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                              INITIAL DECISION RELEASE NO. 96

                              ADMINISTRATIVE PROCEEDING
                              FILE NO. 3-8584



                     UNITED STATES OF AMERICA
                           Before the 
                SECURITIES AND EXCHANGE COMMISSION



-------------------------------  
                              :
In the Matter of              :
                              :
FREDERICK ENTMAN,             :         INITIAL DECISION
NORMAN B. ROTHSTEIN,          :         August 20, 1996
FRANK LOUIS PALUMBO,          :
JACOB WONSOVER,               :
HOWARD RICHARD PERLES,        :
M. RIMSON & CO., INC., and    :
MOSHE RIMSON                  :
                              :
-------------------------------                                  
                








APPEARANCES:   Sarah  A.  Smith  and  Cory C.  Kirchert  for  the
               Division of Enforcement,  Securities and  Exchange
               Commission

               Christopher  J.  Barber  and  Daniel  P.  Roy  for
               Respondent Jacob Wonsover

BEFORE:        Burton S. Kolko, Administrative Law Judge





                           Introduction

     The  Securities  and   Exchange  Commission   ("Commission")

instituted  this proceeding  on  December 28,  1994, pursuant  to

Section 8A of the  Securities Act of 1933 ("Securities  Act") and

Sections  15(b)(4),  15(b)(6),  and  19(h)(3)  of  the Securities

Exchange  Act of 1934 ("Exchange Act").  In the Order Instituting

Proceedings,  the  Division of  Enforcement  ("Division") alleged

that Frederick Entman, Norman  B. Rothstein, Frank Louis Palumbo,

Jacob  Wonsover, and  Howard  Richard  Perles willfully  violated

Sections 5(a) and 5(c) of the Securities Act and that M. Rimson &

Co., Inc., and Moshe Rimson failed reasonably to supervise Howard

Richard  Perles with a view to  preventing violations of Sections

5(a) and 5(c) of the Securities Act.

     The Commission entered Orders  Making Findings and  Imposing

Remedial   Sanctions   on   Frederick  Entman   and   Norman   B.

Rothstein,-[1]-    Frank    Louis   Palumbo,-[2]-    and   Howard

Richard  Perles.-[3]-     On   July  3,  1995,   I  granted   the

Division's Motion to Adjourn the  hearing as to M. Rimson  & Co.,

Inc.,  and Moshe  Rimson based  on the  Division's representation

that  the Commission  planned  to issue  further charges  against

those  Respondents  and  that  all  matters  as  to  them  should


---------FOOTNOTES----------
     -[1]-Order of  the Commission  Making Findings  and Imposing
Remedial   Sanctions  Against  Frederick  Entman  and  Norman  B.
Rothstein, 59 SEC Docket 1937 (June 23, 1995).

     -[2]-Order  of the Commission  Making Findings  and Imposing
Remedial Sanctions, 58 SEC Docket 2506 (February 28, 1995).

     -[3]-Order of  the Commission  Making Findings  and Imposing
Remedial Sanctions  Against Howard Richard Perles,  59 SEC Docket
0612 (May 2, 1995).





                   
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therefore be consolidated.  On  August 3, 1995, these Respondents

were named, along with ten others, in an Order Instituting Public

Administrative  and  Cease  and  Desist  Proceedings.-[4]-    The

Division   made  no   further   attempt  to   consolidate   these

proceedings.   Since the Division did not present evidence of the

alleged  violations of M. Rimson  & Co., Inc.,  and Moshe Rimson,

the proceeding against these Respondents will be dismissed.

     Evidentiary  hearings were held in this matter on May 18 and

19, and June  26 and 27, 1995, in Chicago, Illinois, to determine

whether the  allegations made by the  Division against Respondent

Jacob Wonsover are true, to afford the Respondent  an opportunity

to establish any defense, and to determine what, if any, remedial

sanctions are appropriate and in the public  interest and whether

the Commission should enter  an order requiring him to  cease and

desist from violating  Sections 5(a) and  5(c) of the  Securities

Act.5   The Division  and Mr. Wonsover filed  initial briefs  and

proposed findings of fact  and conclusions of law on  October 17,

1995.  Reply briefs were filed on October 31, 1995.

     The  findings  and conclusions  herein  are  based upon  the

preponderance of  the evidence as  determined by  the record  and

upon my observation of the various witnesses who testified at the

---------FOOTNOTES----------
     -[4]-M. Rimson & Co., Inc., et al., Order Instituting Public
Administrative  and Cease  and Desist  Proceedings and  Notice of
Hearing Pursuant to Section 8A of  the Securities Act of 1933 and
Sections 15(b), 19(h) and  21C of the Securities Exchange  Act of
1934, Admin. Proc. 3-8772 (August 3, 1995).

     5Additionally, a final telephone conference was held on July
14, 1995,  to consider admission  of additional evidence,  but no
additional testimony or exhibits were offered.





                   
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hearing, as well  as the  briefs and proposals  of facts and  law

submitted by the parties.

                     Findings of Fact and Law

Respondent Jacob Wonsover

     Mr. Wonsover  is a  forty-two-year-old  Israeli citizen  who

came to  this country  in 1976.   (Ex.  97 at 9;  Tr. 610.)6   He

began his career in the securities  industry in 1981.  (Tr. 611.)

From about June  1989 until he  was terminated in  May 1991,  Mr.

Wonsover  was  employed as  a  registered  representative in  the

Northbrook, Illinois,  branch office of  PaineWebber, Inc.7  (Tr.

615;  Ex.  97 at  12-14.)   While  at PaineWebber  the Respondent

serviced approximately 500 customer accounts.  (Tr. 620.)

Gil-Med Industries, Inc., and Shimon Gibori

     Gil-Med Industries,  Inc. ("Gil-Med") was formed  in January

1980  to  produce  plastic medical  products.    (Ex.  30 at  4.)

According  to Gil-Med's Amendment No. 2 to Form S-18 Registration

Statement  under the  Securities Act,  which was  filed with  the

Commission  on February  5, 1988,  to register  Gil-Med's initial

public offering ("IPO") of  common stock, the company "market[ed]

disposable plastic containers with attached tubing for parenteral

intravenous  nutrient and  drug  administration  and for  enteral

                    

     6References  to  the hearing  transcript  will  be  cited as
"(Tr. __.)."   References to Division  Exhibits will be  cited as
"(Ex. __.)."

     7PaineWebber  is  a   registered  broker-dealer   conducting
business  throughout the  United States.   In  May or  June 1989,
PaineWebber  acquired  the Northbrook  office  of Drexel  Burnham
Lambert, Inc.  (Ex. 97 at 14.)                
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nutritional support."   Id.   Shimon  Gibori founded  Gil-Med and

served at various times as the company's chief executive officer,

chairman  of  the  board,  president,  director of  international

marketing, and largest shareholder.  Id. at 21, 25.

     Mr. Wonsover was introduced  to Mr. Gibori in 1986  or 1987,

while Mr. Wonsover was a broker at Bear Stearns.  (Tr. 624.)   He

initially opened an Individual Retirement Account for Mr. Gibori.

(Tr. 627.)   During the period  August 1989 to October  1990, Mr.

