ADMINISTRATIVE PROCEEDINGFILE NO. 3-8155

UNITED STATES OF AMERICABefore the

SECURITIES AND EXCHANGE COMMISSION

In the Matter of)))))

DAVID M. HABER

INITIAL DECISION

Washington, D.C.July 13, 1994

Edward J. KuhlmannAdministrative Law Judge

ADMINISTRATIVE PROCEEDINGFILE NO. 3-8155

UNITED STATES OF AMERICABefore the

SECURITIES AND EXCHANGE COMMISSION

In the Matter of)))))

INITIAL DECISIONDAVID M. HABER

APPEARANCES: Edwin H. Nordlinger, Ellen N. Hersh, and BruceH. Newman for the Division of Enforcement

David M. Haber, pro se.

BEFORE: Edward J. Kuhlmann, Administrative Law Judge

This proceeding was instituted by an order of the Commission

dated september 13, 1993 pursuant to Sections 15(b) and 19(h) of

the Securities Exchange Act of 1934, 15 U.S.C. §§ 78o(b) and

78s(h), to determine whether remedial sanctions are appropriate

in the public interest in light of respondent David M. Haber

having been permanently enjoined by the United States District

Court of New Jersey, on consent, from violating sections 5(a),5(c), and 17(a) of the Securities Act of 1933, 15 U.S.C. §§

77e{a), 77e(c), and 77q(a), and section 10(b) of the Exchange

Act, 15 U.S.C. § 78j(b), and Rules 10b-5 and 10b-6 thereunder. A

hearing was held on March 24, 1994. The Division of Enforcement

filed a brief and proposed findings and conclusions on May 2,

1994, the respondent filed a brief and proposed findings and

conclusions on June 20, 1994, and the Division filed a reply on

July 1, 1994.

FINDINGS OF FACT

According to the complaint filed on August 9, 1990 in the

United states District Court for the District of New Jersey, the

respondent began working, in October 1984, as a registered

representative at Monmouth Investments, Inc., a Florida

corporation that operated as a registered broker-dealer from

August 1984 to the end of March 1989. Ex. 2.11 In November

!I The Division and the respondent cite in the theirproposed findings an outline and legal theory of his case that therespondent filed on December 27, 1993. Rule 16 of the rules ofpractice states that initial decisions are to be based on facts"presented on the record." That requirement assumes that theevidence on which the findings are based has been submitted at thehearing and has been ruled relevant by the presiding officer. Theoutline submitted by the respondent was not submitted for the

(continued ...)

- 2 -1987, the respondent became a registered principal and 10 percentto 25 percent owner of Monmouth. Id. From November 1988 throughthe end of March 1989, he was the President of Monmouth. Id.Monmouth's principal place of business was in Englishtown, NewJersey; it maintained 14 branch offices in six states andemployed 300 registered representatives.

The respondent controlled or shared control over themanagement, policies, and over-the-counter trading activities ofMonmouth during the period that he was President of Monmouth. Id.The complaint alleged that the respondent participated inMonmouth's manipulation of the market for Beres Industries commonstock, in violation of section 17(a) of the securities Act andsection 10(b) of the Exchange Act and Rule 10b-S thereunder. Therespondent allegedly participated in Monmouth's offers and salesto the public of unregistered shares of Beres Industries commonstock in violation sections Sea) and S(c) of the Securities Act.The complaint also stated that Haber caused Monmouth to bid forand purchase shares of Beres common stock which were the subjectof a distribution, while Monmouth participated in thedistribution, in violation of section 10(b) of the Exchange Actand Rule 10b-6 thereunder. Id.

The respondent represented that he offered to cooperate withthe Commission if the Commission were willing to settle the case

11 ( ••• continued)record during the hearing and will not be considered in thisdecision. It appears that the facts cited should have beenstipulated.

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against him. Tr. 54, 56. The record reflects, however, that therespondent refused to testify in the Division's investigationabout matters alleged in the complaint and that he asserted theprivilege against self-incrimination. Jt. Ex. 1; Ex. 13. Therespondent took the same position in the District Courtproceeding. Joint Ex. 1; Div. Ex. 14. He has also refused totestify about Monmouth in an investigation by the Commissionstaff into corporate Capital Resources, Inc. Tr. 65. He saidthat he would consider the answers to all questions privilegedpursuant to his right under the Fifth Amendment to theConstitution. Tr. 67.

The respondent stipulated in this proceeding that he residedat 365 Avenida de los Arboles #202, Thousand Oaks, California,but, in fact, that is not his residence. Joint Ex. 1; Tr. 69.The respondent's answer admits that he was associated withMonmouth between October 1984 and March 1989 but he denied in hisanswer that he was president from November 1988 through March1989. This was after he had earlier admitted in his answer to thecomplaint in the federal district court that he was president.Div. Ex. 3 at 3.

The respondent participated in the distribution ofunregistered Beres stock. On December 9, 1988, Harold Zuber sold75,000 shares of restricted Beres stock to Monmouth, purportedlyin conformity with the requirements of Rule 144. Div. Ex. 5; Div.Ex. 73; Div. Ex. 74. The respondent wrote the order ticket. Div.Ex. 2 at 25.; Div. Ex. 3 at 5. Monmouth purchased the Beres