UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES ACT OF 1933 Release No. 7591 / September 30, 1998 SECURITIES EXCHANGE ACT OF 1934 Release No. 40507 / September 30, 1998 ADMINISTRATIVE PROCEEDING File No. 3-9750 In the Matter of : : ORDER INSTITUTING PUBLIC CRAIG LEIBOLD, : PROCEEDINGS, MAKING JEFFREY OETTING, : FINDINGS AND IMPOSING TOM POLLARD, and : REMEDIAL SANCTIONS MARK SALTER, : : : Respondents. : I. The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public proceedings be instituted pursuant to Sections 15(b), 19(h) and 21C of the Securities Exchange Act of 1934 ("Exchange Act") and Section 8A of the Securities Act of 1933 ("Securities Act") against Craig Leibold ("Leibold") and Jeffrey Oetting ("Oetting"), and pursuant to Sections 15(b) and 19(h) of the Exchange Act against Tom Pollard ("Pollard") and Mark Salter ("Salter")(collectively the "Respondents"). In anticipation of these proceedings, the Respondents have each submitted an Offer of Settlement 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 to which the Commission is a party, each of the Respondents, by his Offer of Settlement, without admitting or denying the Commission's findings, except the Commission's jurisdiction, which is admitted, consents to the entry of this Order. II. Accordingly, IT IS HEREBY ORDERED THAT proceedings pursuant to Sections 15(b), 19(h), and 21C of the Exchange Act and Section 8A of the Securities Act be, and they hereby are, instituted. III. On the basis of this Order and the Offers of Settlement submitted by the Respondents, the Commission finds that: 1. Leibold, from in or about October 1992 to in or about April 1994, was associated as a registered representative with Westcap Securities, L.P. ("Westcap"), which was a broker-dealer registered with the Commission pursuant to Section 15 of the Exchange Act. 2. Oetting, from in or about October 1992 to in or about April 1994, was associated as a registered representative with Westcap. 3. At all relevant times herein, Pollard was associated as a principal and as Head of Sales of Westcap. 4. At all relevant times herein, Salter was associated as a principal and as Head of Trading of Westcap. Leibold and Oetting Traded an Account in an Excessive Manner. 5. From in or about 1993 to in or about February 1994, Leibold and Oetting (the "Registered Representatives") traded a customer account at Westcap in an excessive manner in order to maximize commissions from the account. During this period, Leibold and Oetting used discretionary authority provided by the customer to trade the account. Annualized turnover in that account was approximately 13.28 and commissions, as a percent of average equity, was approximately 24.83%. 6. As a result of the activity described in paragraph III.5 above, Leibold and Oetting willfully violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder in that Leibold and Oetting, in connection with the offer, sale or purchase of securities, by the use of the means or instruments of transportation or communication in interstate commerce or by the use of the mails, directly or indirectly, employed devices, schemes or artifices to defraud; obtained money or property by means of untrue statements of material facts or 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; or engaged in transactions, practices or courses of business which operated as a fraud or deceit upon purchasers or prospective purchasers of such securities. Pollard and Salter Failed Reasonably to Supervise Leibold and Oetting. 7. During the relevant period, Pollard had the requisite authority, ability and responsibility to supervise Leibold and Oetting. Pollard's supervisory authority, ability and responsibility stemmed from various sources, including, but not limited to: (i) Westcap's compliance manual which designated Pollard as the supervisor of all Westcap registered representatives; (ii) his assignment, as a member of Westcap's Compliance Committee, to address compliance concerns raised by Westcap's compliance officer regarding registered representatives, including Leibold and Oetting; and (iii) his responsibility, as stated in Westcap's compliance manual, to review periodically the activities of Westcap customer accounts. 8. During the relevant period, Salter had the requisite authority, ability and responsibility to supervise Leibold and Oetting. Salter's supervisory authority, ability and responsibility stemmed from various sources, including, but not limited to: (i) his responsibility to review order tickets and daily trade blotters at Westcap and his authority to approve or disapprove all trades at Westcap; (ii) his acceptance of the responsibility, as a member of Westcap's Compliance Committee, to address compliance concerns raised by Westcap's compliance officer regarding Leibold and Oetting; (iii) his role in the hiring of Westcap registered representatives; (iv) his role to review and, if necessary, modify commission payouts to Westcap registered representatives; and (v) his assurance to Westcap's compliance officer and to the Compliance Committee that he would address compliance concerns about Leibold and Oetting raised in a weekly report prepared by the compliance officer or at compliance meetings. 9. Beginning in or about 1993 through in or about February 1994, Westcap's compliance officer repeatedly notified Salter and Pollard of his compliance concerns, including, but not limited to: (i) unusually active trading in the customer account identified in Paragraph III.5 above; and (ii) the level of commissions being paid to Leibold and Oetting for trades among and between their customers. During the relevant period, Westcap's compliance officer prepared a weekly memorandum regarding these and other compliance concerns, which Salter received each week. Although the compliance officer offered to provide the weekly memorandum to Pollard, Pollard declined the offer. 10. During the relevant period, Westcap generated Phase III Reports, a periodic computer report which monitored the trading activities of Westcap customer accounts and the commissions resulting from the trading activities. Westcap's compliance officer caused a Phase III Report to be generated for, among other customers, the customer identified above in Paragraph III.5. This Phase III Report indicated frequent trading activities and large amounts of commissions generated in this customer account. In or about June 1993, Westcap's compliance officer informed Salter, Pollard and other members of Westcap's Compliance Committee of compliance concerns regarding the results of the Phase III Report for the customer account identified above in Paragraph III.5. Westcap's compliance officer raised additional concerns about the customer identified above in Paragraph III.5 at Westcap's Compliance Committee meetings. 11. Pollard did not investigate the compliance concerns described above in Paragraphs III.9 and III.10. 12. Although Westcap's compliance manual required the Head of Sales periodically to review the account activities of Westcap customers, Pollard, as Westcap's Head of Sales, did not review the account activities of Westcap customers. 13. Salter did not adequately investigate the compliance concerns described above in Paragraphs III.9 and III.10. 14. From in or about 1993 to in or about February 1994, Pollard failed reasonably to supervise the Registered Representatives pursuant to Section 15(b)(6) of the Exchange Act and within the meaning of Section 15(b)(4)(E) of the Exchange Act, with a view to preventing the Registered Representatives' violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in that Pollard failed adequately to respond to the information concerning improper conduct, or red flags, or to implement supervisory procedures required by Westcap. 15. From in or about 1993 to in or about February 1994, Salter failed reasonably to supervise the Registered Representatives pursuant to Section 15(b)(6) of the Exchange Act and within the meaning of Section 15(b)(4)(E) of the Exchange Act, with a view to preventing the Registered Representatives' violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in that Salter failed adequately to respond to the information concerning improper conduct, or red flags. IV. In view of the foregoing, it is in the public interest to impose the sanctions specified in the Offers of Settlement, such sanctions to begin from the date of the entry of the Commission's order. Accordingly, IT IS ORDERED: Sanctions against Leibold. 1. That Leibold cease and desist from committing or causing any violations or any future violations of Section 10 (b) of the Exchange Act or Rule 10b-5 thereunder or of Section 17(a) of the Securities Act; 2. That Leibold be barred from association with any broker, dealer, municipal securities dealer, investment company or investment adviser with a right to reapply after five years; 3. That Leibold pay a civil penalty of $25,000 within thirty (30) days of entry of the Order. Such payment to 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, Stop 0-3, Alexandria, VA 22312; and (d) submitted under cover letter that identifies Craig Leibold as Respondent in this matter, the case number of this matter, a copy of which cover letter and money order or check shall be sent to Peter K.M. Chan, Branch Chief, Securities and Exchange Commission, 500 West Madison Street, Chicago, IL 60661; Sanctions against Oetting. 4. That Oetting cease and desist from committing or causing any violations or any future violations of Section 10 (b) of the Exchange Act or Rule 10b-5 thereunder or of Section 17(a) of the Securities Act; 5. That Oetting be barred from association with any broker, dealer, municipal securities dealer, investment company or investment adviser with a right to reapply after five years; 6. That Oetting pay a civil penalty of $25,000 within thirty (30) days of entry of the Order. Such payment to 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, Stop 0-3, Alexandria, VA 22312; and (d) submitted under cover letter that identifies Jeffrey Oetting as Respondent in this matter, the case number of this matter, a copy of which cover letter and money order or check shall be sent to Peter K.M. Chan, Branch Chief, Securities and Exchange Commission, 500 West Madison Street, Chicago, IL 60661; Sanctions against Pollard. 7. That Pollard be suspended from association with any broker or dealer for a period of six (6) months, effective on the second Monday following entry of this Order. Within thirty (30) days after the end of the suspension period, Pollard shall provide an affidavit, stating that he has complied with this sanction, via certified mail to Mary E. Keefe, Regional Director, Securities and Exchange Commission, Midwest Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; 8. That Pollard be suspended from association in a supervisory or a proprietary capacity with any broker or dealer for a period of twelve (12) months immediately following the period of his suspension from association. Within thirty (30) days after the end of the suspension period, Pollard shall provide an affidavit, stating that he has complied with this sanction, via certified mail to Mary E. Keefe, Regional Director, Securities and Exchange Commission, Midwest Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; 9. That Pollard pay a civil penalty of $7,500 within thirty (30) days of entry of the Order. Such payment to 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, Stop 0-3, Alexandria, VA 22312; and (d) submitted under cover letter that identifies Thomas L. Pollard as Respondent in this matter, the case number of this matter, a copy of which cover letter and money order or check shall be sent to Peter K.M. Chan, Branch Chief, Securities and Exchange Commission, 500 West Madison Street, Chicago, IL 60661; Sanctions against Salter. 10. That Salter be suspended from association with any broker or dealer for a period of three (3) months, effective on the second Monday following entry of this Order. Within thirty (30) days after the end of the suspension period, Salter shall provide an affidavit, stating that he has complied with this sanction, via certified mail to Mary E. Keefe, Regional Director, Securities and Exchange Commission, Midwest Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; 11. That Salter be suspended from association in a supervisory capacity with any broker or dealer for a period of six (6) months immediately following the period of his suspension from association. Within thirty (30) days after the end of the suspension period, Salter shall provide an affidavit, stating that he has complied with this sanction, via certified mail to Mary E. Keefe, Regional Director, Securities and Exchange Commission, Midwest Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and 12. That Salter pay a civil penalty of $10,000 within thirty (30) days of entry of the Order. Such payment to 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, Stop 0-3, Alexandria, VA 22312; and (d) submitted under cover letter that identifies Salter as Respondent in this matter, the case number of this matter, a copy of which cover letter and money order or check shall be sent to Peter K.M. Chan, Branch Chief, Securities and Exchange Commission, 500 West Madison Street, Chicago, IL 60661. By the Commission. Jonathan G. Katz Secretary