Gibori  referred  the  nineteen  shareholders  at  issue  to  Mr.

Wonsover at PaineWebber, Inc., to  open accounts for the transfer

of Gil-Med shares.  (Tr. 266-67, 618, 642.)                  
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Charges Against Respondent Wonsover

     The Order Instituting Proceedings charges,  inter alia, that

Mr. Wonsover  willfully violated  Sections 5(a)  and 5(c) of  the

Securities  Act8 during the  period August  1989 to  August 1990,

through use of jurisdictional means in offering to sell, selling,

and receiving after sale,  various shares of the common  stock of

Gil-Med at a time when no  registration statement was filed or in

effect as to such securities under the Securities Act.

Wonsover's Violations of Sections 5(a) and 5(c) of the Securities

Act

     To establish a prima  facie case of a violation  of Sections

5(a)  and 5(c)  of the  Securities Act,  the Division  must prove

that:   (1) no  registration was in effect  as to the securities;

(2)  the Respondent sold or offered to sell these securities; and

(3) interstate transportation or communication and the mails were

used  in  connection with  the sale  or offer  of  sale.   SEC v.

Continental Tobacco Co. of South Carolina, 463 F.2d 137, 155 (5th

Cir. 1972).

     The record  establishes that  during the period  August 1989

through October  1990, Mr.  Wonsover opened nineteen  accounts in

the  names  of  nineteen  purported Gil-Med  shareholders.    Mr.

Wonsover facilitated  deposits, and  sales and payments  of sales

proceeds derived from such sales, into these nineteen accounts of
                    

     8As applicable here, Sections 5(a) and 5(c) make it unlawful
to use instruments of interstate commerce or the mails to sell or
deliver  a security unless a  registration statement is in effect
as to  such security,  or to  offer to sell  a security  unless a
registration statement has been filed as to such security.





                   
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a  total of 924,000 shares of Gil-Med  common stock, for which no

registration  statement under the Securities Act  was filed or in

effect at the time of the sales.  The 924,000 Gil-Med shares were

sold using instruments of interstate commerce or the mails.

     There  is  sufficient  evidence  to  conclude,  based  on  a

preponderance of the evidence, that Mr. Wonsover violated Section

5 of  the Securities  Act.   I further  find that  Mr. Wonsover's

violations of Sections 5(a)  and 5(c) of the Securities  Act were

willful.

Respondent Wonsover's Contentions

     The  Respondent   contends  that  the   Division  failed  to

establish its prima  facie case that  he violated the  Securities

Act,  that  the  securities  involved were  in  fact  exempt from

registration  under  the  Act, and  that  in  any  event he  made

appropriate  inquiries  regarding  the   status  of  the  subject

securities.   I find the Respondent's  arguments unconvincing and

find his actions in violation of the Securities Act willful.

1.   Division Failed to Establish Prima Facie Case

     Mr. Wonsover argues  that the Division failed  to prove that

there  was no  registration  statement under  the Securities  Act

filed or in  effect with respect to  the Gil-Med stock at  issue.

While the testimony of several witnesses at  the hearing suggests

that shares of Gil-Med common stock were stolen and/or forged, no

proof was offered that the shares at issue were registered.

     The  Division submitted Gil-Med's Amendment No. 2 to Form S-

18 Registration Statement under the Securities Act ("Registration





                   
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Statement") which  was filed on February 5, 1988.  (Ex. 30.)  Mr.

Wonsover  testified that he did  not know of  any registration of

Gil-Med shares other than the Registration Statement.  (Tr. 705.)

The   Registration  Statement   does   not  name   the   nineteen

shareholders at  issue  under  the  "Principal  Shareholders"  or

"Certain  Transactions"  sections.    The  testimony  of  Michael

Beckman,   the  attorney  who   prepared  Gil-Med's  Registration

Statement, indicated that the  shareholders would have been named

if  they owned Gil-Med common stock at  the time of the filing of

the Registration Statement.  Additionally, the Division submitted

an  Attestation   of  the  Commission's   Records  Officer  which

certified  that  no  Gil-Med  registration  statement  was  filed

between March 3, 1988, and March 6, 1995.  (Ex. 36.)

     Accordingly, the  shares in  question were either  issued as

unregistered shares, or issued in the  IPO.  Substantial evidence

was  presented and  is discussed  below involving  allegations of

fraud and  difficulties transferring shares, and  the creation of

bogus shares and shareholder lists.  This evidence, combined with

the inability of the Respondent to prove that the shares at issue

were  in fact  registered, lead  me to  conclude that  the shares

involved were not registered.  

     The names of the nineteen shareholders at issue in this case

are as follows:

     Group 1             Group 2             Group 3
     Peter Gomez         Batia Edna          Izak Derzie
     Mark Swerling       Meriam Avram        Eli See
     Robert Thornton     B. Yarech           Ram Kellmey
     Bruce Levy          Mosher Natli        David Sova





                   
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     Mark Lustig         Saul Shmash         Isac Asian
     Haim Cheap                              Moshe Chatz
                                             Gabriel Chava
                                             Ben Gigl

     Dr. Henry Vogel met Mr. Gibori in February 1988.  (Tr. 229.)

Dr. Vogel was impressed with the company and bought shares.  (Tr.

230.)    He   further  involved  himself  with   the  company  by

introducing Mr.  Gibori  to  hospital  staff who  would  use  the

product, and  by attempting to recruit  institutional and private

investors.    (Tr.  230-33.)    He  solicited   his  friends  and

acquaintances  to  purchase  Gil-Med   shares  and  handled   the

transactions  for  them.    (Tr.  231, 233-34.)    The  investors

included under Group 1  are among the investors solicited  by Dr.

Vogel.  (Tr. 234-36, 306.)

     Dr. Vogel's  testimony is replete with  allegations of fraud

in connection with the sale of Gil-Med shares.  He testified that

Gil-Med stock  certificates were forged and  possibly stolen, and

raised  substantial   doubt  as   to  whether  the   shares  were

registered.   He admitted that  he impersonated Mr.  Cheap on the

phone to  Mr. Wonsover.  (Tr.  310-11.)  Dr. Vogel  forged or had

forged9  the signatures of  Mr. Cheap, Mr. See,  and possibly Mr.

Derzie  listed in Group  3 above on  documentation supporting the

transfer  of  Gil-Med shares.   (Tr.  306-07,  310, 411-14.)   He

believed that Mr. Cheap, Mr. Derzie, and Mr. See did  not in fact

exist, and were  created by Mr. Gibori.  (Tr.  307, 316-18, 435.)

                    

     9Dr.  Vogel testified that  he asked "a girl  at the bakery"
who  knew Hebrew  to sign  people's names  on Gil-Med  paperwork.
(Tr. 307, 313, 332, 412.)





                   
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Dr. Vogel also testified  that both he and Mr. Gibori had unusual

access  to   blank  stock  certificates,   Seller  Representation

Letters10 and  shareholder lists  (Tr. 247-49,  252, 330-33, 
362,

426-28),  and that it appeared that Mr. Gibori issued more shares

than were authorized to be outstanding.  (Tr. 276-77.)

