In re MERRILL LYNCH

 
 
 UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
INVESTMENT ADVISERS ACT OF 1940 
Release No. 6829 / January 17, 2025 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-22433 
 
 
In the Matter of 
 
MERRILL LYNCH, PIERCE, 
FENNER & SMITH 
INCORPORATED,  
 
Respondent. 
 
ORDER INSTITUTING ADMINISTRATIVE 
AND CEASE-AND-DESIST PROCEEDINGS 
PURSUANT TO SECTIONS 203(e) AND 
203(k) OF THE INVESTMENT ADVISERS 
ACT OF 1940 AND SECTION 15(b) OF THE 
SECURITIES EXCHANGE ACT OF 1934, 
MAKING FINDINGS, AND IMPOSING 
REMEDIAL SANCTIONS AND A CEASE-
AND-DESIST ORDER  
   
 
I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
public  interest  that  public  administrative  and  cease-and-desist  proceedings  be,  and  hereby  are, 
instituted pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 (“Advisers 
Act”) and Section 15(b) of the Securities Exchange Act of 1934 (“Exchange Act”), against Merrill 
Lynch, Pierce, Fenner & Smith Incorporated (“Respondent” or “Merrill Lynch”).   
 
II. 
 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer of 
Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose of 
these proceedings 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 the 
Commission’s jurisdiction over it and the subject matter of these proceedings, which are admitted, 
Respondent  consents to  the  entry  of  this Order  Instituting  Administrative  and  Cease-and-Desist 
Proceedings Pursuant  to  Sections  203(e)  and 203(k) of  the  Investment  Advisers  Act  of  1940 and 
Section  15(b)  of  the  Securities  Exchange  Act  of  1934, Making  Findings,  and  Imposing  Remedial 
Sanctions and a Cease-and-Desist Order (“Order”), as set forth below. 
 

 
 
2 
III. 
 
 On the basis of this Order and Respondent’s Offer, the Commission finds:  
 
Summary 
 
1. These proceedings arise out of registered investment adviser Merrill Lynch, Pierce, 
Fenner & Smith Incorporated’s (“Merrill Lynch”) failure to adopt and implement written policies 
and  procedures  reasonably  designed  to  prevent  violations  of  the  Advisers  Act  and  the  rules 
thereunder relating to its cash sweep program, specifically its use of the Merrill Lynch Bank Deposit 
Program (“MLBD Program”). 
  
2. From January  2022 through April 2024 (the “Relevant Period”),  MLBD  Program 
was the only cash sweep option for most advisory clients at Merrill Lynch.  Merrill Lynch’s affiliated 
banking entities, with input from Merrill Lynch, set the interest rates for the MLBD Program and 
received significant financial benefits from advisory client cash.  Merrill Lynch made disclosures to 
its clients concerning its and its affiliates’ financial benefits.  When market interest rates increased 
during the Relevant Period, the yields advisory clients received from the MLBD Program were often 
significantly lower than the yields clients could have received had Merrill Lynch made other options 
available as part of the cash sweep program.   
 
3. During the Relevant Period, Merrill Lynch failed to adopt and implement reasonably 
designed written policies and procedures (i) to consider the best interests of clients when evaluating 
and selecting which cash  sweep  program options to  make  available,  including  during  periods  of 
rising interest rates; and (ii) concerning the duties of Merrill Lynch financial advisors in managing 
client cash in advisory accounts.  As a result of this conduct, Merrill Lynch willfully violated Section 
206(4) of the Advisers Act and Rule 206(4)-7 thereunder.  Nevertheless, as described below, during 
the Relevant Period, Merrill Lynch took steps designed to consider the best interests of its clients in 
operating its cash sweep program and managing client cash in advisory accounts. 
 
Respondent 
 
4. Merrill Lynch is a Delaware corporation with its principal place of business in New 
York, New York.  It is a wholly  owned subsidiary of Bank of America Corporation and has been 
registered with the Commission as a broker-dealer since 1959 and an investment adviser since 1978.  
Merrill Lynch has over $1 trillion in regulatory assets under management.  
 
