==========================================START OF PAGE 1====== UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 38102 / December 31, 1996 ADMINISTRATIVE PROCEEDING File No. 3-9211 __________________________ : In the Matter of : ORDER PURSUANT TO SECTIONS : 15(b), 15B AND 19(h) OF THE MARK S. FERBER, : SECURITIES EXCHANGE ACT OF : 1934, INSTITUTING PROCEEDINGS, Respondent. : MAKING FINDINGS AND IMPOSING : REMEDIAL SANCTIONS __________________________: I. The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that a public administrative proceeding be instituted pursuant to Sections 15(b), 15B and 19(h) of the Securities Exchange Act of 1934 ("Exchange Act") against Mark S. Ferber ("Ferber"). II. In anticipation of the institution of these proceedings, Ferber has submitted an Offer of Settlement ("Offer") that 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 to which the Commission is a party, and prior to a hearing pursuant to the Commission's Rules of Practice, 17 C.F.R. 201.100 et seq., 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 this proceeding and the entry of the conviction and injunction as set forth in paragraphs III.B.1. and III.C.5., which are admitted, Ferber consents to the issuance of this Order Pursuant to Sections 15(b), 15B and 19(h) of the Exchange Act, Instituting Proceedings, Making Findings and Imposing Remedial Sanctions (the "Order") and to the imposition of the remedial sanctions set forth below. III. FINDINGS On the basis of this Order and the Offer, the Commission finds that: A. Respondent Ferber, a resident of Concord, Massachusetts, was at all times relevant hereto an investment banker with Lazard Freres & Co., a broker-dealer and municipal securities dealer with a principal place of business in New York, New York ("Lazard"). Ferber joined Lazard in April 1988 as Senior Vice President, and was promoted to General Partner in January 1990. Ferber established and managed Lazard's Municipal Department branch office in Boston, Massachusetts until he resigned in January 1993. B. Criminal Conviction 1. Following his conviction on mail and wire fraud charges, on December 19, 1996, Ferber was sentenced to a prison term of 33 months, and was ordered to pay a criminal fine of $1,000,000. United States of America v. Mark S. Ferber, Criminal No. 95-10338-WGY (D. Mass). 2. The indictment alleged that Ferber violated his fiduciary duties to his public financial advisory clients. The indictment further alleged that Ferber intentionally failed to adequately disclose to those clients material facts concerning a financial relationship that he entered into on behalf of Lazard with Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), and thereby deprived his financial advisory clients of the ability to assess his advice concerning Merrill Lynch. C. Injunction for Securities Laws Violations 1. On December 19, 1996 the Commission filed a Complaint against Ferber in the United States District Court for the District of Massachusetts, SEC v. Mark S. Ferber, Civil Action No. 96-12653 (EFH) (D. Mass). -[1]- 2. The Complaint alleged that Ferber was responsible for performing and/or overseeing all financial advisory services provided to the Massachusetts Water Resources Authority ("MWRA"), the District of Columbia ("the District") and the United States Postal Service ("USPS"). The Complaint alleged that Ferber, on ---------FOOTNOTES---------- -[1]- See Litigation Release No. 15193 (December 19, 1996). ==========================================START OF PAGE 2====== behalf of Lazard, negotiated a lucrative contract with Merrill Lynch, which provided that Lazard and Merrill Lynch would jointly market interest rate swaps and that Lazard would be a consultant to Merrill Lynch. The Complaint alleged that Ferber and others under his direct supervision primarily provided Lazard's services under the contract. Pursuant to the contract, between September 1990 and November 1992, Merrill Lynch paid Lazard nearly $5.8 million, which resulted in a substantial financial benefit to Ferber. 3. The Complaint further alleged that the contract with Merrill Lynch was a material fact that should have been disclosed to Lazard's financial advisory clients that were serviced by Ferber and were considering the selection of Merrill Lynch as a provider of financial services. The Complaint alleged that the contract created at least a potential conflict of interest for Ferber in that it gave rise to a significant risk that Ferber would not provide impartial advice to the financial advisory clients that were considering the selection of Merrill Lynch as a provider of financial services. Thus, the Complaint alleged that the contract created the potential for Ferber to abuse his influence over the financial advisory clients. 4. The Complaint further alleged that Ferber knowingly or recklessly failed to adequately disclose the contract to the MWRA, the District and the USPS, all of which selected Merrill Lynch to provide underwriting, interest rate swap or other financial services in connection with municipal securities offerings and/or the purchase and sale of securities. As a result, the Complaint alleged that Ferber defrauded these financial advisory clients and the purchasers of their municipal securities. 5. On December 19, 1996, without admitting or denying the Commission's allegations, Ferber consented to the entry of a final judgment of permanent injunction. On December 27, 1996, the District Court (i) permanently enjoined Ferber from future violations of Sections 10(b) and 15B(c)(1) of the Exchange Act, Rule 10b-5 thereunder and rule G-17 of the Municipal Securities Rulemaking Board, and (ii) ordered Ferber to pay disgorgement of $553,000, plus prejudgment interest of $97,000, for a total of $650,000. ==========================================START OF PAGE 3====== IV. Based on the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified in Ferber's Offer of Settlement. Accordingly, IT IS HEREBY ORDERED that Ferber be, and hereby is, barred from association with any broker, dealer, municipal securities dealer, investment adviser or investment company. By the Commission. Jonathan G. Katz Secretary ==========================================START OF PAGE 4======