     Rule  144 of the Securities Act provides a set of conditions

under  which   restricted  securities  and  securities   held  by

affiliates may  be resold  without registration.11   "The rule 
is

designed to prohibit the creation of public markets in securities

of issuers  concerning which adequate current  information is not

available to  the public."   Preliminary Note  to Securities  Act

Rule  144.  The requirements  of Rule 144(b)  through (i) include

provisions that:

     1)  current public  information be  available regarding
     the issuer of the securities;
     2)  at  least two  years  elapse between  the  time the
     securities are acquired from an issuer or affiliate and
     the date the securities are resold under the rule;
     3) the amount of securities able to be sold is limited,
     depending on  whether the  sale is  by an  affiliate or
     not;
     4) the  securities be sold in  brokers' transactions or
     with a market maker; and
     5) Commission Form  144 be filed depending  on the size
                    

     10A  Seller Representation Letter  is a letter  written by
an
account  holder certifying that he  or she meets  the criteria to
sell shares under Rule 144(k).

     11Restricted   securities  include   "[s]ecurities  that 
are
acquired  directly or  indirectly  from the  issuer,  or from  an
affiliate  of   the  issuer,  in   a  transaction  or   chain  of
transactions not involving any  public offering."  Securities Act
Rule 144(a)(3).   Control securities  are securities owned  by an
affiliate  of the  issuer.    An  affiliate  is  "a  person  that
directly,  or  indirectly  through one  or  more  intermediaries,
controls, or is controlled  by, or is under common  control with,
such issuer."  Securities Act Rule 144(a)(1).





                   
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     of the transaction, and that the person filing the form
     has a bona fide intention to sell the securities within
     a reasonable time.

     Mr. Wonsover claims  that it was  not necessary to  register

the  shares at issue  because they were  exempt from registration

under Securities  Act Rule 144(k).   Rule 144(k)  exempts holders

from  the  Rule  144   conditions  on  the  sale   of  restricted

securities,  provided that the shares have been held for at least

three years, and that the holder has not been an affiliate of the

issuing corporation for at  least three months.  Mr.  Gibori sent

letters  as  requested  by  the  transfer  agent  representative,

Theresa Conrad, certifying that the nineteen Gil-Med shareholders

were not affiliates and that they held the shares to  be sold for

at least three years. 

     PaineWebber's  Standard  Methods and  Procedures publication

required  brokers to  submit  completed  Seller's  Representation

Letters  for all  Rule 144  or Rule  144(k) transactions,  and to

complete  the  Investment  Executive's  Worksheet  for  Rule  144

Transactions.   (Ex.  106 at 2,  4, 6,  10.)   While the Seller's

Representation Letter is a statement signed by the seller that he

meets the requirements of Rule 144 or Rule 144(k), the Investment

Executive's Worksheet requires  the broker to  ask the seller  of

Rule 144 or Rule  144(k) stock questions  about how and when  the

shares were  acquired and whether the shareholder is an affiliate

of  the company.   One Forty Four  & More,  self-described as the

"PaineWebber Broker's  Worksheet and Compliance  Manual [on]  How

Rule  144  Works,"  also  requires  the  selling  stockholder  to





                   
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complete and submit Commission Form 144.  (Ex. 1 at 1.)

     Dr.  Vogel admitted that he personally  forged or had forged

Gil-Med stock certificates, Seller Representation Letters for Mr.

Cheap and Mr. See,  and shareholder lists.  (Tr.  276-77, 330-33,

413-14, Ex. 15, Ex. 17.)   In the name of Mr. Cheap,  and perhaps

others, he forged  a Commission  Form 144, a  W-8 Certificate  of

Foreign Status, and  a letter authorizing the transfer  of shares

or  proceeds  from shares.    (Tr. 306-07,  Ex.  15.)   Only  two

Seller's  Representation  Letters were  produced at  the hearing.

(Ex. 15, Ex. 17.)  No PaineWebber Investment Executive Worksheets

for the investors at issue were produced.  (Tr. 722-23.)

     Dr. Vogel  also testified  that the  investors which he  had

recruited had difficulties selling their shares in 1988 and 1989.

(Tr.  252-53, 264-67.)  Mr.  Gibori directed Dr.  Vogel to direct

his shareholders to  Levco, one broker-dealer,  and then to  J.W.

Gant, another broker-dealer, to sell their shares.  (Tr. 264-66.)

Both  firms  refused  to sell  the  shares  and  Mr. Gibori  then

directed  Dr. Vogel to take the shares and necessary paperwork to

Mr.  Wonsover at  PaineWebber.   (Tr. 264-67.)   At  PaineWebber,

James McNulty in the Restricted Stock Department refused to clear

one of Mr.  Wonsover's Gil-Med sales transactions.  (Tr. 185-87.)

The inability to sell  the shares indicates that the  shares were

not registered.

     According to Dr. Vogel, Mr. Wonsover did not  ask him how or

when  the shares were acquired, or why Dr. Vogel was handling the

transactions for  the investors.  In  his investigative testimony





                   
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Mr. Wonsover said he did  not ask the customers how or  when they

acquired  their shares, whereas at the hearing he claimed that he

made  a full  inquiry or  was told this  information.   While the

credibility of Dr. Vogel may be questioned,  his testimony should

not   wholly  be  discounted,  particularly  when  his  testimony

parallels  the  testimony  of  other witnesses.    These  varying

testimonies,   along  with   the  missing   Investment  Executive

Worksheets,  support the  conclusion  that Mr.  Wonsover did  not

inquire whether  the Gil-Med shares of  the nineteen shareholders

at  issue  were  registered.   The  testimony  of  more  credible

witnesses  such as  Theresa  Conrad, James  McNulty, and  Michael

Beckman, as well as the testimonial and documentary discrepancies

raised by the testimony of Mr. Wonsover, confirm that the origins

of at least some of Gil-Med's stock are suspect.

     The names of the nineteen shareholders  listed above did not

appear  in the  Registration Statement,  but  did appear  on some

shareholder lists produced at trial.  The accuracy of shareholder

lists produced at  the hearing generally  are suspect, given  the

testimony of Ms. Conrad, Dr. Vogel, Mr. Beckman, and Mr. McNulty.

For  example, Ms.  Conrad  testified that  the shareholder  lists

provided  to  her were  not complete  and in  some cases  did not

incorporate the  certificates for which she  needed verification.

In  such a case, Mr. Gibori would send updating shareholder lists

and Rule 144(k) letters  certifying that the Gil-Med shareholders

who wished to sell their shares were not affiliates and that they

had held the shares to be sold for at least three years.





                   
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     Additionally, Mr. McNulty of PaineWebber's  Restricted Stock

Department testified that he wrote a note which stated:

     Per Theresa Conrad stock is not listed on her computer.
     She will  require a  letter from company  saying shares
     are outstanding besides letter from attorney.  Informed
     Jacob of this  & told him  I also need  a copy of  this
     letter.

(Ex. 55, Tr. 36-37.)

This evidence, along with the fact that the nineteen shareholders

at issue were not listed  on the Registration Statement, suggests

that the shares were  not registered or purchased in  the 1985-87

period and so were not  held for three years as suggested  by Mr.

Wonsover.

