ENFORCEMENT PROCEEDINGS
JB OXFORD HOLDINGS, INC. SETTLES ADMINISTRATIVE FRAUD CHARGES STEMMING
FROM ITS PARTICIPATION IN A LATE TRADING AND MARKET TIMING SCHEME
On January 18, the Commission announced the issuance of an Order
Instituting Administrative Proceedings Pursuant to Section 21C of the
Securities Exchange Act of 1934, Making Findings and Imposing A Cease-
And-Desist Order against JB Oxford Holdings, Inc. (JBOH). The
Commission's Order finds that JBOH, a Beverly Hills, California-based
holding company and National Clearing Corporation (NCC), one of JBOH's
wholly-owned subsidiaries, were involved in a late trading and market
timing scheme facilitated through NCC and its officers and employees.
The Order finds that from June 2002 until September 2003, NCC and its
officers (including its former president and chief executive officer
who was also the president and chief operating officer of JBOH) and
employees facilitated thousands of late trades in several hundred
mutual funds on behalf of several NCC customers. The Order also finds
that these NCC officers and employees also utilized various methods to
conceal certain of its institutional customers' fraudulent market
timing activity from the mutual funds. The Commission further found
that JBOH prepared its financial statements on a consolidated basis,
which included revenues and other financial information of NCC. As a
result, in 2002 through 2003, JBOH's consolidated financial statements
included over $1 million in gross revenue that NCC received from
compensation arrangements with its mutual fund customers. JBOH did not
admit or deny the Commission's findings.
Based on the above, the Order requires Respondent JBOH to cease and
desist from committing or causing any violations and any future
violations of Section 10(b) of the Exchange Act and Rule 10b-5
thereunder; and refrain, for a period of five years, from having a
controlling interest in or operating a firm engaged in the broker
dealer clearing business. After the five-year period, if JBOH seeks to
conduct any clearing business relating to broker dealers, or to obtain
a controlling interest in or operate any such clearing business, JBOH
agrees to retain an independent consultant not unacceptable to the
Commission staff to review the policies and procedures of the clearing
business to ensure compliance with the federal securities laws. (Rel.
34-53137; File No. 3-12148).
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