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After appropriate notice, hearings were held before a hearing examiner. During the hearings registrant requested withdrawal from registration, and the effectiveness of such withdrawal was stayed as provided by Rule X-15B-6 under the Act. Our Division of Trading and Exchanges filed proposed findings and conclusions. The hearing examiner submitted a recommended decision in which he recommended that registrant's registration as a broker and dealer be revoked, and that Botwinick and Stein each be found to be a cause of such revocation. Our findings are based upon an independent review of the record.

Registrant became registered as a broker and dealer in October 1955. Botwinick and Stein each owned 50% of its outstanding capital stock. Registrant employed six to eight salesmen and appears to have dealt chiefly in low-priced stocks.

Registrant, Botwinick and Stein are permanently enjoined by decree of the Supreme Court of the State of New York, County of New York, dated July 25, 1956, from engaging in the securities business in that State. The decree was entered upon consent, on the basis of a complaint that alleged, among other things, that registrant, Botwinick and Stein engaged in securities transactions while registrant was insolvent, and made false statements in the purchase and sale of securities. Botwinick and Stein, though consenting to the decree, denied participation in the alleged fraudulent practices.

In view of the injunction, under the provisions of the Act here applicable, we must determine whether it is appropriate in the public interest to revoke registrant's registration or to grant registrant's request for withdrawal.

Stein asserts that he learned. of registrant's insolvency only after an audit of its books, although he admits registrant was insolvent immediately prior thereto. He states that thereupon he and Botwinick discussed with an attorney, whom they advised of the insolvency, proposals for a loan to registrant which would be subordinated to the claims of creditors and for a capital investment by the attorney, and that registrant continued to engage in business upon the advice of the attorney until the latter withdrew the loan and capital proposals about 15 days later, at which time registrant promptly ceased doing business. However, we are of the opinion that neither the ignorance of insolvency prior to the audit nor the advice of counsel to continue to do business pending the consumation of proposed financing arrangements--accepting that such advice was given, although the record is not clear in this respect—is sufficient to warrant withholding an order of revocation. Registrant failed to carry out its important responsibility to be informed at all times of its financial condition and to refrain from engaging in any dealings with customers while insolvent.

Stein asserts further that no customer of registrant suffered any pecuniary loss as a result of the misconduct involved in the injunction proceeding. However, the record shows that registrant failed to remit to two customers the proceeds of sales of securities, effected pursuant to orders placed after Stein had learned of registrant's insolvency, in the amount of $4,000.

Under all the circumstances, including the nature of the violations alleged in the complaint in the injunctive action and registrant's consent to the issuance of the injunction, we think it necessary and appropriate in the public interest that its registration as a broker and dealer be revoked, and we deny registrant's request for withdrawal of registration.2 We further conclude that Stein and Botwinick are each a cause of the order entered herein with respect to registrant.

An appropriate order will issue.

By the Commission (Acting Chairman Orrick and Commissioners Patterson, Hastings, and Sargent).

2 Revocation of registration as a broker and dealer will terminate registrant's membership in the National Association of Securities Dealers, Inc.

511636-60

IN THE MATTER OF

MICHAEL RAYMOND CO., INC.

File No. 8-4183. Promulgated July 9, 1957

(Securities Exchange Act of 1934—Sections 15(b) and 15A)

BROKER-DEALER REGISTRATION

Grounds for Revocation-Injunctions Where registered broker and dealer is temporarily enjoined by state court from engaging in securities business on basis of complaint that it engaged in security transactions while insolvent, made fraudulent representations and defrauded customers, and registrant's president and controlling stockholder is permanently enjoined on basis of complaint that he engaged in acts and practices for the purpose of deceiving and defrauding the investing public, held, under all the circumstances in public interest to revoke the registrant's registration as a broker and dealer.

APPEARANCES:

Edward O. B. Reid, of the New York Regional Office of the Commission, for the Division of Trading and Exchanges.

Stanley Kligfeld, for Michael Raymond Co. Inc. and Michael Raymond.