     The  certificates  of  ten  investors  bore  no  restrictive

legends.   The  certificates of  Mr.  Cheap and  those  investors

listed  in Group 3 carried legends that would have put the holder

on notice  of restrictions regarding transfer  of the securities.

The absence of a restrictive legend, however, does not "relieve a

broker-dealer from his  duty as a professional  in the securities

business  to make reasonable inquiry to assure himself that he is

not participating in an illegal sale of unregistered securities."

Stone Summers &  Co., 45 S.E.C. 105,  109 (1972); see  also Quinn

and Co., 44  S.E.C. 461, 470  (1971), aff'd,  452 F.2d 943  (10th

Cir. 1971), cert. denied, 406 U.S. 957 (1972).  Mr. Wonsover  was

not expected to discover  that the certificates were forged,  but

rather  that  the  securities  were  unregistered   or  otherwise

restricted,  and he  should have  declined to  sell them  on that

basis.





                   
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     The evidence  presented raises suspicion about  how and when

the  shares at issue were  acquired.  The  varying testimonies of

Mr.  Wonsover  give   reason  to  question  the  origins  of  the

certificates.  Gil-Med was a little-known company  and its shares

were  thinly traded.    Most  of  the  nineteen  account  holders

purchased  at  least 25,000  shares of  Gil-Med, and  the Gil-Med

address  was listed as the investor's address for the majority of

the nineteen accounts.   Mr. Gibori directed most of  the trading

in the nineteen  accounts, and according to Dr. Vogel both he and

Mr. Gibori engaged in fraud related to the transfer of shares.

     The Respondent does not  dispute that he sold or  offered to

sell these  securities  and  that  interstate  transportation  or

communication and the mails were used in connection with the sale

or offer of sale.





                   
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2.   Claimed Exemptions From Registration

     The Respondent argues in the alternative that the securities

at issue were  exempt from  registration under Section  4 of  the

Securities Act.    Section 4(3)  of  the Securities  Act  exempts

transactions  by  a  "dealer"  from  the  Section 5  registration

requirements.12   Section  4(4)  exempts  "brokers' 
transactions"

executed upon customers' orders  on any exchange or in  the over-

the-counter market, but not the solicitation of such orders.  Mr.

Wonsover argues that: 1) he is  not an underwriter as defined  in

Section 2(11) of  the Securities Act, which  would disqualify him

from either the Section  4(3) or the Section 4(4)  exemption; and

2)  he made  all necessary  inquiries into  the sales  of Gil-Med

shares in order to qualify for the Section 4(4) exemption.

       It is  well settled that the burden of proving entitlement

to  such exemptions  rests  with the  person  claiming it.13  
Mr.

Wonsover  did not  sustain his  burden  of proving  an exemption,

because  he was  in fact  a statutory  underwriter under  Section

2(11),  and  further  because  he  did  not  make  the  necessary

inquiries to qualify for an exemption pursuant to Section 4(4).

     (a) Underwriter Status
                    

     12The  term  "dealer" is  defined  in  Section 2(12)  of 
the
Securities Act as "any person who engages either for all or  part
of  his  time,  directly  or  indirectly,  as  agent,  broker, or
principal,  in  the  business  of offering,  buying,  selling  or
otherwise  dealing or  trading  in securities  issued by  another
person."

     13See SEC  v. Ralston Purina Co., 346 U.S. 119 (1953); SEC
v.
Culpepper, 270 F.2d 241, 246 (2d  Cir. 1959); Pennaluna & Co.  v.
SEC, 410  F.2d 861, 865 (9th  Cir. 1969), cert. denied,  396 U.S.
1007 (1970); Quinn and Co. v. SEC, 452 F.2d at 946.





                   
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     Neither  Section 4(3)  nor  4(4)  exempts from  registration

securities  sold by an underwriter.   "Underwriter" is defined in

Securities Act Section 2(11) as follows:

     The  term  "underwriter"  means  any  person  who   has
     purchased from an issuer  with a view to, or  offers or
     sells   for   an  issuer   in   connection  with,   the
     distribution of any security,  or participates or has a
     direct   or  indirect   participation   in   any   such
     undertaking, or participates or has a  participation in
     the  direct  or  indirect   underwriting  of  any  such
     undertaking; but  such term shall not  include a person
     whose  interest  is limited  to  a  commission from  an
     underwriter  or dealer not  in excess of  the usual and
     customary  distributors'  or sellers'  commission.   As
     used in this paragraph the term "issuer" shall include,
     in  addition  to  an  issuer, any  person  directly  or
     indirectly controlling or controlled  by the issuer, or
     any person under direct or indirect common control with
     the issuer.

"The term  underwriter is not  limited to its  common definition,

but rather is a word of art."  Quinn  and Co. v. SEC, 452 F.2d at

946.   "In view of the  primary purpose of the  Securities Act to

protect investors through the registration provisions, the courts

have given a broad interpretation to the term . . . ."  Quinn and

Co., 44 S.E.C. at 464.

     Section  4(3)  does  not  exempt  dealer  transactions  that

involve an issuer or underwriter.  See Quinn and Co.  v. SEC, 452

F.2d  at 946.  Further, the Section 4(4) exemption is unavailable

to any broker which sells unregistered securities when the broker

knows  or has reasonable grounds to believe that its principal is

an  underwriter.   Paul L.  Rice, 45  S.E.C. 959,  960-61 (1975);

Merrill  Lynch, Pierce, Fenner &  Smith Inc., 45  S.E.C. 185, 188

(1973); Quinn and Co., 44 S.E.C. at 468.

     Mr. Gibori was a control person and statutory issuer of Gil-





                   
==========================================START OF PAGE 17======

Med under Section 2(11).   He founded Gil-Med, and was at various

times chief  executive officer, chairman of  the board, president

of  the company,  director  of international  marketing, and  the

largest shareholder.   He  controlled accounts through  which Mr.

Wonsover sold 924,000 Gil-Med shares.   "Where . . . the critical

factor determining  the availability  of an exemption  is whether

the  shares in  question  emanated from  a  person in  a  control

relationship with  the issuer,  one asserting the  exemption must

show  the  absence  of  control,  at  least  where  a   secondary

distribution of  significant proportions is involved."   Wittow &

Co.,  44 S.E.C.  666, 671  (1971).   The  weight of  the evidence

supports  the  finding that  Mr.  Gibori  created and  controlled

shareholder  lists,   accounts  and  proceeds.     As  such,  the

Respondent's  efforts to show that  Mr. Gibori was  not a control

person are unpersuasive.

     While Mr. Gibori  was the  issuer for each  of the  nineteen

accounts, Mr.  Wonsover sold the  924,000 Gil-Med shares  for Mr.

Gibori in connection with the distribution of the shares, and was

therefore a  statutory underwriter.   See  SEC v.  Culpepper, 270

F.2d 241, 247  (2d Cir. 1959); SEC v. Computronic Ind. Corp., 294

F.Supp. 1136, 1138-39 (N.D.  Tex. 1968); Paul L. Rice,  45 S.E.C.

at 960-61.