Facts 
 
Merrill Lynch’s Bank Deposit Sweep Program Was the Only Cash Sweep Program  
Option for Most Advisory Clients 
 
5. Merrill  Lynch offers  advisory  services  through the  Merrill  Lynch  Investment 
Advisory Program (“IAP”).  Merrill Lynch provides IAP clients access  to  a  program  pursuant  to 

 
 
3 
which they earn a return on uninvested cash balances in their accounts until the cash is invested or 
otherwise used to satisfy obligations.  Outside of the cash sweep program, Merrill Lynch also offers 
money market funds, treasuries, CDs, and other cash products, in which client cash could have been 
invested for other investment objectives or returns.  Merrill Lynch charges an advisory fee on cash 
held in the cash sweep program and invested in other cash alternatives, which was disclosed to its 
clients.  
   
6. In  the MLBD  Program,  Merrill  Lynch automatically  sweeps  advisory  clients’ 
uninvested  cash  holdings  into  interest-bearing accounts  subject  to Federal  Deposit  Insurance 
Corporation insurance at one or more banking affiliates.  Merrill Lynch’s affiliated banking entities 
set the interest rate offered in the MLBD Program.  During the Relevant Period, the rate differential 
between  the  yields in the MLBD  Program and  other  cash  product  options varied.    At  times  the 
differences were almost 400 basis points and at other times were minimal, but the disparity grew as 
interest rates rose. 
 
7. During the Relevant Period, Merrill Lynch swept billions of dollars in client cash into 
its MLBD  Program annually.  Merrill  Lynch  and  affiliated  banking  entities benefited financially 
from advisory clients’ cash balances held in the MLBD Program.  Merrill Lynch earned advisory 
fees on MLBD Program assets and was credited with revenue from affiliated banking entities based 
in part on the spread earned by banking affiliates on the MLBD Program.  Merrill Lynch’s banking 
affiliates earned significant net interest income on the MLBD Program deposits during the Relevant 
Period.  Merrill Lynch disclosed these financial benefits in its Form ADV and other documents.       
 
Merrill Lynch Failed to Adopt and Implement Reasonably Designed Written Policies 
and Procedures Concerning its Cash Sweep Program 
 
8. Section  206(4)  of  the  Advisers  Act  and  Rule 206(4)-7(a)  thereunder  require  a 
registered  investment  adviser  to  adopt  and  implement  written  policies  and  procedures reasonably 
designed to prevent violations by the adviser and its supervised persons of the Advisers Act and the 
rules adopted thereunder.  During the Relevant Period, Merrill Lynch failed to adopt and implement 
written compliance policies and procedures reasonably designed to prevent violations by the adviser 
and its supervised persons of the Advisers Act and the rules adopted thereunder relating to the cash 
sweep program.       
 
9. First, Merrill Lynch failed to adopt and implement written policies and procedures 
reasonably  designed  to  consider the best  interests  of  clients  when  evaluating and selecting which 
cash sweep program options to make available to clients.  Merrill Lynch determined to place cash 
sweep assets for IAP clients in the FDIC-insured MLBD Program.  While Merrill Lynch regularly 
considered  what  options and  yields should  be  provided  to  IAP  clients  in  the MLBD Program, 
including whether selecting a sweep option with higher yields would be appropriate, the individuals 
and  committees  that  considered  cash  sweep  program  options and  yields were  not  governed  by 
reasonably designed written policies and procedures to evaluate whether their decisions were in the 
best interests of clients.      
 

 
 
4 
10. Second, Merrill Lynch failed to adopt and implement sufficient written policies and 
procedures  concerning the  duties  of  Merrill  Lynch  financial  advisors  in  managing  client  cash.  
Merrill Lynch’s written policies and procedures failed to adequately address whether IAP cash was 
reviewed and appropriately allocated on a timely basis according to a client’s goals and objectives.   
 
11. That  said,  Merrill  Lynch  did  implement  certain  remedial  measures  during the 
Relevant Period as summarized below. 
 
