UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
SECURITIES ACT OF 1933
Release No. 7762 / October 27, 1999
SECURITIES EXCHANGE ACT OF 1934
Release No. 42062 / October 27, 1999
ADMINISTRATIVE PROCEEDING
File No. 3-9327
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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 AUBREY
O'CONNOR
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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 Aubrey O'Connor ("O'Connor") 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 O'Connor
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., O'Connor
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.
SNIPPETS:
UNITED STATES OF AMERICA SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
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
entry 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.
O'Connor was, at relevant times, a fixed income trader, Head Trader of GSC's Fixed Income
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. O'Connor formulated and approved specific transactions involving the sale of IOs, Inverse
VIOLATIONS OF THE ANTIFRAUD PROVISIONS BY O'CONNOR
G. O'Connor 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
Such payment shall be 1) made by United States postal money order, certified check, bank
a copy of which, along with the money order or check, shall be sent to Harold F. Degenhardt,
The order instituting these proceedings was issued on June 4,
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