UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES ACT OF 1933
Release No. 7693 / June 28, 1999

SECURITIES EXCHANGE ACT OF 1934
Release No. 41566 / June 28, 1999

ADMINISTRATIVE PROCEEDING
File No. 3-9924

In the Matter of THOMAS J. DALTON, Respondent.

ORDER INSTITUTING PUBLIC ADMINISTRATIVE AND CEASE- AND-DESIST PROCEEDINGS PURSUANT TO SECTION 8A OF THE SECURITIES ACT OF 1933 AND SECTIONS 15(b|, 19(h| AND 21C OF THE SECURITIES EXCHANGEACT OF 1934, MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONS (ORDER)

I.

The Securities and Exchange Commission (Commission) deems it appropriate and in the public interest that public administrative proceedings be 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) against Thomas J. Dalton (Dalton).

In anticipation of the institution of these administrative proceedings, Dalton has submitted an Offer of Settlement (Offer) which the Commission has determined to accept. Solely for the purpose of this proceeding and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to jurisdiction and those facts set forth in paragraphs II.A. and B. below, which are admitted, Dalton consents to the entry of this Order.

Accordingly, it is ordered that proceedings pursuant to Section 8A of the Securities Act and Sections 15(b), 19(h) and 21C of the Exchange Act be, and hereby are, instituted.

II.

On the basis of this Order and the Offer submitted by Dalton, the Commission makes the following findings¹:

A. The Commission has jurisdiction over Dalton and over matters to be set forth in the Order Instituting Public Administrative Proceedings Pursuant to Section 8A of the Securities Act of 1933, and Sections 15(b), 19(h), and 21C of the Securities Exchange Act of 1934, Making Findings and Imposing Remedial Sanctions (Order).

B. Dalton, age 38, resides in Levittown, New York. From March 1993 through February 1997, Dalton served as the head trader for LT Lawrence & Co., Inc. (LAWR).

C. LAWR is a registered broker-dealer that has been registered with the Commission since March 1993. LTL Capital Corp. (LTC), a New York corporation, owns 100% of LAWR. LAWR was the managing underwriter of two initial public offerings (IPOs): the Ecotyre Technologies, Inc. (Ecotyre) IPO on December 12, 1995, and the Bigmar, Inc. (Bigmar) IPO on June 19, 1996.

D. LAWR's principals personally controlled and directed the activities of LAWR from March 1993 to the present.

Ecotyre IPO

E. On or about December 12, 1995, the entire Ecotyre IPO of 1,725,000 units, including 225,000 units resulting from LAWR's exercise of the underwriter's over-allotment option, was sold out at the price of $4.00 per unit. LAWR sold approximately 83% of the IPO to its own retail customers. In addition, before trading began, LAWR obtained orders from retail customers for units in the aftermarket.

F. Aftermarket trading began on December 13, 1995, at approximately 12:20 p.m. On December 13, 1995, between approximately 12:20 p.m. and 1:52 p.m., LAWR acquired for its inventory approximately 320,000 of the units sold in the Ecotyre IPO, having purchased approximately 305,000 of those units by 12:25 p.m. at an average cost of approximately $4.81. While it was accumulating these shares, LAWR executed no sales to retail customers. LAWR acquired approximately 52,000 units from other broker-dealers into inventory between 1:52 p.m. and 4:00 p.m. The price of the Ecotyre units rose from the IPO price of $4.00 to approximately $6.50 by 1:52 p.m.

G. Between approximately 12:36 p.m. and 4:00 p.m. on December 13, 1995, LAWR began to sell units out of inventory to customers. LAWR sold approximately 944,400 Ecotyre units to its customers at prices ranging from approximately $7.00 to $8.00 per unit. By the end of the day on December 13, 1995, LAWR took a short position in its inventory accounts of approximately 624,400 units. LAWR's purchases from and sales to its customers of Ecotyre units constituted approximately 95% of all retail transactions on December 13, 1995. More than 98% of all retail sales on December 13, 1995, were made to customers of LAWR. LAWR ultimately profited by approximately $1.2 million from the sales of the Ecotyre units on December 13, 1995.

H. As a result of purchasing the Ecotyre units at ever increasing prices while dominating and controlling the market, and as a result of LAWR increasing the bid for the securities, LAWR manipulated the price of the Ecotyre units to approximately $8.00 by the end of trading on December 13, 1995.