     In addition to the fact that Mr. Wonsover sold shares for an

issuer  in connection  with the  distribution of  Gil-Med shares,

which brings him  under the definition of underwriter  in Section

2(11),  the  customers  themselves  were  statutory  underwriters





                   
==========================================START OF PAGE 18======

because  they purchased  the Gil-Med  shares from  Mr. Gibori,  a

statutory issuer,  with a view  towards distribution.   Wittow  &

Company, 44  S.E.C. at  670; Owen  V.  Kane, 48  S.E.C. 617,  619

(1986),  aff'd Kane v.  SEC, 842 F.2d  194 (8th Cir.  1988).  The

term "distribution"  includes "the entire process by which in the

course  of a public offering the block of securities is dispersed

and  ultimately comes  to  rest in  the  hands of  the  investing

public."  Oklahoma-Texas  Trust, 2 S.E.C. 764,  769 (1937), aff'd

100  F.2d  888  (10th  Cir.  1939).    A  distribution  within  a

relatively short period after acquisition would be evidence of an

original intent  to distribute.  Loss,  Securities Regulation 552

(2d ed., 1961).

     Here,  where for  example  the first  group of  shareholders

bought  shares in  June  1988  and  March  1989,  and  where  Mr.

Wonsover's sales  occurred between  August 1988 and  August 1989,

the intent to  distribute among the nineteen shareholders  can be

inferred.   Additionally,  because  the shareholders  experienced

difficulty selling their shares,  I can infer that they  were not

held  for the three-year period required by Rule 144(k), the rule

under  which Mr. Wonsover claimed he was not required to register

the shares.   Finally, it  is reasonable  to assume  that if  the

shares  had been bought in  1985-87 as Mr.  Wonsover claimed, the

names of  the shareholders would  have appeared on  earlier lists

and  in the Registration Statement.  Their absence from the early

lists  and the Registration  Statement implies that  they did not

become shareholders until at least 1988.





                   
==========================================START OF PAGE 19======

     "[T]he underlying  policy of  the [Securities] Act,  that of

protecting  the  investing  public  through   the  disclosure  of

adequate information, would be seriously impaired if we held that

a dealer must have conventional  or contractual privity with  the

issuer  in order to be an  'underwriter.'"  SEC v. Culpepper, 270

F.2d at 246  (quoting SEC  v. Chinese Consol.  Benev. Ass'n,  120

F.2d  738 (2d  Cir. 1941),  cert. denied,  314 U.S.  618 (1941)).

"[A] direct or indirect  participation in the distribution brings

a dealer within the definition of underwriter."  Id. at 247.  Mr.

Wonsover's underwriter status derives from both  his relationship

with  Mr. Gibori and with the  investors themselves.  Conversely,

Mr. Wonsover's underwriter status does not hinge on the existence

or lack of existence of the nineteen shareholders.

     (b) Requisite Inquiries

     "A  broker relying on Section  4(4) cannot merely  act as an

order taker, but must make whatever inquiries are necessary under

the circumstances  to determine  that the  transaction is  only a

normal  'brokers'  transaction'  and  not  part  of  an  unlawful

distribution."   Robert  G.  Leigh, 50  S.E.C.  189, 193  (1990).

Specifically,  Rule  144(g)  provides   that  the  Section   4(4)

exemption:

     "include[s]  transactions by  a  broker  in which  such
     broker . . .  after reasonable inquiry is not  aware of
     circumstances  indicating  that  the person  for  whose
     account the securities are  sold is an underwriter with
     respect to the securities or that  the transaction is a
     part of a distribution of securities of the issuer."

     The Commission has made very clear the obligation imposed on

broker-dealers   to   inquire   when  distributing   unregistered





                   
==========================================START OF PAGE 20======

securities:

     [A]  dealer who offers  to sell, or is  asked to sell a
     substantial amount  of  securities must  take  whatever
     steps  are  necessary   to  be  sure  that  this  is  a
     transaction  not  involving  an  issuer,  person  in  a
     control relationship with an issuer or an  underwriter.
     For this  purpose, it is not sufficient  for him merely
     to accept "self-serving statements of his sellers . . .
     without   reasonably   exploring  the   possibility  of
     contrary facts."

     The  amount of  inquiry called  for necessarily  varies
     with the  circumstances of particular cases.   A dealer
     who  is offered  a  modest amount  of  a widely  traded
     security by  a  responsible  customer,  whose  lack  of
     relationship to the  issuer is well  known to him,  may
     ordinarily  proceed with  considerable confidence.   On
     the other hand, when a  dealer is offered a substantial
     block of a little-known security either by a person who
     appears  reluctant   to  disclose  exactly   where  the
     securities   came  from,   or  where   the  surrounding
     circumstances raise a question as to whether or not the
     ostensible  sellers may  be  merely intermediaries  for
     controlling  persons  or  statutory underwriters,  then
     searching inquiry is called for.

Distribution  by  Broker-Dealers   of  Unregistered   Securities,
Exchange  Act  Release  No.  4445 (February  2,  1962)  (footnote
omitted)  (quoting SEC v. Culpepper,  270 F.2d 241,  251 (2d Cir.
1959))(cited in Kane v. SEC, 842 F.2d at 199).

     It was Mr. Wonsover's responsibility as the salesman for the

accounts  to ensure that the  shares at issue  met the applicable

legal requirements.   Mr. Wonsover had  primary responsibility to

inquire  as to  the source  of the  shares in order  to determine

whether  they could properly be sold.  Mr. Wonsover was "uniquely

positioned   to   ask   relevant   questions,   acquire  material

information,  or disclose his findings."  Wasson v. SEC, 558 F.2d

879,  886  (8th Cir.  1977).   "Such  liability  encourages those

parties who can most  efficiently obtain information and disclose

it,  to do so, while not penalizing mere intermediaries who would





                   
==========================================START OF PAGE 21======

not  normally be expected to inquire or  disclose."  Kane v. SEC,

842 F.2d at  199.   "Questions concerning the  tradeability of  a

block  of stock  that is  offered for sale  are not  esoteric but

fundamental  for  any  salesman  in  [Mr.  Wonsover's]  position,

particularly when he is  dealing with an officer of  the issuer."

Owen V. Kane, 48 S.E.C. at 623.

     Mr. Wonsover  can not  claim that he  satisfied his  Section

4(4)  duty  of   inquiry  by  relying  on   in-house  counsel  at

PaineWebber or on the transfer agent.  While evidence of reliance

on PaineWebber's  Legal Department might be  relevant in deciding

what  sanctions are appropriate in the  public interest, his lack

of complete  candor with them diminishes  significantly its value

in mitigation.  See Mark  E. O'Leary, 43 S.E.C. 842, 848  (1968).

Mr.  Wonsover did  not tell  PaineWebber's compliance  department

that  Mr. Gibori introduced the  customers to him,  and that some

customers were relatives of Mr. Gibori.  According to Mr. McNulty

of PaineWebber's  Restricted  Stock Department,  Mr. Wonsover  on

many occasions  told Mr. McNulty that the  shareholders were poor

and  needed  the money  from  the sale  of  shares quickly.   His

objective  appeared to be to sell the shares quickly, rather than

to  secure  an unbiased  opinion  about the  tradeability  of the

shares.

