In the Matter of PAUL BORNSTEIN,Respondent.
UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
Securities Exchange Act of 1934
Release No. 53726 / April 26, 2006
Administrative Proceeding
File No. 3-12279
In the Matter of
PAUL BORNSTEIN,
Respondent.
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ORDER INSTITUTING PUBLIC
ADMINISTRATIVE PROCEEDINGS
PURSUANT TO SECTION 15(b) OF THE
SECURITIES EXCHANGE ACT OF 1934,
MAKING FINDINGS, AND IMPOSING
REMEDIAL SANCTIONS
I.
The Securities and Exchange Commission ("Commission") deems it appropriate and in
the public interest that public administrative proceedings be, and hereby are, instituted pursuant
to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act") against Paul
Bornstein ("Bornstein" or "Respondent").
II.
In anticipation of the institution of these proceedings, Bornstein has submitted an Offer of
Settlement (the "Offer") which the Commission has determined to accept. Solely for the purpose
of these proceedings 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 herein, except as
to the Commission’s jurisdiction over him and the subject matter of these proceedings, and the
findings contained in Section III.3 below, which are admitted, Bornstein consents to the entry of
this Order Instituting Public Administrative Proceedings Pursuant to Section 15(b) of the
Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions
("Order"), as set forth below.
III.
On the basis of this Order and Bornstein's Offer, the Commission finds that:
1. Bornstein is a resident of West Hartford, Connecticut. From at least December
1999 through May 2000, Bornstein was both a research analyst at a registered broker-dealer,
Connecticut Capital Markets, LLC (“Connecticut Capital”), and a salaried employee at a public
relations firm, Sterns & Company, hired by CyberCare, Inc. (“CyberCare”).
2. On July 16, 2004, the Commission filed a complaint in the United States District
Court for the Southern District of Florida captioned SEC v. Michael Morrell, et al., Civil Action
No. 04-80664-CIV-MARRA/SELTZER, alleging, among other things, violations of the antifraud
provisions of the federal securities laws by Bornstein in connection with his research report. The
Complaint further alleges that while he was employed by both companies, Bornstein created a
research report on CyberCare that rated CyberCare a “strong buy.” The research report, issued
by Connecticut Capital in January 2000, failed to disclose Bornstein’s conflict of interest and
contained, among other things, information released by CyberCare which was materially false.
Although Bornstein was not directly compensated by CyberCare for preparation of the research
report, the research report failed to fully disclose Sterns & Company’s compensation for public
relations services Sterns & Company and Bornstein were providing to CyberCare.
3. On March 16, 2006, a Final Judgment was entered by consent against Bornstein.
The Judgment permanently enjoined Bornstein from future violations of Sections 17(a) and 17(b)
of the Securities Act of 1933 (“Securities Act”) and Section 10(b) of the Exchange Act, and Rule
10b-5, thereunder. Bornstein consented to the entry of the Judgment without admitting or
denying the allegations contained in the Commission’s Complaint.
IV.
In view of the foregoing, the Commission deems it appropriate and in the public interest
to impose the sanctions specified in Respondent Bornstein's Offer.
Accordingly, it is hereby ORDERED:
Pursuant to Section 15(b)(6) of the Exchange Act, that Respondent Bornstein be, and
hereby is barred from association with any broker or dealer with the right to reapply for
association after two (2) years to the appropriate self-regulatory organization, or if there is none,
to the Commission.
Any reapplication for association by Bornstein will be subject to the applicable laws and
regulations governing the reentry process, and reentry may be conditioned upon a number of
factors, including, but not limited to, the satisfaction of any or all of the following: (a) any
disgorgement ordered against Bornstein, whether or not the Commission has fully or partially
waived payment of such disgorgement; (b) any arbitration award related to the conduct that
served as the basis for the Commission order; (c) any self-regulatory organization arbitration
award to a customer, whether or not related to the conduct that served as the basis for the
Commission order; and (d) any restitution order by a self-regulatory organization, whether or not
related to the conduct that served as the basis for the Commission order.
By the Commission.
Nancy M. Morris
Secretary
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