Bigmar IPO

I. On or about June 19, 1996, the entire Bigmar IPO of 1,610,000 shares, including the 210,000 shares resulting from LAWR's exercise of the underwriter's over-allotment option, was sold out at the price of $7.50 per share. LAWR sold approximately 81% of the IPO to its own retail customers. In addition, before trading began, LAWR obtained orders from retail customers for shares in the aftermarket.

J. Aftermarket trading began at approximately 1:20 p.m. on June 20, 1996. On June 20, 1996, between approximately 1:20 p.m. and 2:41 p.m., LAWR acquired for its inventory approximately 394,730 of the shares sold in the Bigmar IPO. The average cost of those shares was approximately $9.74. The price of the Bigmar shares rose from the IPO price of $7.50 to approximately $11.00 by 2:41 p.m. While it accumulated shares, LAWR executed virtually no sales to retail customers, even though it held retail customer orders.

K. Between approximately 2:42 p.m. and 4:00 p.m. on June 20, 1996, LAWR began to sell shares out of inventory to customers. LAWR sold approximately 746,375 Bigmar shares to its customers at prices ranging from approximately $10.75 to $12.00 per share. By the end of the day on June 20, 1996, LAWR took a short position in its inventory accounts of approximately 269,055 shares. LAWR's purchases from and sales to its customers of Bigmar shares constituted approximately 90% of all retail transactions on June 20, 1996. More than 96% of all retail sales on June 20, 1996, were made to customers of LAWR. LAWR ultimately profited by approximately $861,000 from the sales of the Bigmar shares on June 20, 1996.

L. As a result of purchasing the Bigmar shares at ever increasing prices while dominating and controlling the market, and as a result of LAWR increasing the bid for the securities, LAWR manipulated the price of the Bigmar shares to approximately $12.00 by the end of trading on June 20, 1996.

M. From at least on or about December 12 through December 13, 1995, and on or about June 19 through June 20, 1996, LAWR and others:

1. effected a series of transactions, thereby acquiring over 86% of the public float of the Ecotyre units by effectively controlling the Ecotyre units held in its customer accounts and by purchasing the securities from IPO investors, members of the Ecotyre selling group, and others in the Ecotyre aftermarket;

2. manipulated the price of the Ecotyre units from the IPO price of $4.00 to approximately $8.00 by:

a) exercising price leadership by purchasing Ecotyre units at increasing prices and entering increasing bids into the NASDAQ system;

b) dominating and controlling the market for the Ecotyre units; and

c) controlling and substantially reducing the floating supply of the Ecotyre units; and

3. after accumulating the vast majority of the Ecotyre units and manipulating the price of the Ecotyre units, sold the units to its customers at the artificially inflated prices.

4. effected a series of transactions, thereby acquiring over 86% of the public float of the Bigmar shares by effectively controlling the Bigmar shares held in its customer accounts and by purchasing the securities from IPO investors, members of the Bigmar selling group, and others in the Bigmar aftermarket;

5. manipulated the price of the Bigmar shares from the IPO price of $7.50 to approximately $12.00 by:

a) exercising price leadership by purchasing Bigmar shares at increasing prices and entering increasing bids into the NASDAQ system;

b) dominating and controlling the market for the Bigmar shares; and

c) controlling and substantially reducing the floating supply of the Bigmar shares;

6. after accumulating the vast majority of the Bigmar shares and manipulating the price of the Bigmar shares, sold the shares to its customers at the artificially inflated prices; and

7. in furtherance of the schemes to manipulate the securities of Ecotyre and Bigmar, engaged in unauthorized transactions and delayed orders to purchase securities.

N. Dalton knowingly provided substantial assistance to LAWR and LAWR's principals by: i) being present in LAWR's trading room during the first days of aftermarket trading after both the Ecotyre and Bigmar IPOs; ii) stamping order tickets; iii) executing trades; iv) updating LAWR's market quotes; and v) monitoring LAWR's inventory account positions in the securities of Ecotyre and Bigmar.

Violations of Law

O. From at least on or about December 12 through December 13, 1995, and on or about June 19 through June 20, 1996, Dalton willfully aided and abetted and caused violations of Section 17(a) of the Securities Act in that, in connection with the offer and sale of securities, by the use of the means and instrumentalities of interstate commerce and by the use of the mails, directly and indirectly, Dalton aided and abetted LAWR and LAWR's principals, by the conduct described in paragraph II.N. above, to: i) employ devices, schemes and artifices to defraud; or ii) make untrue statements of material facts and omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or iii) engage in acts, practices and courses of business which operated and would operate as a fraud and a deceit.