     Further, merely calling  the transfer  agent was  "obviously

not a sufficient inquiry."  Stead v. SEC, 444 F.2d 713, 716 (10th

Cir.  1971).  Courts and this Commission have routinely held that

the  transfer  agent's willingness  to  reissue the  certificates





                   
==========================================START OF PAGE 22======

without restrictive legends  did not relieve Mr.  Wonsover of his

obligation  to investigate.  Butcher & Singer, 48 S.E.C. 640, 643

(1987), aff'd (3d Cir.  1987); Stone Summers & Co.,  45 S.E.C. at

109;  Paul  L.  Rice,  45  S.E.C. at  961.    Instead  of  making

appropriate inquiry,  Mr. Wonsover was satisfied by the fact that

the  certificates  presented  by  many of  the  nineteen  account

holders  bore  no  restrictive  legends  and  were  accepted  for

transfer  by the transfer agent.  The transfer agent, however, is

the  agent  of the  issuer and  willingness  to transfer  did not

relieve Mr. Wonsover of  responsibility.  Testimony revealed that

the  transfer  agent  relies  on  the  issuer  for   an  accurate

shareholder  list.   A dealer  cannot close  his eyes  to obvious

signals or  red flags warning  him to  go slowly.   SEC v.  Mono-

Kearsage  Consol. Mining  Co.,  167 F.Supp.  248,  259 (D.  Utah,

1958).

     Nor can  Mr. Wonsover claim  that he can not  be held liable

because he was defrauded by Mr.  Gibori and others.  "There is no

exemption from  the registration provisions  of the  [Securities]

Act for a person otherwise subject thereto, on the ground that he

was defrauded by the issuer.  A person's status as an underwriter

under the statutory  definition is not  changed thereby."   Quinn

and Co., 44 S.E.C. at 465.

     Mr.  Wonsover  claims  that   he  made  full  and  necessary

inquiries into each of  his sales of Gil-Med shares  as warranted

by  the  circumstances.    Similar contentions  were  raised  and

rejected  by the  Commission  in L.A.  Frances,  Ltd., where  the





                   
==========================================START OF PAGE 23======

respondents argued that they "acted with due diligence to satisfy

themselves  that  the transactions  were  legal,  that they  were

misled by the sellers,  and that any violations by  them were not

willful."  44  S.E.C. 588, 590 (1971).  The  Commission held that

"in  light of the cardinal role occupied by broker-dealers in the

securities  distribution process,  we  cannot  overemphasize  the

importance  of [their] obligation to take all reasonable steps to

avoid   participation   in   distributions  violative   of   [the

registration] provisions.  Respondent's conduct fell far short of

meeting that obligation."  L.A. Frances, Ltd., 44 S.E.C. at 593.

     I  find  that  Mr.  Wonsover  failed  to  ask the  customers

pertinent questions  about their  acquisition of the  stock, even

though he: 1) was well aware that the  customers had affiliations

with Gil-Med and Mr. Gibori, and 2) initially encountered trouble

selling shares of  Gil-Med.  In making this finding  I credit Mr.

Wonsover's investigative  testimony, given closer in  time to the

events at issue, over his self-serving testimony at the hearing.

     In his investigative testimony Mr. Wonsover said he did  not

ask the customers how or when they acquired their shares, whereas

at the hearing he claimed that he made a full inquiry or was told

this information.   In  fact, in  the investigative testimony  he

said  that he  thought  it would  offend  a shareholder  to  make

further inquiry.   He said that  there was no reason  to find out

how shares were acquired in  his position as a broker and  agent.

I am not persuaded by the explanation offered for the significant





                   
==========================================START OF PAGE 24======

difference  between  these  testimonies.14    Further,  while 
Dr.

Vogel's activities reflect adversely on his credibility, there is

no reason to discount  his hearing testimony on this  issue which

is consistent with Mr.  Wonsover's investigative testimony.  Both

stated that  Mr. Wonsover did  not inquire into  how or  when the

sellers had acquired their stock.

     Even if I  were to accept Mr. Wonsover's  hearing testimony,

there were numerous other  red flags that should have  caused him

to  further investigate the securities that he was asked to sell.

"As [the Commission has] previously pointed out, while securities

salesmen need not be 'finished scholars in the metaphysics of the

Securities   Act  .  .  .   familiarity  with  the  rudiments  is

essential.'"  Robert G. Leigh, 50 S.E.C. at  193 (quoting Paul L.

Rice,  45 S.E.C. at 961).   For example,  two investors, Ms. Edna

and Ms. Avram,  were related  to Mr. Gibori,  listed the  Gil-Med

address   as  their   own,  and   listed  no   telephone  number.

PaineWebber's  One Forty  Four  & More  asserts  that the  broker

should be aware of  control-person status if a relative  lives in

the same home  as the control person.15  (Ex.  1 at 3.) 
Similarly

Securities Act  Rule 144(a)(2) states  that "a  person for  whose

account securities are  to be  sold in reliance  upon [Rule  144]
                    

     14Mr.  Wonsover  testified  that  he  was  upset  during 
the
investigative testimony.   He thought  that he was  testifying to
assist  in pointing  to someone  else as  the "thief,"  but found
fingers  pointing at him.  At the  hearing he said he was relaxed
and the "pain" was gone.  (Tr. 646.)

     15I  note  that  the  manual,   while  not  definitive, 
does
indicate  facts  which should  cause  a  broker to  make  further
inquiry.





                   
==========================================START OF PAGE 25======

includes .  . . [a]ny relative  or spouse of such  person, or any

relative of  such spouse, any  one of whom  has the same  home as

such person."  The investors' use of the company's address should

have raised Rule 144 concerns in the mind of Mr. Wonsover.

     In addition,  all investors,  except for  Mr.  Cheap in  the

first group of investors and Mr. Asian in the third group, listed

Gil-Med  as their  address, and  in  some cases  listed Gil-Med's

phone  number  as  their  own.    This  should  have  raised  Mr.

Wonsover's level  of scrutiny  during  the sales  process.   See,

e.g., Strathmore Securities, 43 S.E.C. 575, 584 (1967).

     Mr. Wonsover  knew of the connection  between the customers,

Mr.  Gibori  and  Gil-Med.   The  circumstances  surrounding  the

transactions  were such  as  to put  Mr.  Wonsover on  notice  of

possible   irregularities   and    called   for   more   diligent

investigation  than he  undertook.   The transactions  themselves

involved a substantial amount of stock in a little-known company,

being sold  by persons previously unknown to him and whom he knew

were associated with the issuer.  Mr. Wonsover must have realized

that there was a question as to the availability of  an exemption

when a sales transaction was refused,  yet he did not seek  legal

counsel or  consult the  Commission staff before  continuing with

additional transactions.16  Quinn and  Co., 44 S.E.C. at  469;
cf.

SEC  v.  Culpepper,  270 F.2d  at  251.   Mr.  Wonsover  then was

                    

     16Mr. McNulty  testified that  a broker  who sent 
unlegended
stock  through PaineWebber's  Restricted Stock  Department either
knew  that the stock was restricted or was being overly cautious.
This suggests guilty knowledge on the part of Mr. Wonsover.





