SEC Division of Investment Management staff letter: Stephanie Hibler

Effective November 4, 2022, This Letter is Withdrawn. Please consult the following web page for more information: https://www.sec.gov/divisions/investment/im-modified-withdrawn-staff-statements .

January 24, 2014

RESPONSE OF THE CHIEF COUNSEL'S OFFICE DIVISION OF INVESTMENT MANAGEMENT

IM Ref. No. 20134121421 Ms. Stephanie Hibler

File No. 132-3

We would not recommend enforcement action to the Securities and Exchange Commission (“Commission”) under Section 206(4) of the Investment Advisers Act of 1940 (“Advisers Act”) and Rule 206(4)-3 thereunder if any investment adviser registered pursuant to Section 203 of the Advisers Act pays to Ms. Stephanie Hibler a cash solicitation fee for the solicitation of advisory clients in accordance with Rule 206(4)-3, [1] notwithstanding an administrative order of the Commission (“Order”), [2] which has been in part vacated, [3] that would have otherwise precluded such an investment adviser from paying such a fee to Ms. Hibler.

Our position is based on the facts and representations in your incoming letter dated January 23, 2014, particularly the fact that the Commission vacated the portion of the Order with respect to Ms. Hibler barring her from being associated with an investment adviser and your representations that:

Ms. Hibler will conduct any cash solicitation arrangement entered into with any investment adviser registered pursuant to Section 203 of the Advisers Act in compliance with the terms of Rule 206(4)-3, except for the investment adviser’s payment of cash solicitation fees, directly or indirectly, to Ms. Hibler, who is subject to the Order; and

Ms. Hibler has complied with the terms of the Order and will continue to do so, except for those portions vacated by the Commission.

This position applies only to the Order and does not apply to any other basis for disqualification under Rule 206(4)-3 that may exist or arise with respect to Ms. Hibler.

David Joire Senior Counsel

[1] Rule 206(4)-3 prohibits any investment adviser that is required to be registered under the Advisers Act from paying a cash fee, directly or indirectly, to any solicitor with respect to solicitation activities if, among other things, the solicitor is subject to a Commission order issued under Section 203(f) of the Advisers Act, or has been found by the Commission to have engaged, or has been convicted of engaging, in any of the conduct specified in Section 203(e)(1), (5), or (6) of the Advisers Act.

[2]

See

In the Matter of Stephanie Hibler , Securities Exchange Act Rel. No. 19338 (Dec. 15, 1982) (finding that Ms. Hibler willfully violated Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder).

[3]

See In the Matter of Stephanie Hibler , Securities Exchange Act Rel. No. 70140 (Aug. 8, 2013) (vacating Ms. Hibler’s bar from being associated with an investment adviser or investment company).

Incoming Letter

The Incoming Letter is in Acrobat format.

http://www.sec.gov/divisions/investment/noaction/2013/hibler-012414.htm

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JMBM Jeffer Mangels
Butler & Mitchell LLP
Catherine DeBono Holmes 1900 Avenue of the Stars, 7th Floor Direct: (310) 201-3553 Los Angeles, California 90067-4308 Fax: (310) 712-8553 (310) 203-8080 (310) 203-0567 Fax CHolmes@jmbm.com www.jmbm.com January 23, 2014 Douglas J. Scheidt, Esq.

Associate Director and Chief Counsel

Division of Investment Management

U.S. Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549-0506

Re: Ms. Stephanie Hibler
Dear Mr. Scheidt:
Our client, Ms. Stephanie Hibler ("Ms. Hibler"), seeks assurance that the staff

of the Division of Investment Management (the "Staff') will not recommend

enforcement action to the Securities and Exchange Commission (the "Commission")

under Section 206(4) of the Investment Advisers Act of 1940, as amended (the

"Advisers Act"), or Rule 206(4)-3 thereunder, if an investment adviser registered

pursuant to Section 203 of the Advisers Act pays to Ms. Hibler a cash solicitation fee

for the solicitation of advisory clients, notwithstanding an administrative order

("Order"), which has been in part vacated, that would have otherwise precluded such

an investment adviser from paying such a fee to Ms. Hibler.

