UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 37720 / September 24, 1996 ADMINISTRATIVE PROCEEDING File No. 3-9096 ______________________________ : : ORDER INSTITUTING PUBLIC In the Matter of : PROCEEDINGS, MAKING : FINDINGS AND IMPOSING MOORS & CABOT, INC. : REMEDIAL SANCTIONS AND : CEASE-AND-DESIST ORDER Respondent. : ______________________________: I. The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that administrative proceedings be instituted pursuant to Sections 15(b), 19(h) and 21C of the Securities Exchange Act of 1934 ("Exchange Act") against Moors & Cabot, Inc. ("Moors & Cabot"), a broker-dealer registered with the Commission. In anticipation of the institution of these proceedings, Moors & Cabot has submitted an Offer of Settlement which the Commission has determined to accept. Solely for purposes of this proceeding and any other proceeding brought by or on behalf of the Commission or in which the Commission is a party, without admitting or denying the findings contained herein, except for those set forth in Subparagraph II.A., below, which are admitted, and prior to a hearing pursuant to the Commission's Rules of Practice, 17 C.F.R.  201.200, Moors & Cabot consents to the findings and the imposition of sanctions, a Cease-and-Desist Order and civil penalty as set forth below. Accordingly, IT IS ORDERED that proceedings against Moors & Cabot be, and hereby are, instituted. II. On the basis of this Order Instituting Public Proceedings, Making Findings and Imposing Remedial Sanctions and ==========================================START OF PAGE 2====== Cease-and-Desist Order, and the Offer of Settlement submitted by Moors & Cabot, the Commission finds that:-[1]- A. At all times relevant to this proceeding, Moors & Cabot, headquartered in Boston, Massachusetts, has been registered with the Commission as a broker-dealer. B. From approximately April 1991 through the present, Moors & Cabot willfully violated Section 17(a) of the Exchange Act and Rule 17a-4 promulgated thereunder. Section 17(a) of the Exchange Act requires registered broker-dealers to "make and keep for prescribed periods such records . . . as the Commission, by rule, prescribes as necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes" of the Exchange Act. Rule 17a-4 requires brokers and dealers to preserve, for a period of not less than three years, "originals of all communications received and copies of all communications sent by such . . . broker or dealer (including inter-office memoranda and communications) relating to his business as such." 1. From April 1991 through the present, Moors & Cabot failed to keep, for a period of at least three years, documentation evidencing certain wire transfers executed in Moors & Cabot's customer accounts. 2. This documentation was part of the firm's correspondence files and constituted inter-office communications within the meaning of Rule 17a-4. Therefore, by failing to keep these documents, Moors & Cabot violated Section 17(a) and Rule 17a-4 thereunder. III. On the basis of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified in the Offer of Settlement submitted by Moors & Cabot. Accordingly, IT IS HEREBY ORDERED that: A. Respondent Moors & Cabot be, and hereby is, censured; B. Pursuant to Section 21C of the Exchange Act, Moors & Cabot shall cease and desist from committing or causing any violations and any future violations of Section 17(a) of the Exchange Act and Rule 17a-4 thereunder. ---------FOOTNOTES---------- -[1]- The findings herein are made pursuant to Moors & Cabot's Offer of Settlement and are not binding on any other person or entity named as a respondent in any other proceeding. ==========================================START OF PAGE 3====== C. Pursuant to Section 21B of the Exchange Act, Moors & Cabot shall pay a civil money penalty in the aggregate of fifty thousand dollars ($50,000) to the United States Treasury. Such payment shall be: (i) paid within thirty (30) days from the date of this Order; (ii) made by United States postal money order, certified check, bank cashier's check or bank money order; (iii) made payable to the Securities and Exchange Commission; (iv) delivered to Donald M. Hoerl, District Administrator, Philadelphia District Office, Securities and Exchange Commission, The Curtis Center, Suite 1005E., 601 Walnut Street, Philadelphia, Pennsylvania 19106; and (v) submitted under cover letter which identifies Moors & Cabot as the Respondent in these proceedings and the file number of the proceedings. D. Respondent Moors & Cabot shall comply with the following undertakings; 1. That Moors & Cabot undertake to retain an independent consultant ("Consultant"), not unacceptable to the Commission's staff, at Moors & Cabot's expense, to conduct a review of Moors & Cabot's record retention policies, practices and procedures; 2. That Moors & Cabot undertake to require the Consultant, at Moors & Cabot's expense, to prepare a report ("Report") making recommendations as to Moors & Cabot's record retention policies, practices and procedures and to submit the Report in the manner described in paragraph III.D.5., below. Moors & Cabot shall cooperate fully with the Consultant and shall provide such person with access to its files, books, records and personnel as reasonably requested for such person's review; 3. That Moors & Cabot undertake to provide Donald M. Hoerl, District Administrator, Philadelphia District Office, within thirty (30) days of the entry of the Order, with a copy of an engagement letter detailing the scope of the Consultant's responsibilities pursuant to paragraphs III.D.1. and III.D.2., above. The engagement letter shall provide, at a minimum, that the review will comply with the requirements contained in paragraph III.D.5.; 4. That Moors & Cabot undertake to adopt, implement and maintain all policies, practices and procedures recommended by the Consultant in the Report; provided, however, that as to any recommendation of the Consultant which Moors & Cabot determines is, in whole or in part, unduly burdensome, Moors & Cabot, with the consent of the Commission's staff, may suggest an alternative procedure to the Consultant designed to achieve the same objective or purpose as that of the recommendation of the Consultant. Moors & Cabot shall set forth in an affidavit to be submitted pursuant to paragraph III.D.5. of this Order such alternative procedure, and a description of how such alternative ==========================================START OF PAGE 4====== procedure achieves the same objective or purpose as the Consultant's original recommendation. The Consultant shall evaluate the alternative procedure proposed by Moors & Cabot and Moors & Cabot will abide by the Consultant's determination with regard thereto and adopt those recommendations which the Consultant shall ultimately determine are appropriate; 5. That Moors & Cabot undertake to require the Consultant to complete the review and deliver the Report described in paragraph III.D.2., above, to Moors & Cabot and to Donald M. Hoerl, District Administrator, Philadelphia District Office, within ninety (90) days of issuance of the Order. Moors & Cabot may apply to the Commission's staff for an extension of this deadline and, upon a showing of good cause by Moors & Cabot, the Commission's staff may grant such extension for whatever time period it deems appropriate, but in no event shall the deadline exceed one hundred and twenty (120) days from the date of the Commission's Order. Moors & Cabot shall, within three months after the issuance of the Consultant's Report, submit to Donald M. Hoerl, District Administrator, Philadelphia District Office, an affidavit attesting to its implementation of the recommendations contained in the Report and setting forth the details of its implementation of the recommendations contained in the Report; 6. That Moors & Cabot undertake to require the Consultant to review and deliver a report one year after delivery of the Report, analyzing Moors & Cabot's adoption, implementation and maintenance of the policies, practices and procedures contained in the Consultant's Report and the effectiveness of those policies, practices and procedures; and 7. That Moors & Cabot undertake to conduct training for all supervisory and managerial employees in its field offices and headquarters in order to apprise them of the policies, practices and procedures contained in the Consultant's Report. The training will be completed before Moors & Cabot submits the affidavit referred to in paragraph III.D.5. By the Commission. Jonathan G. Katz Secretary