                   
==========================================START OF PAGE 26======

successful in selling the 924,000 Gil-Med shares for the nineteen

investors,  even though  other  brokers had  refused to  sell the

shares.17    He was  not  alarmed by  the  fact that  none  of
the

nineteen investors  who allegedly purchased  shares from  1985-87

were  listed in the Registration Statement (Ex. 30), which he had

reviewed.

     The  evidence  presented  by  the  Division  indicates  that

sufficient red flags existed that should have caused Mr. Wonsover

to  make  further inquiry.    I  need not  speculate  as to  what

reasonable inquiry would have disclosed where no such inquiry was

made.  See L.A. Frances, Ltd., 44 S.E.C. at 592.  I conclude that

Mr.  Wonsover  did  not  make  the  inquiries  required  for  the

transactions  at  issue  to  be exempt  from  registration  under

Section 4(4) of the Securities Act.

3.   Willfulness of Violations

     "It  is well  settled that  a  finding of  willfulness under

[Section 15(b)(4) of] the Exchange Act does not require an intent

to violate, but merely an intent  to do the act which constitutes
                    

     17Evidence  was presented  at  the  hearing that  Mr. 
Gibori
approached  two  broker-dealer firms  that  refused  to sell  the
restricted securities, and that Dr. Vogel's customers were unable
to sell their shares through their own brokers.  It is clear that
other brokers  were not willing to  undertake these transactions,
but it is not clear that Mr. Wonsover was aware of these previous
sales attempts.   Compare Merrill Lynch, Pierce,  Fenner & Smith,
45 S.E.C. 185,  188 (1973) ("The dealer's exemption .  . . is not
available  to a  dealer  selling unregistered  securities for  an
underwriter,  and  neither is  the  broker's  exemption when  the
broker knows  or  has  reasonable  grounds to  believe  that  his
principal is an underwriter.  Here [the Respondent] not only knew
that  [a  customer] was  selling  shares  that  he  had  recently
acquired  from  the issuer,  but  also  that another  broker  had
refused to handle the sale.").





                   
==========================================START OF PAGE 27======

the violation."  Quinn and  Co., 44 S.E.C. at 469.   Mr. Wonsover

obviously  intended to  offer and  sell the  securities purchased

from  the nineteen accounts, and  no registration statement as to

them was in effect.

     The reasonableness of Mr. Wonsover's belief that the Gil-Med

shares at issue were exempt from registration is only relevant to

the  willfulness of his Section  5 violations, and  to whether he

properly discharged his obligation to inquire into the sources of

the shares.  Kane v. SEC,  842 F.2d at 198.  Mr. Wonsover  failed

to  make adequate  inquiry  into the  sources  of the  shares  in

reckless  disregard  of  his  responsibilities  as  a  securities

salesman.  Thus his actions were willful.

     The  Respondent argues  that  his behavior  was not  willful

enough to  warrant sanctions.  He cites the Commission's decision

in International  Shareholders Servs.  Corp. for  the proposition

that a respondent's actions are not willful within the meaning of

Section  15(b)(4) of the Exchange  Act where he  neither knows or

has  reason to know of the issuer's violative conduct which makes

an  exemption  to  the  Securities  Act  registration  provisions

unavailable.  46 S.E.C. 378, 381-82 (1976).

     The Commission,  however, also  recognized in  that decision

that   "a   broker-dealer   participating   in   an  unregistered

distribution  of securities  purportedly made  in reliance  on an

exemption from the Securities Act registration  requirements must

exercise  considerable care to see to it that the exemption is in

fact available."   International Shareholders, 46  S.E.C. at 382.





                   
==========================================START OF PAGE 28======

Because  I have found that  Mr. Wonsover failed  to make adequate

inquiries  concerning how and when the  shares were acquired, Mr.

Wonsover's argument  that the  loss of  the exemption was  solely

caused by the actions of another  person must fail.  Mr. Wonsover

could  have discovered  facts  which should  have  caused him  to

refuse   to  sell   the  securities   of  the   nineteen  Gil-Med

shareholders.    By  contrast, the  Commission  in  International

Shareholders  found that  the  respondent broker  could not  have

discovered that  the issuing  company was engaging  in activities

that  made the  exemption  unavailable because  of the  company's

"elaborate efforts to create an impression of compliance with the

exemption."  Id.

     In view of Mr. Wonsover's failure to make reasonable inquiry

despite the existence of  facts which should have alerted  him to

the  need for such inquiry,  I conclude that  his violations were

willful.

4.   Statute of Limitations

     After briefs  were filed  in  this case,  the United  States

Court of Appeals  for the  District of Columbia  Circuit held  in

Johnson  v. SEC  that  a Commission  "proceeding  resulting in  a

censure and  a six-month disciplinary suspension  of a securities

industry supervisor was a proceeding 'for the  enforcement of any

civil  fine,  penalty  or  forfeiture, pecuniary  or  otherwise,'

within  the meaning of  [28 U.S.C.]   2462."   No. 95-1340, 1996

U.S. App. LEXIS 14917,  at *1-2 (D.C. Cir. June 21,  1996).  As a

result, the court  found that the section's  five-year statute of





                   
==========================================START OF PAGE 29======

limitations "does apply to SEC proceedings under Section 15(b) of

the Securities and Exchange Act of 1934 which seek to censure and

suspend a securities supervisor."  Id. at *23-24.

     Pursuant to  Johnson  v. SEC,  I  have considered  only  the

actions  of   Mr.  Wonsover  within  the   five-year  statute  of

limitations period in assessing whether he  violated Section 5 of

the Securities  Act.18   I  have  considered  the full  record 
in

deciding what sanctions to order in the public interest.19

                         Public Interest

     "The registration  provisions are  a keystone of  the entire

system of securities regulation, and set forth basic requirements

for  the protection of [public] investors."  Sirianni v. SEC, 677

F.2d  1284, 1289  (9th Cir.  1982), aff'g  47 S.E.C.  355 (1980).

Registered  representatives play  an important  role in  ensuring

compliance with the registration requirements.

     Section  15(b)(4)  of   the  Exchange  Act  authorizes   the

Commission  to sanction  Mr.  Wonsover if  it  is in  the  public

interest to do so, and if he is found to  have willfully violated

any  provision  of  the  Securities  Act.    The  Commission  has

previously held that  "brokers and  dealers are under  a duty  to

investigate,  and a violation of that duty brings them within the
                    

     18Upon review of  Division Exhibit 107 and  the
documentation
supporting  that exhibit, I conclude  that at least  seven of the
nineteen  investors,  and a  substantial  amount  of the  overall
number of  transactions, fall  within the statute  of limitations
period.

     19See  Benjamin  G.  Sprecher, Order  Granting  in  Part 
and
Denying in Part  Motion to Dismiss, 58 SEC Docket  1375, 1376 n.5
(December 27, 1994).





                   
==========================================START OF PAGE 30======

term 'willful' of the Securities Act."  Quinn and Co. v. SEC, 452

F.2d at 947.   "[W]illfulness can be found if  a broker or dealer

who is aware of several facts suggesting a suspicious transaction

proceeds  to facilitate  the sale  with reckless  indifference to

such  facts, and ignores the obvious need for further inquiry and

the duty to disclose all relevant  information to his superiors."

