==========================================START OF PAGE 1====== UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION ADMINISTRATIVE PROCEEDINGS File No. 3-8827 INVESTMENT ADVISERS ACT OF 1940 Release No. 1554 / February 27, 1996 ---------------------------------------- : In the Matter of : : ORDER MAKING Professional Management-St. Louis Inc. : FINDINGS AND Wayne B. Conwell : IMPOSING REMEDIAL : SANCTIONS : ---------------------------------------- I. In this public administrative proceeding ordered pursuant to Sections 203(e) and (f) of the Investment Advisers Act of 1940 ("Advisers Act"), Respondents Professional Management-St. Louis, Inc. ("Professional Management") and Wayne B. Conwell ("Conwell") have submitted an Offer of Settlement ("Offer") which the Commission has determined to accept.-[1]- Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or in which the Commission is a party, and without admitting or denying the allegations contained in this Order, except as to jurisdiction and the facts set forth in paragraph II.A. and F. below, which are admitted, Professional Management and Conwell consent to the entry of this Order Making Findings and Imposing Remedial Sanctions. II. On the basis of this Order, the Order Instituting Public Administrative Proceedings and the Offer submitted by Professional Management and Conwell, the Commission finds that: A. Professional Management has been registered with the Commission as an investment adviser pursuant to Section 203 of the Advisers Act since March 2, 1992. ---------FOOTNOTES---------- -[1]- The Order Instituting Public Proceedings in this matter was issued on September 26, 1995. Advisers Act Release No. 1524 (Sept. 26, 1995). ==========================================START OF PAGE 3====== B. At all relevant times Conwell, Professional Management's sole employee, controlled and personally directed all of Professional Management's activities. C. In April 1992, Conwell convinced two of his advisory clients to invest their Individual Retirement Account balance of $11,714.84 in various mutual funds. Conwell instructed them to pay for these investments with two checks made payable to Professional Management. Conwell assured his clients that he would invest their funds in the mutual funds. The clients paid Conwell a $248 service fee. In addition, Conwell told the clients that he was a registered broker-dealer. In fact, Conwell only invested $2,500 of the clients' money in mutual funds and misappropriated the remainder of their money. Further, Conwell has never been registered as a broker-dealer or associated with a registered broker-dealer. D. During April 1992, Professional Management and Conwell willfully violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933 in that they, in connection with the purchase or sale and in the offer or sale of the mutual funds, by use of the means or instrumentalities of interstate commerce, or by use of the mails, directly or indirectly: employed devices, schemes or artifices to defraud; made untrue statements of material facts or 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 engaged in acts, practices, or courses of business which would or did operate as a fraud or deceit. As part of this conduct, Professional Management and Conwell made misrepresentations and omissions of material fact concerning the fact that only a small portion of the clients' funds were invested in mutual funds and that Conwell was a registered broker-dealer. E. During April 1992, Professional Management willfully violated and Conwell willfully aided and abetted the violation of Sections 206(1) and (2) of the Advisers Act which prohibit an investment adviser, by use of the mails or any means or instrumentality of interstate commerce, directly or indirectly to employ any device, scheme, or artifice to defraud any client or prospective client or to engage in any transaction, practice, or course of business which operates as a fraud or deceit. As part of this conduct, Professional Management and Conwell engaged in the conduct described in Paragraph II.C. and D. above. F. On March 11, 1994, Conwell was convicted in the Circuit Court of St. Louis County, State of Missouri, of one count of stealing one-hundred fifty dollars or more by deceit, State of Missouri v. Wayne B. Conwell, 92 CR-4337, and one count of passing bad checks, State of Missouri v. Wayne B. Conwell, 93 CR- 3040. On April 22, 1994, the Court sentenced Conwell to ==========================================START OF PAGE 4====== concurrent sentences of five years probation for each offense, and it ordered Conwell to pay $9,214.84 in restitution. G. The criminal information (Information) filed in case No. 92 CR-4337 charged that between April 10, 1992, and April 20, 1992, Conwell stole $11,714.84 from clients of Professional Management with the purpose to deprive these clients of the $11,714.84 by deceit. The Information charged that Conwell represented to the clients that if they would give him $11,714.84, then Conwell would invest that amount in several mutual funds. After taking the $11,714.84, Conwell made one investment of $2,500 into one mutual fund and stole the remaining $9,214.84. III. In view of the foregoing, the Commission finds it is in the public interest to impose the sanctions specified in the Offer of Settlement. ACCORDINGLY, IT IS ORDERED that effective immediately: A. Conwell be barred from association with any broker, dealer, investment company, investment adviser and municipal securities dealer; B. Professional Management's registration as an investment adviser be revoked; and C. Conwell and Professional Management are jointly and severally liable to pay disgorgement of $5,914, plus interest, at the prejudgment rate, provided, however, that the payment of such disgorgement and prejudgment interest is waived, and no civil penalty is being imposed based upon Conwell's and Professional Management's demonstrated inability to pay. If at any time following the entry of this Order the Division of Enforcement ("Division") obtains information from any source indicating that the financial information provided by Conwell and Professional Management was inaccurate or incomplete in any material respect as of the time such representations were made, the Division may, at its sole discretion and without prior notice to Conwell and Professional Management, petition the Administrative Law Judge to reopen these proceedings to consider entry of an order of disgorgement and prejudgment interest, and imposing a civil penalty. In connection with any such proceedings, the only issues shall be whether the financial information provided by Conwell and Professional Management was fraudulent, misleading, inaccurate or incomplete in any material respect at the time such representations were made, the amount of disgorgement and prejudgment interest, and the civil penalty to be imposed. Conwell and Professional Management may not, by way of defense to such petition, contest the allegations and findings in this Order ==========================================START OF PAGE 5====== or assert that disgorgement and/or a civil penalty should not be ordered for the violations of the federal securities laws alleged herein. By the Commission. Jonathan G. Katz Secretary