UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 43352 / September 26, 2000
ADMINISTRATIVE PROCEEDING
File No. 3-10306
In the Matter of
Prospera Financial Services, Inc.
(f\k\a Addison Securities, Inc.),
and Jonathan D. Stein
Respondents.
ORDER INSTITUTING PROCEEDINGS, MAKING FINDINGS, AND IMPOSING REMEDIAL
SANCTIONS
I.
The Securities and Exchange Commission ("Commission") deems it
appropriate in the public interest and for the protection of investors
that public administrative proceedings be, and hereby are, instituted
pursuant to Sections 15(b) and 19(h) of the Securities Exchange Act of
1934 ("Exchange Act") against Prospera Financial Services, Inc.
(formerly known as Addison Securities, Inc., hereinafter referred to
as "Addison") and Jonathan D. Stein ("Stein").
In anticipation of the institution of these proceedings, Addison and
Stein have submitted an Offer of Settlement ("Offer") to the
Commission, 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 in which the Commission
is a party, and without admitting or denying the findings contained
herein, except those contained in paragraph II.A. and the jurisdiction
of the Commission over Respondents and the subject matter of these
proceedings, Addison and Stein consent to the issuance of this Order
Instituting Proceedings, Making Findings and Imposing Remedial
Sanctions, and to the entry of the findings set forth below.
II.
On the basis of this Order and the Offer submitted by Addison and
Stein, the Commission finds that
A. THE RESPONDENTS
SNIPPETS:
UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
ORDER INSTITUTING PROCEEDINGS, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS
The Securities and Exchange Commission deems it appropriate in the public interest and for
and the jurisdiction of the Commission over Respondents and the subject matter of these
Addison employs approximately 95 registered representatives, approximately 39 of whom work in
This matter arises from Addison's and Stein's failure reasonably to supervise two registered
Further, during their employment by Addison, each was sanctioned by a self-regulatory
The registered representative in Pittsburgh misappropriated approximately $324,000 over a two
This registered representative then expended these funds, a portion of which was lost in
The registered representative in Addison's home office engaged in unauthorized transactions
Addison lacked adequate supervisory and compliance procedures and failed adequately to
Addison's procedures failed adequately to provide for delineation of supervisory
As set out below, Addison, under Stein's direction, failed to adopt, implement and follow
These procedures designating supervisory responsibility were ineffective, however, because
"It is critical for investor protection that a broker establish and enforce effective
Such payment shall be 1) made by United States postal money order, certified check, bank
a copy of which cover letter and money order or check shall be sent to Harold F. Degenhardt,
Retain, within 30 days of the date of this Order, at its expense, an Independent Consultant
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