BACKGROUND
In June 1982, the Commission instituted administrative proceedings pursuant to

Section 15(b) and 19(h) of the Securities Exchange Act of 1934 (the "Exchange Act")

alleging that Ms. Hibler willfully violated Section 10(b) of the Exchange Act and Rule

10b-5 thereunder.' The order instituting the proceedings alleged that Ms. Hibler, as a

registered representative associated with a brokerage firm, induced certain customers to

purchase securities issued by Westamerica Automotive Corporation ("Westamerica"),

without disclosing that she would receive payment from a Westamerica agent for

purchases made by her customers. In addition, the order instituting the proceedings

alleged that, in a related criminal action, Ms. Hibler had pled guilty to an information

See In the Matter of Stephanie Hibler, Securities Exchange Act Rel. No. 18786 (June 2, 1982). ALimited Liability Law Partnership Including Professional Corporations / Los Angeles • San Francisco • Orange County LA 9803931+:3

Douglas Scheidt
January 23, 2014 charging misdemeanor violations of Section 10(b) of the Exchange Act and Rule 10b￾5, and had been sentenced by the court. 2 In December 1982, based on Ms. Hibler's offer of settlement concerning the Commission's administrative proceedings against her, the Commission entered the Order finding that Ms. Hibler willfully violated Section 10(b) of the Exchange Act and Rule 10b-5 and that she had been charged in the related criminal action with willful violations of Section 10(b) of the Exchange Act and Rule 10b-5 in connection with client purchases of Westamerica stock. 3 On these findings, the Commission ordered that Ms. Hibler be "barred from being associated with any broker or dealer or investment adviser or investment company or affiliate of a broker or dealer or investment adviser or investment company" for an indefinite period of time. 4 On December 19, 2012, Ms. Hibler filed a motion to vacate entirely the bars placed upon her by the Order, so that she could act as a solicitor for investment advisers registered under the Advisers Act. On August 8, 2013, the Commission vacated the portion of the Order with respect to the bars on Ms. Hibler being associated with an investment adviser or investment company, but not the bars from her being associated with brokers or dealers? DISCUSSION Under Rule 206(4)-3, an investment adviser may not pay cash fees to a

solicitor who is "subject to a Commission order issued under section 203(f) of the

[Advisers] Act."6 In addition, the Rule prohibits an investment adviser from paying

cash fees to a solicitor who has been found by the Commission to have engaged in

conduct specified in Section 203(e)(1), (5), or (6) of the Advisers Act. 7 The Order

causes Ms. Hibler to be disqualified under the Rule, and, accordingly, absent no-action

relief, Ms. Hibler is unable to receive cash payments for the solicitation of advisory

clients.

See U.S. v. Stephanie J. Hibler, Litigation Rel No. 9490 (Nov. 2, 1981) (filing of the information); U.S. v. Stephanie J. Hibler, Litigation Rel. 9529 (Dec. 16, 1981) (sentencing). 3 See In the Matter of Stephanie Hibler, Securities Exchange Act Rel. No. 19338 (Dec. 15, 1982). Id. 5 See In the Matter of Stephanie Hibler, Securities Exchange Act Rel. No. 70140 (Aug. 8, 2013). 6 17 C.F.R. 275.206(4)-3(a)(1)(ii)(A) (2013). 7 17 C.F.R. 275.206(4)-3(a)(1)(i i)(C) jmilik ,r Jeffer Mangels , Butler & Mitchell LIP LA 93039310

Douglas Scheidt
January 23, 2014
In support of Ms. Hibler's request, we note that the Commission has determined that Ms. Hibler's bar of being associated with an investment adviser is no longer necessary by vacating, notwithstanding the prior findings against her, the portion of the Order concerning this bar. 8 Accordingly, there does not appear to be any reason to prohibit any investment adviser from paying Ms. Hibler for engaging in solicitation activities under the Rule 206(4)-3. UNDERTAKINGS In connection with this request, Ms. Hibler undertakes as follows:

1. to conduct any cash solicitation arrangement entered into with any investment
   adviser registered pursuant to Section 203 of the Advisers Act in compliance with the terms of Rule 206(4)-3, except for the investment adviser's payment of cash solicitation fees, directly or indirectly, to Ms. Hibler, who is subject to the Order; and
2. that she has complied with the terms of the Order and will continue to do so,
   except for those portions vacated by the Commission.
   CONCLUSION
   We respectfully request the Staff to advise us that it will not recommend enforcement action to the Commission under Section 206(4) of the Advisers Act, or Rule 206(4)-3 thereunder, if an investment adviser registered pursuant to Section 203 of the Advisers Act pays to Ms. Hibler a cash solicitation fee for the solicitation of advisory clients, notwithstanding the Order, which has been in part vacated, that would have otherwise precluded such an investment adviser from paying such a fee to Ms. Hibler. Should you have any further questions, please contact the undersigned. Very t uly yours CATHERINE DEBONO HOLMES of Jeffer Mangels B utler & Mitchell LLP CJD:cjd cc: Stephanie Hibler We note that Ms. Hibler was not originally sanctioned for conduct under the Advisers Act, although the Order included a bar on all activities associated with any investment adviser, among others. Jeffer Mangels Butler & Mitchell Lu= jimBm LA 9803931 v3