Appointment of A Receiver
Appointment of A Receiver
Defendants. )
The Securities and Exchange Commission having filed a Complaint and Defendants
Bryan S. Behrens and National Investment, Inc. (“Defendants”) having entered a general
appearance; consented to the Court’s jurisdiction over Defendants and the subject matter
of this action; consented to entry of this Judgment without admitting or denying the
conclusions of law; and waived any right to appeal from this Judgment:
agents, servants, employees, attorneys, and all persons in active concert or participation
with them who receive actual notice of this Final Judgment by personal service or
otherwise are permanently restrained and enjoined from violating, directly or indirectly,
Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act") [15 U.S.C. §
78j(b)] and Rule 10b-5 promulgated thereunder [17 C.F.R. § 240.10b-5], by using any
national securities exchange, in connection with the purchase or sale of any security:
(b) to make any untrue statement of a material fact or to omit to state a material
fact necessary in order to make the statements made, in the light of the
II.
Defendants’ agents, servants, employees, attorneys, and all persons in active concert or
participation with them who receive actual notice of this Final Judgment by personal service
or otherwise are permanently restrained and enjoined from violating Section 17(a) of the
Securities Act of 1933 (the “Securities Act”) [15 U.S.C. § 77q(a)] in the offer or sale of any
III.
It Is Hereby Further Ordered, Adjudged, and Decreed that Defendants are obligated
to pay disgorgement of ill-gotten gains, prejudgment interest thereon, and a civil penalty
pursuant to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3)
of the Exchange Act [15 U.S.C. § 78u(d)(3)]. The Court shall determine the amounts of
the disgorgement and civil penalty upon motion of the Commission. Prejudgment interest
shall be calculated from January 31, 2002, based on the rate of interest used by the
Internal Revenue Service for the underpayment of federal income tax as set forth in 26
U.S.C. § 6621(a)(2). In connection with the Commission’s motion for disgorgement and/or
civil penalties, and at any hearing held on such a motion: (a) Defendants will be precluded
from arguing that he did not violate the federal securities laws as alleged in the Complaint;
(b) Defendants may not challenge the validity of the Consent or this Final Judgment; (c)
solely for the purposes of such motion, the allegations of the Complaint shall be accepted
as and deemed true by the Court; and (d) the Court may determine the issues raised in the
testimony, and documentary evidence, without regard to the standards for summary
judgment contained in Rule 56(c) of the Federal Rules of Civil Procedure. In connection
with the Commission’s motion for disgorgement and/or civil penalties, the parties may take
IV.
Appointment Of Receiver
2. The goals and purposes of this Receivership are twofold: first, locating,
preserving and protecting all assets that are subject to disgorgement and
penalties, and second, maximizing returns to investors.
and others doing business with the Receivership Entities. Take all
actions to manage, maintain, and/or wind-down business operations
of the Receivership Entities, including making legally required
payments to creditors, employees, and agents of the Receivership
Entities. Communicate with vendors, investors, governmental and
regulatory authorities, and others, as appropriate.
j. Prior Court Approval. The Receiver shall obtain prior approval of the
Court, upon reasonable notice to the Commission’s counsel of record,
for any proposed actions or decisions taken in the course of the
Receivership that will involve or necessitate the substantial
commitment, dissipation, or liquidation of the Assets (i.e., beyond day-
to-day management expenses), or any other substantial commitment
(i.e., beyond day-to-day management activities) of, effecting, or
binding upon the Receivership Entities.
k. Other actions. Take all other reasonable and necessary actions, with
prior approval of the Court and upon reasonable notice to the
Commission’s counsel of record.