Kane v. SEC, 842 F.2d at 200 (citations omitted).

     Mr. Wonsover recklessly  ignored suspicious facts suggesting

that  further inquiry  about  registration was  required, and  he

failed to alert his branch manager or the legal department to the

involvement of Mr. Gibori in the proposed sales.  He instead took

steps to  move the  sales through  the approval process  quickly.

Owen V. Kane, 48 S.E.C.  at 622.  Thus Mr. Wonsover's  violations

of Section  5 of the  Securities Act were  willful, and make  him

subject to sanctions  pursuant to Section  15(b) of the  Exchange

Act.

     The  starting   point   for  assessing   what  sanction   is

appropriate in the  public interest  is a review  of the  factors

specified in Steadman v. SEC:

     [T]he  egregiousness of  the  defendant's actions,  the
     isolated or  recurrent  nature of  the infraction,  the
     degree  of  scienter  involved, the  sincerity  of  the
     defendant's assurances against  future violations,  the
     defendant's recognition  of the wrongful nature  of his
     conduct,  and the  likelihood that his  occupation will
     present opportunities for future violations.

603 F.2d 1126, 1140 (5th Cir. 1979), aff'd  on other grounds, 450

U.S. 91 (1981).

     Mr.  Wonsover  is   currently  a  registered  representative





                   
==========================================START OF PAGE 31======

employed  at  Rodman &  Renshaw.   (Tr.  611.)   Apart  from this

proceeding,  Mr. Wonsover has not been  charged by the Commission

or   any   self-regulatory   organizations    with   disciplinary

violations.   (Tr.  732.)   He has  never been  the subject  of a

customer complaint.  Id.

     Mr. Wonsover's conduct with respect to the purchase and sale

of 924,000  unregistered shares  of Gil-Med demonstrated  a gross

indifference  to the  "searching  inquiry" called  for under  the

circumstances present in this case and, in general, a  deliberate

disregard of the duties  and responsibilities of a broker-dealer.

The level of  indifference in this case is  magnified by the fact

that  PaineWebber  issued in-house  materials  which gave  strict

guidelines and cautions on the issuance of  restricted or control

stock.   These materials included:  1) One Forty Four & More, the

"Broker's  Worksheet  and Compliance  Manual  [on]  How Rule  144

Works", which required registered representatives to inquire into

facts  surrounding each  order to  determine whether  stock being

offered  for sale was purchased  directly from the  issuer or was

owned by an officer or significant shareholder of the issuer, and

2)  the Standard  Methods and  Procedures manual,  which required

Seller's Representation Letters  on all Rule  144 or Rule  144(k)

trades,  and which  required  use of  the Investment  Executive's

Worksheet  for  Rule  144  Transactions.   These  procedures,  if

complied with, would have put  Mr. Wonsover on notice as to  when

and  where the shares at issue were acquired.  As noted, Seller's

Representation   Letters   were    missing   for   all   nineteen





                   
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shareholders, and Investment Executive's Worksheets  were missing

for seventeen of the nineteen shareholders.  Mr. Wonsover did not

have to complete the sale if he could not satisfy  his burden for

searching inquiry. 

     My  analysis is  also affected  by the variance  between Mr.

Wonsover's investigative testimony and his hearing testimony.  In

the former testimony Mr. Wonsover stated that he did not make the

necessary  inquiries, whereas in the latter he stated that he did

make the necessary inquiries.  The former testimony was closer in

time to  the violations and  was given without  much preparation.

Further, Dr. Vogel's testimony affirms that Mr. Wonsover  did not

follow  appropriate procedures in the sale of  the stock.  I find

that on the issue of inquiry, Mr. Wonsover's hearing testimony is

not credible.

     Finally,  Mr. Wonsover  has not  admitted any  wrongdoing or

offered  significant mitigating factors in this matter.  While he

relied upon  the transfer agent and legal counsel, but he did not

disclose  the relationship  among  Gil-Med, Mr.  Gibori, and  the

shareholders.   He claims that  he made the  requisite inquiries,

yet he ignored many red flags which should have put him on notice

that there was a problem with the transferability of the shares.

     The  Division   asks  that  Mr.  Wonsover   be  barred  from

associating with any broker, dealer, municipal securities dealer,

investment company, or investment adviser with a right to reapply





                   
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after an  appropriate  period  of  time.20    In  support  of 
the

sanction,  the Division argues that "such  an order is consistent

with  the precedents of the  Commission in this  area," citing an

administrative law judge's initial decision in Paul L. Rice, 1973

SEC  LEXIS  3477 (April  30, 1973),  for  the proposition  that a

"broker  [who  was] found  to  have willfully  aided  and abetted

violations  of Sections 5(a) and 5(c) in connection with the sale

of 698,000  shares [was] barred with the  right to reapply in one

year."21   However,  the sanction  imposed  by the 
administrative

law judge in Paul L. Rice was reduced on appeal by the Commission

to a  thirty-day suspension.   Paul L.  Rice, 45  S.E.C. at  962.

Accordingly, I  conclude that  the public interest  requires that

Mr. Wonsover  be  suspended from  association  with a  broker  or

dealer  for  six  months, based  on  the  need  to maintain  high

standards of  honest dealing  and compliance with  the securities

laws.

     Additionally, I  find it  appropriate to  issue a  cease and

desist order  against Mr.  Wonsover because he  violated Sections

5(a) and 5(c) of the Securities Act.





                    

     20I deny the Division's request that I collaterally bar Mr.
Wonsover from association with any investment adviser, investment
company, or municipal securities dealer because this proceeding
was instituted pursuant to Section 15(b)(6) of the Exchange Act
which does not provide for such sanctions.  This issue is
currently before the Commission.

     21Division of Enforcement's Post-Trial Brief at 18.





                   
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                              Order

     Based on the findings and conclusions set forth above, IT IS

ORDERED that pursuant to Section 15(b) of the Securities Exchange

Act  of 1934, Jacob  Wonsover is suspended  from being associated

with a  broker or dealer  for six  months, and  that pursuant  to

Section  8A of  the Securities  Act he  is  ordered to  cease and

desist from committing or causing violations of Sections 5(a) and

5(c)  of the Securities Act and any future violations of Sections

5(a) and 5(c).

     IT IS FURTHER ORDERED that the allegations against M. Rimson

& Co., Inc., and Moshe Rimson are dismissed.

     This  order shall  become effective  in accordance  with and

subject to the provisions of Rule 17(f) of the Commission's Rules

of Practice.   17 C.F.R.   201.17(f) (1995).   Pursuant to  that

rule, this initial  decision shall become  the final decision  of

the Commission  as to each party who has not filed a petition for

review pursuant to  Rule 17(b) within fifteen  days after service

of the initial decision  upon him or her, unless  the Commission,

pursuant  to Rule  17(c),  determines on  its  own initiative  to

review this  initial decision as to  a party.  If  a party timely

files a petition for review, or the  Commission acts to review as

to  a party, the  initial decision shall  not become final  as to

that party.



                                                                

                              Burton S. Kolko
                              Administrative Law Judge





                   
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August 20, 1996