FINDINGS, OPINION AND ORDER

This proceeding involves the question whether under Section 15(b) of the Securities Exchange Act of 1934 (“Act”) we should revoke the registration as a broker and dealer of Michael Raymond Co., Inc. (“registrant”), a member of the National Association of Securities Dealers, Inc. (“NASD"), and whether, under Section 15A (b)(4) of the Act, we should find that Michael Raymond, president, director and together with his wife the owner of all the stock of registrant, is the cause of any order of revocation which may be issued.1

1 Section 15(b) of the Act, as here pertinent, provides that we may revoke the registration of a broker or dealer if we find it is in the public interest and that such broker or dealer or any officer, director or controlling person thereof is enjoined by any court of competent jurisdiction from engaging in any conduct or practice in connection with the sale of securities.

Under Section 15A (b)(4) no broker or dealer may be admitted to or continued in membership in a national securities association if such broker or dealer or any partner, officer or director or any person controlling or controlled by such broker or dealer was a cause of any order of revocation, suspension or expulsion which is in effect.

38 S.E.C.-34 -5543

After appropriate notice a hearing was held. Proposed findings and conclusions were filed by the Division of Trading and Exchanges, which waived a recommended decision by the hearing examiner. Registrant and Raymond also waived a recommended decision. Our findings are based upon an independent review of the record.

The order for proceedings alleges, and we find, that registrant is temporarily enjoined by a decree dated November 18, 1955, and Raymond has been permanently enjoined by a decree dated September 19, 1956, both issued by the Supreme Court of the State of New York, County of New York, from engaging in the securities business. The injunction against registrant was based on a verified complaint and accompanying affidavit which alleged, among other things, that during 1955 registrant engaged in security transactions while insolvent; that registrant and Raymond made fraudulent representations, and defrauded customers of more than $40,000 worth of securities by failing to make payment for and deliver securities to customers entitled thereto; and that Raymond was in full charge of registrant's affairs and responsible for all its acts and practices. The injunction against Raymond was based on a verified complaint which alleged that during 1955, Raymond engaged in acts and practices for the purpose of deceiving and defrauding the investing public. Raymond consented to the permanent injunction but denied the allegations as to fraud.

In view of the injunctions entered against registrant and Raymond, and the nature of the violations alleged in the complaints in the injunction proceedings, we conclude that it is necessary and appropriate in the public interest to revoke registrant’s registration as a broker and dealer. We also find that Raymond is a cause of our order of revocation.

Accordingly, It Is ORDERED that the registration as a broker and dealer of Michael Raymond Co., Inc. be, and it hereby is, revoked, and it is found that Michael Raymond is a cause of this order of revocation.

By the Commission (Acting Chairman Orrick and Commissioners Patterson, Hastings and Sargent).

2 Revocation of registration as a broker and dealer will terminate registrant's NASD membership.

IN THE MATTER OF

HAROLD L. NIELSEN

doing business as NIELSEN INVESTMENT CO.

File No. 8–4222. Promulgated July 10, 1957

(Securities Exchange Act of 1934Section 15(b))

BROKER-DEALER REGISTRATION

Grounds for Revocation-Injunction Where registered broker and dealer is permanently enjoined by federal district court from engaging in the securities business while he is insolvent and his books and records are not current, from selling unregistered securities and from engaging in deceptive and fraudulent acts and practices, held, under all the circumstances in public interest to revoke registrant's registration as a broker and dealer.

FINDINGS, OPINION AND ORDER

This is a proceeding under Section 15(b) of the Securities Exchange Act of 1934 to determine whether to revoke the registration as a broker and dealer of Harold L. Nielsen, doing business as Nielsen Investment Co. ("registrant”), a sole proprietor. The order for proceedings alleges that registrant is permanently enjoined from engaging in or continuing certain conduct and practices in connection with the purchase and sale of securities. Registrant filed an answer and consent to revocation in which he waived a hearing.

Registrant is permanently enjoined by a decree dated November 21, 1956, of the United States District Court for the District of Idaho, Southern Division, from engaging in the securities business while insolvent and his books and records are not current, from selling unregistered securities not exempt from registration under the Securities Act of 1933, and from effecting securities transactions while his aggregate indebtedness to all other persons exceeds 2,000 per centum of his net capital. The complaint in that action, and the

1 Section 15(b) as here applicable, provides that we may revoke the registration of a broker or dealer if we find that it is in the public interest and that such broker or dealer is enjoined by any court of competent jurisdiction from engaging in or continuing any conduct or practices in connection with the purchase or sale of any security.

38 S.E.C.-34-5545

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