UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 39362 / November 26, 1997 ADMINISTRATIVE PROCEEDING File No. 3-9490 : In the Matter of : ORDER INSTITUTING A PROCEEDING, : MAKING FINDINGS, AND IMPOSING FREEMAN B. IRBY III, : REMEDIAL SANCTIONS, A CEASE AND Respondent. : DESIST ORDER AND A PENALTY : : : I. The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest to institute this administrative proceeding pursuant to Sections 15(b)(6) and 21C of the Securities Exchange Act of 1934 ("Exchange Act"), against Freeman B. Irby III ("Irby" or "Respondent") to determine whether Respondent willfully aided and abetted and was a cause of violations of Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Exchange Act and Rule 10b- 5 thereunder. II. In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement ("Offer") which the Commission has determined to accept.<(1)> Solely for the purpose of these proceedings, and any other proceeding brought by or on behalf of the Commission or to which the Commission is a party, and without admitting or denying the findings contained herein, except as to the Commission's finding of jurisdiction over him and the subject matter, which are admitted, Respondent consents to the entry of this Order Instituting A Proceeding, Making Findings and Imposing Remedial Sanctions, a Cease and Desist Order and a Penalty (the "Order"). <(1)> In determining to accept the Offer, the Commission considered the cooperation Respondent afforded the Commission staff. III. On the basis of this Order and Respondent's Offer, the Commission finds<(2)> that: A. From March 1992 until July 24, 1996, Respondent was associated with Stephens Inc. ("Stephens"), a broker-dealer and municipal securities dealer registered with the Commission pursuant to Sections 15 and 15B(a) of the Exchange Act. B. On June 3, 1992, the Board of Commissioners of Fulton County, Georgia, selected Stephens and another firm (the "Co-Financial Advisor") to serve as financial advisors to the county for a two-year term commencing July 1, 1992.<(3)> C. As part of its work as one of the financial advisors to Fulton County, Stephens assisted with the selection of underwriters for an offering by Fulton County of $163.375 million in Water & Sewerage Revenue Bonds, Refunding Series 1992 ("Fulton Water & Sewer Refunding"), which closed on November 19, 1992. Respondent and his immediate supervisor (the "Supervisor") were principally responsible for drafting the request for underwriting proposals, and evaluating the responses to that request. D. By late July 1992, the Supervisor had agreed, in exchange for a promise of remuneration, to help Lazard Freres obtain the position of senior managing underwriter (the most lucrative position) for the Fulton Water & Sewer Refunding. By mid-August 1992, the Supervisor had informed Respondent that he (the Supervisor) wanted Lazard Freres to be selected as lead underwriter on the Fulton Water & Sewer Refunding. The Supervisor did not tell Respondent or the Co-Financial Advisor that he (the Supervisor) expected to be paid by Lazard Freres. E. During the period August 31 - September 2, 1992, at the Supervisor's instruction, Respondent took steps that affected the process of evaluating and ranking the responses to the request for underwriting proposals so that Lazard Freres was given the highest score and recommended <(2)> The findings herein are made pursuant to Respondent's Offer and are not binding on any other person or entity in this or any other proceeding. <(3)> Rule G-23(b) of the MSRB provides, in relevant part, that: "a financial advisory relationship shall be deemed to exist when a broker, dealer, or municipal securities dealer renders or enters into an agreement to render financial advisory or consultant services to or on behalf of an issuer with respect to a new issue or issues of municipal securities, including advice with respect to the structure, timing, terms and other similar matters concerning such issue or issues, for a fee or other compensation or in expectation of such compensation for the rendering of such services." ======END OF PAGE 2====== to the Fulton County Commission to serve as senior managing underwriter. At a meeting of the Fulton County Commission on September 2, 1992, the County's financial advisors and its Finance Director submitted a joint recommendation to the Fulton County Commission that Lazard Freres be named lead underwriter for the Fulton Water & Sewer Refunding. The County Commission adopted that recommendation on September 16, 1992. On November 19, 1992, the Fulton Water & Sewer Refunding issue closed. F. By agreeing to assist Lazard Freres with its effort to be named senior managing underwriter for the Fulton Water & Sewer Refunding in exchange for undisclosed remuneration, and by taking undisclosed steps, described above, to assist Lazard Freres with that effort, the Supervisor violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. G. As a result of the conduct described above, Respondent willfully aided and abetted and was a cause of the Supervisor's violation of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. IV. Based on the foregoing, the Commission deems it appropriate and in the public interest to accept the Offer submitted by Respondent and impose the sanctions that are consented to in that Offer. Accordingly, IT IS HEREBY ORDERED that: A. Pursuant to Section 15(b)(6) of the Exchange Act [15 U.S.C. 78o(b)((6)], Respondent be, and hereby is, censured; B. Pursuant to Section 21C of the Exchange Act [15 U.S.C. 78u-3], Respondent cease and desist from being a cause of any violation, and from being a cause of any future violation, of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; and C. Pursuant to Section 21B(a) of the Exchange Act [15 U.S.C.  78u- 2(a)], Respondent shall within 21 days of the entry of this Order, pay a civil penalty of $5,000 to the United States Treasury. Such payment shall 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 delivered by certified mail (return receipt requested) to the Comptroller, Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C., 20549; and (d) submitted under cover letter that identifies the Respondent in these proceedings, and the file number of the proceedings. A copy of such cover letter and check shall be sent to J. Lee Buck, II, Senior Counsel, Division of Enforcement, Securities and Exchange Commission, 450 Fifth Street, N.W., Mail Stop 7-5, Washington, D.C., 20549. ======END OF PAGE 3====== By the Commission. Jonathan G. Katz Secretary ======END OF PAGE 4======