5. The Receiver shall take all necessary steps to enable the Disgorgement
Funds to obtain and maintain the status of a taxable “Settlement Fund,”
within the meaning of Section 468B of the Internal Revenue Code and of the
regulations, whether proposed, temporary or final, or pronouncements
thereunder, including the filing of the elections and statements contemplated
by those provisions. The Receiver shall be designated the administrator of the
Disgorgement Fund, pursuant to Treas. Reg. § 1.468B-2(k)(3)(i), and shall
satisfy the administrative requirements imposed by Treas. Reg. § 1.468B-2,
including but not limited to (a) obtaining a taxpayer identification number, (b)
timely filing applicable federal, state, and local tax returns and paying taxes
reported thereon, and (c) satisfying any information, reporting or withholding
requirements imposed on distributions from the Disgorgement Fund. The
Receiver shall cause the Disgorgement Fund to pay taxes in a manner
consistent with treatment of the Disgorgement Fund as a “Qualified Settlement
Fund.” The defendants shall cooperate with the Receiver in fulfilling the
Disgorgement Fund's obligations under Treas. Reg. § 1.468B-2.
6. The Receiver is entitled to payment for all reasonable costs, fees, and other
expenses incurred in the performance of his duties, and to engage and retain
attorneys, accountants, securities professionals, and other persons or
entities to assist in carrying out its directives. The Receiver shall not retain
such persons or entities without the prior written consent of Commission’s
counsel of record. The Receiver shall disclose to the Commission’s counsel
of record all financial arrangements with such persons or entities.
8. The Receiver shall give the Commission counsel of record at least ten (10)
days notice of all of his applications to the Court under this Judgment,
including all applications for disbursements from the Disgorgement Fund.
The Commission shall be permitted to submit to the Court for consideration
its position on the reasonableness of the Receiver’s application. All of the
Receiver’s requests for payments of fees or expenses must be approved by
the Court before payment of such fees or expenses are made, and the Court
will review the reasonableness of such fees and expenses in determining
whether, in its equitable discretion, such payment will be approved. The
Receiver is not required to seek prior Court approval of payments made for
any federal, state, or local taxes that may be applicable.
10. The Receiver, along with any persons or firms retained by the Receiver
pursuant to this Judgment, shall be entitled to rely on all outstanding rules of
law and court orders and shall not be liable to anyone for his or their own
good faith compliance with any order, rule, law, judgment or decree,
including those issued or enacted in foreign jurisdictions. In no event shall
the Receiver or any person or firm retained by the Receiver in this action be
liable to anyone for his, her, its, or their good faith compliance with the duties
and responsibilities as Receiver or as counsel for or consultant to the
Receiver. Nor shall the Receiver or any person or firm retained by the
Receiver in this matter be liable to anyone for any actions taken or omitted
by them except on a finding by this Court that he, she, it or they acted or
failed to act as a result of misfeasance, bad faith, or gross negligence, or in
reckless disregard of his, her, its or their duties.
11. The Receiver is excused from all legal requirements to post a bond or to give
an undertaking or any type in connection with her fiduciary duties to the
Disgorgement Fund.
12. The Receiver may be removed at any time by the Court and replaced with
a successor, sua sponte, upon request of the Commission, or otherwise. In
the event the Receiver decides to resign, the Receiver shall first give written
notice to the Commission’s counsel of record and the Court of its intention,
and the resignation shall not be effective until the Court appoints a
successor. The Receiver shall then follow such instructions as the Court
may provide.
13. All persons who receive actual notice of this Judgment by personal service
or otherwise are enjoined from in any way disturbing the Assets and from
filing or prosecuting any judicial action or proceeding of any kind, civil or
criminal, or from appointing a receiver or administrator, which involves the
Receiver, the Receivership Entities, or which affects the Assets, except on
leave having been granted by this Court. The Receiver shall not be required
to respond to any subpoena or other court process (for documents or
testimony) relating to the Receiver’s duties, except on order of this Court.
14. On the request of the Commission, the Receiver shall provide the
Commission with any documentation that the Commission deems necessary
to meet its reporting requirements, that is mandated by statute or Congress,
or that is otherwise necessary to further the Commission’s mission.
15. The Receiver shall take all necessary efforts to maintain the privacy and
confidentiality of all information that he obtains during the course of the
Receivership.
V.
herein with the same force and effect as if fully set forth herein, and that Defendants shall
comply with all of the undertakings and agreements set forth therein.
VI.
It Is Further Ordered, Adjudged, And Decreed that this Court shall retain jurisdiction
of this matter for the purposes of monitoring, applying, and enforcing the terms of this
Judgment.
BY THE COURT: