UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
SECURITIES ACT OF 1933
Release No 7764 / October 27, 1999
SECURITIES EXCHANGE ACT OF 1934
Release No. 42064 / October 27, 1999
ADMINISTRATIVE PROCEEDING
File No. 3-9327
_______________________________
In the Matter of
ORDER MAKING FINDINGS
Aubrey O'Connor, Rick Pierson AND IMPOSING SANCTIONS
James Winter, Gregory Bowen, AND CEASE-AND-DESIST
and Kenneth Ward, ORDER PURSUANT TO SECTION
8A OF THE SECURITIES ACT OF 1933
Respondents. AND SECTIONS 15(b), 19(h) AND
21C OF THE SECURITIES EXCHANGE
_______________________________ ACT OF 1934 AS TO RICK PIERSON
I.
In these proceedings instituted pursuant to Section 8A of the
Securities Act of 1933 ("Securities Act") and Sections 15(b), 19(h)
and 21C of the Securities Exchange Act of 1934 ("Exchange Act"),
respondent Rick Pierson ("Pierson") has submitted an Offer of
Settlement ("Offer") that the Securities and Exchange Commission has
determined to accept.
II.
Solely for the purpose of this proceeding, 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 contained
herein, except as to the jurisdiction of the Commission over Pierson
and the findings set forth in Section III, Paragraphs A and B, hereof,
which are admitted, and prior to a hearing pursuant to the
Commission's Rules of Practice, 17 C.F.R. § 201.100 et seq., Pierson
consents to the entry of the findings set out below, and the
imposition of remedial sanctions and issuance of a Cease-and-Desist
Order.
III.
On the basis of the order instituting proceedings, and Pierson's
SNIPPETS:
UNITED STATES OF AMERICA SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
ADMINISTRATIVE PROCEEDING
Rick Pierson AND IMPOSING SANCTIONS
In these proceedings instituted pursuant to Section 8A of the Securities Act of 1933 and
Solely for the purpose of this proceeding, and any other proceedings brought by or on behalf
try of the findings set out below, and the imposition of remedial sanctions and issuance of a
The Commission's public files disclose that Government Securities Corporation,
Corporation of Texas, was registered with the Commission as a broker-dealer, pursuant to
GSC was formed in 1980, and, at all times, maintained its offices in Houston, Texas.
Pierson was a co-founder and former President of GSC and was, at relevant times, a fixed
From 1988 through 1994, GSC sold a variety of mortgage-backed derivative securities to public
IOs and Inverse IOs are collateralized mortgage obligations that receive only interest
IOs and Inverse IOs are highly sensitive to changes in interest rates and resulting mortgage
Inverse Floaters are CMOs that have a guaranteed return of investment principal, but are
E. Pierson formulated and approved specific transactions involving the sale of IOs, Inverse
VIOLATIONS OF THE ANTIFRAUD PROVISIONS BY PIERSON
G. Pierson encouraged GSC representatives to make, and they did make, certain oral
misrepresenting the high-risk CMOs as suitable investments which were consistent with
failing to disclose that the market value and yield of the IOs and Inverse IOs are highly
the Commission deems it appropriate in the public interest and for the protection of
Based on Pierson's demonstrated financial inability to pay a civil money penalty, no penalty
The Division of Enforcement may, at any time following the entry of this Order, petition the
The order instituting these proceedings was issued on June 4,
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