Violations 
 
 12. As a result of the conduct described above, Merrill Lynch willfully
1
 violated Section 
206(4) of the Advisers Act and Rule 206(4)-7 thereunder which require, among other things, that a 
registered  investment  adviser  adopt  and  implement  written  policies  and  procedures  reasonably 
designed to prevent violations of the Advisers Act and the rules adopted thereunder. 
 
Remedial Efforts and Cooperation 
13. In  determining  to  accept  the  Offer,  the  Commission  considered  remedial  acts 
promptly undertaken by Merrill  Lynch and cooperation afforded  the Commission staff.  During 
the Relevant Period, Merrill Lynch’s MLBD Program increased the rates paid to advisory clients, 
and Merrill Lynch adopted and implemented enhanced supervisory procedures targeted at a subset 
of IAP accounts with significant cash holdings and lowered the minimum thresholds for investing 
cash in certain money market funds.  Merrill Lynch also provided detailed narrative responses on 
numerous topics which expedited the Commission staff’s investigation.  
IV. 
 In view of the foregoing, the Commission deems it appropriate and in the public interest to 
impose the sanctions agreed to in Respondent’s Offer. 
 
 Accordingly, pursuant to Sections 203(e) and 203(k) of the Advisers Act and Section 15(b) 
of the Exchange Act, it is hereby ORDERED that: 
 
                                                 
1
 “Willfully,” for purposes of imposing relief under Section 203(e) of the Advisers Act and Section 
15(b) of the Exchange Act, “‘means no more than that the person charged with  the  duty  knows 
what he is doing.’” Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) (quoting Hughes v. SEC, 
174 F.2d 969, 977 (D.C. Cir. 1949)). There is no requirement that the actor “also be aware that he 
is violating one of the Rules or Acts.”  Tager v. SEC, 344 F.2d 5, 8 (2d Cir. 1965). The decision 
in The  Robare  Group,  Ltd.  v.  SEC, which  construed the term “willfully”  for purposes  of a 
differently structured statutory provision, does not alter that standard.  922 F.3d 468, 478-79 (D.C. 
Cir. 2019) (setting forth the showing required to establish that a person has “willfully omit[ted]” 
material information from a required disclosure in violation of Section 207 of the Advisers Act). 

 
 
5 
 A. Merrill  Lynch cease and desist  from  committing  or  causing  any  violations  and any 
future violations of Section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder.  
 
B. Merrill Lynch is censured.  
 
C. Merrill Lynch shall, within 10 days of entry of this Order, pay a civil money penalty 
of  $25 million  to  the Securities and  Exchange Commission for  transfer  to  the  general  fund  of  the 
United  States  Treasury,  subject  to  Section  21F(g)(3)  of  the  Securities  Exchange  Act  of  1934.    If 
timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717.  Payment 
must be made in one of the following ways:   
 
(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request;  
 
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 
Payments by check or money order must be accompanied by a cover letter identifying Merrill 
Lynch as a Respondent in these proceedings, and the file number of these proceedings.  A copy of 
the cover letter and the check or money order must be sent to Reid A. Muoio, Assistant Director, 
Division of Enforcement, Securities and Exchange Commission, 100 F Street NE Washington DC 
20549.   
 
D. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 
treated as penalties paid to the government for all purposes, including all tax purposes. To preserve 
the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor Action, it shall 
not argue that it is entitled to, nor shall it benefit by, offset or reduction of any award of compensatory 
damages by the amount of any part of Respondent’s payment of a civil penalty in this action (“Penalty 
Offset”). If the court in any Related Investor Action grants such a Penalty Offset, Respondent agrees 
that it shall, within 30 days after entry of a final order granting the Penalty Offset, notify the  

 
 
6 
Commission’s counsel in this action and pay the amount of the Penalty Offset to the Securities and 
Exchange Commission. Such a payment shall not be deemed an additional civil penalty and shall not 
be deemed to change the amount of the civil penalty imposed in this proceeding.  For purposes of this 
paragraph, a “Related Investor Action” means a private damages action brought against Respondent 
by or on behalf of one or more investors based on substantially the same facts as alleged in the Order 
instituted by the Commission in this proceeding. 
 
 By the Commission. 
 
 
 
Vanessa A. Countryman 
       Secretary 

UNITED STATES OF AMERICA 

 Before the 

 SECURITIES AND EXCHANGE COMMISSION 

 

INVESTMENT ADVISERS ACT OF 1940 

Release No. 6829 / January 17, 2025 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-22433 

 

 

In the Matter of 

 

MERRILL LYNCH, PIERCE, 

FENNER & SMITH 

INCORPORATED,  

 

Respondent. 

 

ORDER INSTITUTING ADMINISTRATIVE 

AND CEASE-AND-DESIST PROCEEDINGS 

PURSUANT TO SECTIONS 203(e) AND 

203(k) OF THE INVESTMENT ADVISERS 

ACT OF 1940 AND SECTION 15(b) OF THE 

SECURITIES EXCHANGE ACT OF 1934, 

MAKING FINDINGS, AND IMPOSING 

REMEDIAL SANCTIONS AND A CEASE-

AND-DESIST ORDER  

   

 

I. 

 

 The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 

public interest that public administrative and cease-and-desist proceedings be, and hereby are, 

instituted pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 (“Advisers 

Act”) and Section 15(b) of the Securities Exchange Act of 1934 (“Exchange Act”), against Merrill 

Lynch, Pierce, Fenner & Smith Incorporated (“Respondent” or “Merrill Lynch”).   

 

II. 

 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer of 

Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose of 

these proceedings 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 the 

Commission’s jurisdiction over it and the subject matter of these proceedings, which are admitted, 

Respondent consents to the entry of this Order Instituting Administrative and Cease-and-Desist 

Proceedings Pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 and 

Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial 

Sanctions and a Cease-and-Desist Order (“Order”), as set forth below. 

 



 

 

2 

III. 

 

 On the basis of this Order and Respondent’s Offer, the Commission finds:  

 

Summary 

 

1. These proceedings arise out of registered investment adviser Merrill Lynch, Pierce, 

Fenner & Smith Incorporated’s (“Merrill Lynch”) failure to adopt and implement written policies 

and procedures reasonably designed to prevent violations of the Advisers Act and the rules 

thereunder relating to its cash sweep program, specifically its use of the Merrill Lynch Bank Deposit 

Program (“MLBD Program”). 

  

2. From January 2022 through April 2024 (the “Relevant Period”), MLBD Program 

was the only cash sweep option for most advisory clients at Merrill Lynch.  Merrill Lynch’s affiliated 

banking entities, with input from Merrill Lynch, set the interest rates for the MLBD Program and 

received significant financial benefits from advisory client cash.  Merrill Lynch made disclosures to 

its clients concerning its and its affiliates’ financial benefits.  When market interest rates increased 

during the Relevant Period, the yields advisory clients received from the MLBD Program were often 

significantly lower than the yields clients could have received had Merrill Lynch made other options 

available as part of the cash sweep program.   

 

3. During the Relevant Period, Merrill Lynch failed to adopt and implement reasonably 

designed written policies and procedures (i) to consider the best interests of clients when evaluating 

and selecting which cash sweep program options to make available, including during periods of 

rising interest rates; and (ii) concerning the duties of Merrill Lynch financial advisors in managing 

client cash in advisory accounts.  As a result of this conduct, Merrill Lynch willfully violated Section 

206(4) of the Advisers Act and Rule 206(4)-7 thereunder.  Nevertheless, as described below, during 

the Relevant Period, Merrill Lynch took steps designed to consider the best interests of its clients in 

operating its cash sweep program and managing client cash in advisory accounts. 

 

Respondent 

 

4. Merrill Lynch is a Delaware corporation with its principal place of business in New 

York, New York.  It is a wholly owned subsidiary of Bank of America Corporation and has been 

registered with the Commission as a broker-dealer since 1959 and an investment adviser since 1978.  

Merrill Lynch has over $1 trillion in regulatory assets under management.  

 

Facts 

 

Merrill Lynch’s Bank Deposit Sweep Program Was the Only Cash Sweep Program  

Option for Most Advisory Clients 

 

5. Merrill Lynch offers advisory services through the Merrill Lynch Investment 

Advisory Program (“IAP”).  Merrill Lynch provides IAP clients access to a program pursuant to 



 

 

3 

which they earn a return on uninvested cash balances in their accounts until the cash is invested or 

otherwise used to satisfy obligations.  Outside of the cash sweep program, Merrill Lynch also offers 

money market funds, treasuries, CDs, and other cash products, in which client cash could have been 

invested for other investment objectives or returns.  Merrill Lynch charges an advisory fee on cash 

held in the cash sweep program and invested in other cash alternatives, which was disclosed to its 

clients.  

   

6. In the MLBD Program, Merrill Lynch automatically sweeps advisory clients’ 

uninvested cash holdings into interest-bearing accounts subject to Federal Deposit Insurance 

Corporation insurance at one or more banking affiliates.  Merrill Lynch’s affiliated banking entities 

set the interest rate offered in the MLBD Program.  During the Relevant Period, the rate differential 

between the yields in the MLBD Program and other cash product options varied.  At times the 

differences were almost 400 basis points and at other times were minimal, but the disparity grew as 

interest rates rose. 

 

7. During the Relevant Period, Merrill Lynch swept billions of dollars in client cash into 

its MLBD Program annually.  Merrill Lynch and affiliated banking entities benefited financially 

from advisory clients’ cash balances held in the MLBD Program.  Merrill Lynch earned advisory 

fees on MLBD Program assets and was credited with revenue from affiliated banking entities based 

in part on the spread earned by banking affiliates on the MLBD Program.  Merrill Lynch’s banking 

affiliates earned significant net interest income on the MLBD Program deposits during the Relevant 

Period.  Merrill Lynch disclosed these financial benefits in its Form ADV and other documents.       

 

Merrill Lynch Failed to Adopt and Implement Reasonably Designed Written Policies 

and Procedures Concerning its Cash Sweep Program 

 

8. Section 206(4) of the Advisers Act and Rule 206(4)-7(a) thereunder require a 

registered investment adviser to adopt and implement written policies and procedures reasonably 

designed to prevent violations by the adviser and its supervised persons of the Advisers Act and the 

rules adopted thereunder.  During the Relevant Period, Merrill Lynch failed to adopt and implement 

written compliance policies and procedures reasonably designed to prevent violations by the adviser 

and its supervised persons of the Advisers Act and the rules adopted thereunder relating to the cash 

sweep program.       

 

9. First, Merrill Lynch failed to adopt and implement written policies and procedures 

reasonably designed to consider the best interests of clients when evaluating and selecting which 

cash sweep program options to make available to clients.  Merrill Lynch determined to place cash 

sweep assets for IAP clients in the FDIC-insured MLBD Program.  While Merrill Lynch regularly 

considered what options and yields should be provided to IAP clients in the MLBD Program, 

including whether selecting a sweep option with higher yields would be appropriate, the individuals 

and committees that considered cash sweep program options and yields were not governed by 

reasonably designed written policies and procedures to evaluate whether their decisions were in the 

best interests of clients.      

 



 

 

4 

10. Second, Merrill Lynch failed to adopt and implement sufficient written policies and 

procedures concerning the duties of Merrill Lynch financial advisors in managing client cash.  

Merrill Lynch’s written policies and procedures failed to adequately address whether IAP cash was 

reviewed and appropriately allocated on a timely basis according to a client’s goals and objectives.   

 

11. That said, Merrill Lynch did implement certain remedial measures during the 

Relevant Period as summarized below. 

 

Violations 

 

 12. As a result of the conduct described above, Merrill Lynch willfully1 violated Section 

206(4) of the Advisers Act and Rule 206(4)-7 thereunder which require, among other things, that a 

registered investment adviser adopt and implement written policies and procedures reasonably 

designed to prevent violations of the Advisers Act and the rules adopted thereunder. 

