UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
INVESTMENT ADVISERS ACT OF 1940
Release No. 1825 / September 13, 1999
ADMINISTRATIVE PROCEEDING
File No. 3-10010
In the Matter of
Engebretson Capital Management, Inc.
and Lester W. Engebretson,
Respondents. ORDER INSTITUTING PUBLIC ADMINISTRATIVE AND
CEASE-AND-DESIST PROCEEDING PURSUANT TO SECTIONS 203(e), 203(f) AND
203(k) OF THE INVESTMENT ADVISERS ACT OF 1940, MAKING FINDINGS AND
IMPOSING REMEDIAL SANCTIONS
I.
The Securities and Exchange Commission (the "Commission") deems it
appropriate and in the public interest that a public administrative
and cease-and-desist proceeding be instituted pursuant to Sections
203(e), 203(f) and 203(k) of the Investment Advisers Act of 1940 (the
"Advisers Act") against Engebretson Capital Management, Inc. ("ECMI")
and Lester W. Engebretson ("Engebretson").
In anticipation of the institution of this proceeding, ECMI and
Engebretson have submitted an Offer of Settlement (the "Offer") which
the Commission has determined to accept. Solely for the purposes of
this proceeding and any other proceeding 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
findings pertaining to the jurisdiction of the Commission over them
and over the subject matter of this proceeding, ECMI and Engebretson
consent to the issuance of this Order Instituting Public
Administrative and Cease-and-Desist Proceeding Pursuant to Sections
203(e), 203(f) and 203(k) of the Investment Advisers Act of 1940,
Making Findings and Imposing Remedial Sanctions (the "Order").
Accordingly, IT IS ORDERED that a proceeding pursuant to Sections
203(e), 203(f) and 203(k) of the Advisers Act be, and hereby is,
instituted.
II.
On the basis of this Order and the Offer submitted by ECMI and
Engebretson, the Commission finds that
SNIPPETS:
ADMINISTRATIVE PROCEEDING
File No. 3-10010 In the Matter of Engebretson Capital Management, Inc. and Lester W.
ORDER INSTITUTING PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDING PURSUANT TO SECTIONS
The Securities and Exchange Commission deems it appropriate and in the public interest that a
In anticipation of the institution of this proceeding, ECMI and Engebretson have submitted an
Engebretson controlled ECMI's operations and was responsible for the firm's compliance with
The materials appeared in the form of charts which summarized ECMI's performance history from
Moreover, the returns reported by ECMI were not indicative of actual client performance, and
Although ECMI began to report actual client performance in 1995, the adviser failed to
As a result of these practices, ECMI overstated its annual performance by as many as 15
In fact, as noted above, the reported results were based upon composites of client accounts
Moreover, ECMI improperly linked actual and model account performance, also in violation of
In reality, the accounting firm reviewed, but did not audit, ECMI's model account between
The paper published a transcript of the interview in its February 16, 1998 edition, and ECMI
During the relevant period, ECMI willfully violated, and Engebretson willfully aided and
tive clients.
Within thirty days of the effective date of the Order and continuing five years thereafter,
violations of the Advisers Act and the Investment Company Act of 1940.
For any particular calendar year, ECMI shall, no earlier than three months prior to the
Within thirty days of the completion of each audit, ECMI shall arrange for the certified
ECMI shall further arrange for the certified public accountant's quarterly reports to be
ECMI shall adopt, implement, and maintain all policies, practices and procedures recommended
For the period of the engagement and for a period of two years from the completion of the
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