P. From on or about December 12 through December 13, 1995, and on or about June 19 through June 20, 1996, Dalton willfully aided and abetted and caused violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder in that, in connection with the purchase and sale of securities, by the use of the means and instrumentalities of interstate commerce and by the use of the mails, directly and indirectly, Dalton aided and abetted LAWR and LAWR's principals', by the conduct described in paragraph II.N. above, employing devices, schemes and artifices to defraud; making untrue statements of material facts and omitting to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; and engaging in acts, practices and courses of business which operated and would operate as a fraud and a deceit.

Q. From on or about June 19 through June 20, 1996, Dalton willfully aided and abetted and caused violations of Section 9(a)(2) of the Exchange Act in that, in connection with the purchase and sale of Bigmar securities, by the use of the means and instrumentalities of interstate commerce and by the use of the mails, directly and indirectly, Dalton aided and abetted LAWR and LAWR's principals', by the conduct described in paragraph II.N. above, effecting, alone or with one or more other persons, a series of transactions in a security registered on a national securities exchange creating actual or apparent active trading in such security or raising or depressing the price of such security, for the purpose of inducing the purchase or sale of such security by others.

R. From on or about December 12 through December 13, 1995, and on or about June 19 through June 20, 1996, Dalton willfully aided and abetted and caused violations of Section 15(c) of the Exchange Act and Rule 15c1-2 promulgated thereunder in that, by the use of the mails and of the means and instrumentalities of interstate commerce, he aided and abetted, by the conduct described in paragraph II.N. above, LAWR effectuating transactions in and inducing and attempting to induce the purchase and sale of securities by means of manipulative, deceptive and other fraudulent devices and contrivances, including acts, practices and courses of business which operated and would operate as a fraud and a deceit, and made untrue statements of material facts and 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, which statements and omissions were made with knowledge or reasonable grounds to believe that they were untrue and misleading.

S. From on or about December 12 through December 13, 1995, Dalton willfully aided and abetted and caused violations of Section 15(c) of the Exchange Act and Rule 15c1-8 promulgated thereunder in that, by the use of the mails and of the means and instrumentalities of interstate commerce, he aided and abetted, by the conduct described in paragraph II.N. above, LAWR's effectuating transactions in and inducing and attempting to induce the purchase and sale of Ecotyre securities by means of manipulative, deceptive and other fraudulent devices and contrivances, including acts, practices and courses of business which operated and would operate as a fraud and a deceit, and made untrue statements of material facts and 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, which statements and omissions were made with knowledge or reasonable grounds to believe that they were untrue and misleading. LAWR represented to customers that LAWR was selling a security at a price related to the market when LAWR knew that no market existed for the security, or had no reasonable grounds to believe that a market existed for the security, other than the market made, created, or controlled by LAWR.

T. Dalton has submitted a sworn financial statement and other evidence and has asserted his financial inability to pay a civil penalty. The Commission has reviewed the sworn financial statement and other evidence provided by Dalton and has determined that Dalton does not have the financial ability to pay a civil penalty.

III.

In view of the foregoing, it is in the public interest to impose the sanction specified in the Offer.

ACCORDINGLY, IT IS HEREBY ORDERED THAT:

A. Pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, that Thomas J. Dalton cease and desist from committing or causing any violation and any future violation of Section 17(a) of the Securities Act and Sections 9(a)(2), 10(b), and 15(c) of the Exchange Act and Rules 10b-5, 15c1-2, and 15c1-8 thereunder.

B. Effective immediately, Thomas J. Dalton be, and hereby is, barred from association with any broker or dealer, with the right to reapply after one year to the appropriate self-regulatory organization, or if there is none, to the Commission.

C. The Division of Enforcement ("Division") may, at any time following the entry of this Order, petition the Commission to: (1) reopen this matter to consider whether Respondent provided accurate and complete financial information at the time such representations were made; (2) determine the amount of the civil penalty to be imposed; and (3) seek any additional remedies that the Commission would be authorized to impose in this proceeding if Respondent's offer of settlement had not been accepted. No other issues shall be considered in connection with this petition other than whether the financial information provided by Respondent was fraudulent, misleading, inaccurate or incomplete in any material respect, the amount of civil penalty to be imposed and whether any additional remedies should be imposed. Respondent may not, by way of defense to any such petition, contest the findings in this Order or the Commission's authority to impose any additional remedies that were available in the original proceeding.

By the Commission.

Jonathan G. Katz

Secretary

Footnotes

http://www.sec.gov/litigation/admin/34-41566.htm