 

Remedial Efforts and Cooperation 

13. In determining to accept the Offer, the Commission considered remedial acts 

promptly undertaken by Merrill Lynch and cooperation afforded the Commission staff.  During 

the Relevant Period, Merrill Lynch’s MLBD Program increased the rates paid to advisory clients, 

and Merrill Lynch adopted and implemented enhanced supervisory procedures targeted at a subset 

of IAP accounts with significant cash holdings and lowered the minimum thresholds for investing 

cash in certain money market funds.  Merrill Lynch also provided detailed narrative responses on 

numerous topics which expedited the Commission staff’s investigation.  

IV. 

 In view of the foregoing, the Commission deems it appropriate and in the public interest to 

impose the sanctions agreed to in Respondent’s Offer. 

 

 Accordingly, pursuant to Sections 203(e) and 203(k) of the Advisers Act and Section 15(b) 

of the Exchange Act, it is hereby ORDERED that: 

 

                                                 

1 “Willfully,” for purposes of imposing relief under Section 203(e) of the Advisers Act and Section 

15(b) of the Exchange Act, “‘means no more than that the person charged with the duty knows 

what he is doing.’” Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) (quoting Hughes v. SEC, 

174 F.2d 969, 977 (D.C. Cir. 1949)). There is no requirement that the actor “also be aware that he 

is violating one of the Rules or Acts.”  Tager v. SEC, 344 F.2d 5, 8 (2d Cir. 1965). The decision 

in The Robare Group, Ltd. v. SEC, which construed the term “willfully” for purposes of a 

differently structured statutory provision, does not alter that standard.  922 F.3d 468, 478-79 (D.C. 

Cir. 2019) (setting forth the showing required to establish that a person has “willfully omit[ted]” 

material information from a required disclosure in violation of Section 207 of the Advisers Act). 



 

 

5 

 A. Merrill Lynch cease and desist from committing or causing any violations and any 

future violations of Section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder.  

 

B. Merrill Lynch is censured.  

 

C. Merrill Lynch shall, within 10 days of entry of this Order, pay a civil money penalty 

of $25 million to the Securities and Exchange Commission for transfer to the general fund of the 

United States Treasury, subject to Section 21F(g)(3) of the Securities Exchange Act of 1934.  If 

timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717.  Payment 

must be made in one of the following ways:   

 

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request;  

 

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to:  

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

 

Payments by check or money order must be accompanied by a cover letter identifying Merrill 

Lynch as a Respondent in these proceedings, and the file number of these proceedings.  A copy of 

the cover letter and the check or money order must be sent to Reid A. Muoio, Assistant Director, 

Division of Enforcement, Securities and Exchange Commission, 100 F Street NE Washington DC 

20549.   

 

D. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 

treated as penalties paid to the government for all purposes, including all tax purposes. To preserve 

the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor Action, it shall 

not argue that it is entitled to, nor shall it benefit by, offset or reduction of any award of compensatory 

damages by the amount of any part of Respondent’s payment of a civil penalty in this action (“Penalty 

Offset”). If the court in any Related Investor Action grants such a Penalty Offset, Respondent agrees 

that it shall, within 30 days after entry of a final order granting the Penalty Offset, notify the  

http://www.sec.gov/about/offices/ofm.htm


 

 

6 

Commission’s counsel in this action and pay the amount of the Penalty Offset to the Securities and 

Exchange Commission. Such a payment shall not be deemed an additional civil penalty and shall not 

be deemed to change the amount of the civil penalty imposed in this proceeding.  For purposes of this 

paragraph, a “Related Investor Action” means a private damages action brought against Respondent 

by or on behalf of one or more investors based on substantially the same facts as alleged in the Order 

instituted by the Commission in this proceeding. 

 

 By the Commission. 

 

 

 

Vanessa A. Countryman 

       Secretary 


	UNITED STATES OF AMERICA
	Facts