SECURITIES AND EXCHANGE COMMISSION
                                   Washington, D.C.


          SECURITIES EXCHANGE ACT OF 1934
          Rel. No. 40654 / November 10, 1998

          Admin. Proc. File No. 3-9549
          -----------------------------------------------------------------


                                                             :
                  In the Matter of the Application of        :
                                                             :
                           Robert L. Wallace                 :
                  1819 Imperial Golf Course Boulevard        :
                            Naples, FL 34110                 :
                                                             :
             For Review of Disciplinary Action Taken by the  :
                                                             :
            NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. :
                                                             :


          OPINION OF THE COMMISSION

               REGISTERED SECURITIES ASSOCIATION -- REVIEW OF DISCIPLINARY
               PROCEEDINGS

                    Exaggerated and Misleading Advertisements

               Registered principal and representative of NASD member
               caused the distribution of exaggerated and misleading
               advertisements.  Held, association's findings of violation
               and sanctions it imposed are sustained.


          APPEARANCES:

               Robert L. Wallace, pro se.

               Alden S. Adkins, Norman Sue, Jr., Susan L. Beesley, and
          Shirley H. Weiss, for NASD Regulation, Inc.


          Appeal filed:  March 2, 1998
          Last brief filed:  May 22, 1998
                                         I.

               Robert L. Wallace appeals from disciplinary action taken
          against him by the National Association of Securities Dealers,
          Inc. ("NASD").  The NASD found that Wallace was responsible for
          the publication of an advertisement that was misleading and
          contained exaggerated and unwarranted representations, in
          violation of Conduct Rules 2110 and 2210. [1]  The NASD censured
          Wallace, fined him $5,000, and suspended him for 60 days from
          association with any member of the NASD in all capacities.[2]  We
          base our findings on an independent review of the record.

                                         II.

               Wallace was a registered principal and representative with
          NASD member firm Securities America ("SA").  On Saturday,
          November 4, and Monday, November 6, 1995, the following
          advertisement ("Advertisement") was published in the Naples Daily
          News ("News"):

               Making a "Killing" in the Stock Market needn't mean 
               "having to shoot your broker."  Learn how you can 
               realize up to 42% on your investment with no risk to 
               principal. For information on the investment of the 
               '90's, call: BOB WALLACE 435-9111. Securities offered 
               thru Securities America - member NASD, SIPC.

          The Advertisement did not specifically identify the "investment
          of the '90's" for which it was offering information.  In fact,
          the Advertisement was for financial instruments known as
          "viatical settlements."  A viatical settlement is "an investment
          contract pursuant to which an investor acquires an interest in
          the life insurance policy of a terminally ill person." [3]

               The NASD learned about the Advertisement from NASD member
          firms in competition with SA and began an investigation.  In late
          February 1996 the NASD requested from SA's compliance officer
          information regarding the nature of the product being offered in
          the Advertisement.  Two months later, the compliance officer
          responded in writing that SA had not reviewed the Advertisement,
          that the firm had not approved the product itself, and that
          Wallace, the representative responsible for the publication of
          the Advertisement, had been terminated as a result of the
          unauthorized publication of the Advertisement.  The compliance
          officer attached to his letter to the NASD a statement by Wallace
          asserting that the News had published the Advertisement by
          mistake.  Wallace, however, did not complain to the News or SA
          that the News had published the Advertisement without his
          authorization until after the NASD began its investigation.

               In October 1996, the NASD issued a complaint alleging that
          Wallace violated Conduct Rules 2110 and 2210 by publishing the
          Advertisement.  Subsequently, at the District Business Conduct
          Committee ("District Committee") hearing in this matter, Emilie
          Gehrke, a former advertising account representative for the News
          who handled Wallace's account with the News at the time the
          Advertisement was published, testified that Wallace had
          authorized her to publish the Advertisement.  She testified that
          Wallace sent her a copy of the Advertisement via facsimile on
          November 1, 1995, and that Wallace contacted her by telephone and
          specifically asked that the News run the Advertisement on
          November 4 and 6.  She further stated that Wallace called her in
          early 1996 and told her that "some people in his business" were
          concerned about the text of the Advertisement, and that, although
          they "both knew that this ad was approved to run," he needed her
          to get him "off the hook" by writing a letter stating that she
          had printed the Advertisement without his authorization.  Gehrke
          refused to write any such letter on Wallace's behalf.

               Wallace testified before the District Committee that the
          News ran the Advertisement by mistake.  According to Wallace, the
          Advertisement was one of four form advertisements that he
          received from the insurance company through which he planned to
          offer the viatical settlements.  Wallace testified that he sent
          all four of these forms to Gehrke on November 1, 1995.  Wallace
          asserted that these four advertisements were to be used by the
          News' art department to create "proofs," which he then planned to
          have approved by SA's compliance department before publication.
          Wallace also testified that he was not aware of the
          Advertisement's publication until he was contacted by SA's
          compliance department in early 1996.  Wallace confirmed that he
          called Gehrke in early 1996, that he asked her to write a letter
          stating that she had run the Advertisement without his
          authorization, and that she refused to comply with his request.

               Wallace paid the November 1995 bill that he received from
          the News in early 1996.  While Wallace acknowledges that he had
          paid the November bill, he testified that he typically paid his
          bills from the News without reviewing them carefully, and that
          once he discovered that the Advertisement had been run without
          his authorization, he refused to pay all subsequent bills.

                                         III.

               We find, as did the NASD, that Wallace authorized
          publication of the Advertisement.  We find further that the
          Advertisement was misleading, contained exaggerated and
          unwarranted representations, and failed to disclose the risks
          associated with the product being advertised, in violation of
          Conduct Rules 2110 and 2210.

          Wallace Placed the Advertisement

               Gehrke testified that there was "no question in her mind"
          that Wallace authorized her to run the Advertisement on November
          4 and 6, 1995.  She added that, in a telephone conversation in
          early 1996, Wallace stated that they "both knew that this ad was
          approved to run."

               While Gehrke's testimony contrasts starkly with that of
          Wallace, the District Committee found that Gehrke was an
          "extremely credible" witness and concluded that Wallace had
          authorized publication of the Advertisement.  Because the
          District Committee heard the testimony of both Gehrke and Wallace
          and observed their respective demeanors, its credibility
          determination deserves great weight. [4]  We have no reason to
          question that determination here.

               We do not find persuasive Wallace's attempt, in his brief to
          us, to discredit Gehrke's testimony.  As a part of this attempt,
          Wallace seeks to introduce (1) hearsay evidence that Gehrke has
          run unauthorized advertisements before and (2) evidence of 28
          lawsuits against the parent company of the News, including one
          alleging that the News printed untrue statements.  The
          reliability of this new evidence is questionable.  Moreover,
          Section 452 of our Rules of Practice provides that a proponent
          seeking to adduce new evidence on appeal must show that the
          evidence is material and that reasonable grounds exist for his
          failure to present the evidence previously.  Wallace has not even
          attempted to make such a showing here, and we decline to consider
          his proffered new evidence.
               
               Alternatively, Wallace seeks to exclude Gehrke's testimony
          because her name was not on the witness list sent him by the NASD
          prior to the hearing.  The NASD does not dispute that Gehrke's
          name was not on the witness list that it transmitted to Wallace.
          Wallace claims additionally that the NASD never told him that it
          intended to call Gehrke as a witness at the District Committee
          hearing. [5]  The record does not support his claim.  The NASD
          regional attorney in this matter stated before the District
          Committee that Wallace called him two days prior to the hearing
          and inquired about the witnesses that the NASD intended to call
          and that during this telephone conversation he informed Wallace
          that Gehrke would testify.  The District Committee credited the
          NASD attorney's testimony regarding the conversation over
          Wallace's testimony.  As noted above, we tend to defer to a
          hearing panel's credibility determination and generally do not
          question such a determination without a good reason to do
          so. [6]  We have been given no such reason here.

               In any event, the record reflects that Wallace had ample
          opportunity to examine Gehrke and, in fact, questioned her at
          length.  Wallace has not proffered any testimony that he might
          have elicited from Gehrke had he had more opportunity to prepare
          for the cross-examination, nor has he shown how he was prejudiced
          by the NASD's asserted failure timely to identify Gehrke as a
          witness. [7]

          The Advertisement was Misleading

               Wallace advertised that an investor in the product offered
          could realize gains of up to 42% "with no risk to principal."
          Wallace asserts that this statement is true, because once the
          insured dies, as he or she inevitably will, the insurer is under
          a contractual obligation to pay out benefits to the purchaser of
          the viatical settlement contract.  Although the Advertisement
          claims "no risk to principal," if the insurer is unwilling (e.g.,
          on the basis of alleged fraud) or unable (e.g., because it is
          insolvent) to pay the claim made against the insurance policy
          that is the subject of the viatical settlement contract, the
          investor may lose some or all of his principal.  In addition,
          while the Advertisement trumpets the potential profits to be made
          by buying the product offered, it fails to disclose the
          considerable risks attendant to investing in viatical
          settlements. [8]  For instance, should the insured live longer
          than expected, the net present value of the consideration paid by
          the investor might well exceed the net present value of the
          proceeds paid upon the insured's death.

               By referring to "securities" and the "stock market," the
          Advertisement left the public with the impression that the
          product being sold was a listed security.  In fact, the viatical
          settlements that Wallace offered were not listed on any market or
          exchange, and may not have been securities. [9]  Investors in
          Wallace's viatical settlements thus would not benefit from the
          liquidity that a public listing provides and also might not
          receive the benefit of the protections of the federal securities
          laws and regulations.

               The Advertisement also stated that the product was being
          "offered thru Securities America - member NASD, SIPC," although
          SA had never approved the product or the Advertisement.  Such
          representations falsely assured prospective investors that their
          purchases of the product would be subject to "the oversight and
          supervision by a brokerage firm that [persons investing through
          an NASD member firm] have the right to expect." [10]


          **FOOTNOTES**

          [1]: NASD Conduct Rule 2210(d) provides that no material fact or
               qualification may be omitted from any member communication
               with the public "if the omission, in the light of the
               context of the material presented, would cause the
               advertising or sales literature to be misleading," and
               prohibits "exaggerated, unwarranted, or misleading
               statements or claims" in all public communications.  NASD
               Conduct Rule 2110 provides that members shall "observe high
               standards of commercial honor and just and equitable
               principles of trade."

               [2]:The NASD also assessed costs.

               [3]:SEC v. Life Partners, Inc., 87 F.3d 536, 537; reh'g
               denied, 102 F.3d 587 (D.C. Cir. 1996).

               [4]:See, e.g., Charles E. French, Exchange Act Release No.
               37409 (July 8, 1996), 62 SEC Docket 828, 833-34 and n.16;
               Gary Roth, Exchange Act Release No. 37221 (May 16, 1996), 61
               SEC Docket 2781, 2785 and n.6.

               [5]:The NASD "shall upon request make available to
               respondents
               . . . the names of any witnesses the staff intends to
               present at the hearing no later than five (5) business days
               before the hearing."  NASD Procedural Rule 9224(a).
               Although Wallace did not request the list, the NASD took it
               upon itself to provide him with one.  That any list provided
               should be accurate is axiomatic; our disposition of
               Wallace's claim here should not be read to suggest
               otherwise.

               [6]:See supra n.4 and accompanying text.

               [7]:See Kim G. Girdner, 50 S.E.C. 221, 227 (1990) (NASD's
               failure to identify two witnesses not prejudicial where the
               respondent "vigorously cross-examined" the witnesses and did
               not identify "any testimony he might have elicited from
               [the] witnesses if he had had more of an opportunity to
               prepare for their cross-examination").

               [8]:See Jay Michael Fertman, 51 S.E.C. 943, 950 (1994)
               (sales literature must "disclose in a balanced way the risks
               and rewards of the touted investments").

               [9]:After publication of the Advertisement, the Court of
               Appeals for the District of Columbia Circuit held that
               certain viatical settlement contracts before it were not
               securities under the federal securities laws. See SEC v.
               Life Partners, Inc., 87 F.3d 536, reh'g denied, 102 F.3d 587
               (D.C. Cir. 1996).

               [10]:Cf. Darrell Jay Williams, 50 S.E.C. 1070, 1073 (1992)
               (concerning a registered representative of an NASD member
               firm who engaged in a private securities transaction without
               notifying his employer).
                                         IV.

               Wallace asserts that viatical settlements are "an insurance
          product," not securities, and that "the NASD has no business
          trying to regulate an insurance product."  He bases this argument
          on SEC v. Life Partners, Inc., [11] which concluded that certain
          viatical settlement contracts are not securities under the
          federal securities laws.  Here, the particular characteristics of
          the viatical settlements being offered by Wallace are not evident
          from the record, and thus we cannot reach a conclusion about
          their status under the federal securities laws.

               In reviewing this disciplinary proceeding, we need not
          determine whether the viatical settlements Wallace offered were
          securities.  The NASD is not seeking here to regulate the
          particular product being offered by Wallace, but to regulate
          Wallace's dealings with the investing public.  By registering as
          a representative and a principal of an NASD member firm, Wallace
          agreed to abide by the NASD's rules.  The rules under which
          Wallace has been charged are not limited to advertisements for
          securities, but provide standards applicable to all NASD member
          communications with the public. [12]  Registered representatives
          and principals must comply with these standards when they offer
          financial advice and sell financial instruments to the public
          through newspaper advertisements.

