officer. On July 18, 1997, Wolynez pleaded guilty in the Supreme Court of New York, and was convicted of, a scheme to defraud, a Class E Felony, in connection with his activities while employed at Baron.

2. Other Relevant Entities

a. A.R. Baron & Co., Inc., a Delaware corporation with its principal place of business in New York, New York, was registered with the Commission in September 1991 as a broker-dealer pursuant to Section 15(b) of the Exchange Act. In July 1996, Baron ceased operations and was placed into liquidation pursuant to the Securities Investors Protection Act. On October 17, 1996, the Commission issued an order (i) finding that Baron had violated Section 17(a) of the Securities Act, Sections 7(c), 9(a)(2), 9(a)(4), 10(b) and 15(c)(1) of the Exchange Act and Rules 10b-5 and 15c1-2 thereunder and Regulation T promulgated by the Federal Reserve Board and (ii) revoking Baron's registration as a broker-dealer.

b. Cypros Pharmaceutical Corp. ("Cypros") is a California corporation with its principal place of business in Carlsbad, California. Cypros has common stock and warrants registered with the Commission pursuant to Section 12(g) of the Exchange Act. Cypros common stock and warrants are listed for trading on Nasdaq.

C. WOLYNEZ HAD NOTICE OF CUSTOMER COMPLAINTS OF SALES ABUSES BY BROKERS AT BARON

While Wolynez served in Baron's compliance department, he received numerous customer complaints concerning abusive sales practices by Baron brokers involving the sale of Cypros shares and other securities. These complaints, which put Wolynez on notice of possible wrong-doing by Baron brokers, included claims of rampant unauthorized trading in customer accounts and refusals by Baron brokers to execute customer sell orders. In addition, these brokers routinely made Regulation T credit extension requests for unauthorized purchases of Baron house stocks in customer accounts for the purpose of parking these securities in customer accounts beyond the normal time for settlement. These sales practice abuses by Baron brokers violated Section 17(a) of the Securities Act, Sections 10(b) and 7(c) of the Exchange Act and Rule 10(b)(5) thereunder and constituted willful aiding and abetting violations of Section 7(c) of the Exchange Act and Regulation T promulgated by the Federal Reserve Board.

D. BROKERS AT BARON MANIPULATED THE SHARE PRICE OF CYPROS

Certain Baron brokers, through Baron, manipulated the price of Cypros common stock from at least January 2, 1995 through October 10, 1995 during which time the price of Cypros shares increased from $13 3/8 per share on January 3, 1995, to a high of $23 3/4 per share on June 21, 1995.⁴ These brokers carried out the manipulation by dominating and controlling the market for Cypros stock and by creating artificial demand and volume in the market for Cypros shares by repeatedly placing unauthorized trades in customer accounts. In so doing, these brokers willfully violated Section 17(a) of the Securities Act and Sections 10(b) and Rule 10b-5 thereunder and willfully aided and abetted and caused Baron's violations of Section 15(c)(1) of the Exchange Act and Rule 15c1-2 thereunder.

E. FAILURE TO SUPERVISE

As a registered principal and while serving in a compliance capacity, Wolynez failed reasonably to detect and prevent repeated unauthorized trading of customer accounts and other sales abuses by Baron's registered representatives. Wolynez also failed reasonably to detect and prevent stock manipulation by Baron's registered representatives. In addition, Wolynez failed to periodically review the trading of customer accounts by Baron's employees with a view to preventing abusive sales practices.

In particular, Wolynez failed to respond adequately to, and failed reasonably to investigate, red flags that signaled possible wrongdoing by the Baron registered representatives, including among other things:

1. customer complaints concerning unauthorized trades in their accounts and the mismanagement of their accounts by registered representatives;

2. frequent requests by registered representatives for Regulation T extensions of time for payment;

3. frequent sellouts or forced liquidations of unpaid purchases for customer accounts by the registered representatives;

4. large block sales to customer accounts near the end or shortly after the end of the trading day that had the effect of clearing out the inventory in the Baron's trading account following heavy buying of securities from other brokerage firms or following large liquidations or sellouts from other customer accounts;

5. concentration of customer accounts in one or a few speculative issues;

6. frequent in-and-out trades in customer accounts involving a few speculative issues; and

7. frequent "proceeds" trades, that is, purchases of securities using the proceeds of contemporaneous sales.

As a result of the foregoing, Wolynez failed reasonably to supervise registered representatives and registered principals at Baron with a view to preventing their violations of Section 17(a) of the Securities Act and Section 10(b) and Rule 10b-5 thereunder and their aiding and abetting and causing violations of Sections 7(c) and 15(c)(1) of the Exchange Act and Rule 15c1-2 thereunder and Regulation T promulgated by the Federal Reserve Board, as described above.

F. WOLYNEZ'S CRIMINAL CONVICTION

On July 18, 1997, Wolynez pleaded guilty to and was convicted in the Supreme Court of the State of New York of a scheme to defraud, a Class E felony, arising from his activities as a registered representative and principal of Baron. Wolynez cooperated with and provided substantial assistance to New York state criminal authorities in their investigation of Baron.

III.

FINDINGS

Based on the above, the Commission finds that while Wolynez served in a supervisory or compliance capacity at Baron, certain Baron registered representatives and registered principals willfully committed violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and willfully aided and abetted and caused violations of Sections 7(c) and 15(c)(1) of the Exchange Act and Rule 15c1-2 thereunder and Regulation T promulgated by the Federal Reserve Board. In connection therewith, Wolynez failed reasonably to supervise registered representatives and registered principals at Baron with a view to preventing their violations of Section 17(a) of the Securities Act and Section 10(b) and Rules 10b-5 thereunder and their aiding and abetting and causing violations of Sections 7(c) and 15(c)(1) of the Exchange Act and Rules 15c1-2 thereunder and Regulation T promulgated by the Federal Reserve Board.

IV.

OFFER OF SETTLEMENT

The Respondent has submitted an offer of settlement, which, without admitting or denying the findings herein, he consents to the Commission's issuance of this Order which makes findings, as set forth above and the relief ordered below.

V.

ORDER

On the basis of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions and other relief specified in Wolynez's Offer.

Accordingly, IT IS HEREBY ORDERED that Wolynez:

(a) be barred from association with any broker or dealer; and

(b) pay a civil penalty in the amount of $20,000, to be paid within forty-five days of entry of the Order. Such payment shall be: (a) made by United States postal money order, certified check, bank cashier's check or bank money order; (b) made payable to the Securities and Exchange Commission; (c) hand-delivered or mailed to the Comptroller, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Mail Stop 0-3, Alexandria, VA 22312; and (d) submitted under cover letter which identifies Jack Wolynez as a Respondent in this proceeding, and the Commission's file number HO-2641. A copy of the cover letter and the payment shall be sent simultaneously to Lawrence A. West, Assistant Director, Securities and Exchange Commission, Division of Enforcement, 450 Fifth Street, N.W., Washington, DC 20549-0807.

By the Commission.

Jonathan G. Katz
Secretary

Footnotes