               Based on the foregoing analysis, we sustain the NASD's
          findings of violation.

                                          V.

               Wallace asserts that the sanctions imposed by the NASD are
          "extremely harsh and do not fit the nature of this situation."
          We may cancel, reduce or require remission of a sanction imposed
          by the NASD where we find, having due regard for the public
          interest and the protection of investors, that the NASD's
          sanction is excessive or oppressive or imposes an unnecessary or
          inappropriate burden on competition.[13]  Here, we make no such
          finding.
              
               Wallace claims that the sanctions are excessive given that
          his publication of the Advertisement did not cause harm to any
          member of the public.  The District Committee, however, already
          considered this argument in determining its sanction of Wallace,
          explicitly recognizing as a mitigating circumstance the fact that
          Wallace's wrongdoing resulted in "no demonstrable harm to any
          customers." [14]

               Wallace also argues that the fine imposed is too severe
          because he already has suffered financial loss as a result of the
          publication of the Advertisement.  Securities America terminated
          Wallace as a principal because of his unauthorized publication of
          the Advertisement, and Wallace states that he has been unable to
          find satisfactory employment.  Financial loss to a wrongdoer as a
          result of his wrongdoing does not, however, serve to mitigate the
          gravity of his conduct. [15]  That Wallace's employer responded
          to his misconduct, independent of this NASD proceeding, is not
          relevant to our review of the NASD's sanctions here.

               Moreover, Wallace has a history of prior similar misconduct.
          In 1994 the NASD found that he had disseminated misleading sales
          literature, thereby violating Article III, Sections 1 and 35 of
          the NASD's Rules of Fair Practice, the predecessor rules to
          Conduct Rules 2110 and 2210.  For that misconduct the NASD fined
          Wallace $3,000 and ordered that he disgorge $423 in commissions.

               The rules that Wallace violated provide important safeguards
          for the protection of public investors.  The sanctions imposed by
          the NASD are well within the range recommended in the applicable

          **FOOTNOTES**

          [11]:See supra nn.3 and 9 and accompanying text.

               [12]:NASD Conduct Rule 2210(d) provides that "all member
               communications with the public shall be based on principles
               of fair dealing and good faith," and that "exaggerated,
               unwarranted or misleading statements or claims are
               prohibited in all public communications of members"
               (emphasis added).

               [13]:Exchange Act 19(e)(2), 15 U.S.C. 78s(e)(2) (1997).

               [14]:The National Business Conduct Committee subsequently
               reduced the sanctions imposed by the District Committee by
               eliminating the five-year bar as a securities principal the
               District Committee also had imposed.

               [15]:Indeed, the NASD's Sanction Guidelines do not list
               financial loss to the wrongdoer as one of the "principal
               considerations in determining sanctions."  See NASD Sanction
               Guidelines (1996 ed.) at 5.
         
          guidelines for the publication of misleading advertisements. [16]
          We do not find that these sanctions are excessive, oppressive, or
          unduly burdensome.  We accordingly sustain them.

               An appropriate order will issue. [17]

               By the Commission (Chairman LEVITT and Commissioners HUNT
          and CAREY); Commissioners JOHNSON and UNGER not participating.




          Jonathan G. Katz
          Secretary

          **FOOTNOTES**

               [16]:See id.

               [17]:We have considered all of the arguments advanced by the
               parties.  They are rejected or sustained to the extent that
               they are inconsistent or in accord with the views expressed
               herein.
                         
                          SECURITIES AND EXCHANGE COMMISSION
                                   Washington, D.C.

          SECURITIES EXCHANGE ACT OF 1934
          Rel. No. 40654 / November 10, 1998

          Admin. Proc. File No. 3-9549
          -----------------------------------------------------------------



                                                             :
                  In the Matter of the Application of        :
                                                             :
                           Robert L. Wallace                 :
                  1819 Imperial Golf Course Boulevard        :
                            Naples, FL 34110                 :
                                                             :
             For Review of Disciplinary Action Taken by the  :
                                                             :
            NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. :
                                                             :


          ORDER SUSTAINING DISCIPLINARY ACTION TAKEN BY REGISTERED
          SECURITIES ASSOCIATION


               On the basis of the Commission's opinion issued this day, it
          is

               ORDERED that the disciplinary action taken by the National
          Association of Securities Dealers, Inc. against Robert L. Wallace
          be, and it hereby is, sustained.

               By the Commission.





               Jonathan G. Katz
               Secretary