UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934

Release No. 71565 / February 18, 2014

ADMINISTRATIVE PROCEEDING

File No. 3-15755

In the Matter of

MARK FEATHERS, 

Respondent.

ORDER INSTITUTING ADMINISTRATIVE 

PROCEEDINGS PURSUANT TO SECTION 

15(b) OF THE SECURITIES EXCHANGE 

ACT OF 1934 AND NOTICE OF HEARING 

I.

The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 

public interest that public administrative proceedings be, and hereby are, instituted pursuant to 

Section 15(b) of the Securities Exchange Act of 1934 (“Exchange Act”) against Mark Feathers

(“Respondent” or “Feathers”).

II.

After an investigation, the Division of Enforcement alleges that:

A. RESPONDENT

1. Feathers, age 50, resides in Los Altos, California. From at least 2009

through June 26, 2012, Feathers was the chief executive officer (CEO) and a director of Small 

Business Capital Corp. (“SBCC”), a privately-held California corporation. Through SBCC, 

Feathers offered and sold securities in two mortgage investment funds, Investors Prime Fund, LLC 

(“IPF”) and SBC Portfolio Fund, LLC (“SPF”) (collectively, IPF and SPF are referred to herein as 

the “Funds”). Feathers controlled the Funds through SBCC. SBCC acted as a broker at the 

relevant time, but has never been registered with the Commission in any capacity. Feathers was 

associated with SBCC, but Feathers has never been registered with the Commission in any 

capacity and has never had a securities license. The Funds have never been registered with the 

Commission.
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B. ENTRY OF THE INJUNCTION

2. On November 6, 2013, an order and final judgment was entered against 

Feathers, permanently enjoining him from future violations of Section 10(b) and Rule 10b-5 

thereunder of the Exchange Act, Section 15(a) of the Exchange Act, and Section 17(a) of the 

Securities Act, in the civil action entitled Securities and Exchange Commission v. Small Business 

Capital Corp., et al., Civil Action Number 5:12 CV 03237-EJD, in the United States District Court 

for the Northern District of California, San Jose Division.

3. In an order entered August 16, 2013 in the civil enforcement action, the 

Court granted the Commission’s motion for summary judgment. The Court found that in the offer 

and sale of securities of the Funds, Feathers and SBCC made material misrepresentations with a 

high level of scienter. First, Feathers caused the Funds to represent to investors that there would be 

no loans from the Funds to the manager, but contrary to that representation, Feathers caused the 

Funds to transfer over $7 million in cash to SBCC. Second, Feathers caused the Funds to represent 

that they adhered to conservative lending standards by only making secured loans, but contrary to 

that representation Feathers caused the Funds to make unsecured loans to SBCC, which had no 

ability to repay the loans. Third, Feathers caused the Funds to represent that member returns 

would be paid from profits generated by the Funds’ investments, but in fact the Funds were not 

profitable and Feathers used investors’ money to make “Ponzi-like payments” of returns to 

investors. The Court found that this conduct violated Section 10(b) of the Exchange Act and Rule 

10b-5, and Section 17(a) of the Securities Act. In addition, the Court found that Feathers and 

SBCC were unregistered brokers in violation of Section 15(a) of the Exchange Act. 

4. In the order entered August 16, 2013, the Court also found that Feathers and 

SBCC employed investor representatives who were paid a salary and commission for sales of 

securities of the Funds, and actively solicited new investments. Feathers and SBCC were in the 

business of selling securities for years, with sales of at least $46 million of securities. The Court 

found that Feathers and SBCC fell under the definition of “broker” under Section 15(a) of the 

Exchange Act, and held that Feathers and SBCC were unregistered brokers in violation of Section 

15(a) of the Exchange Act. Finally, the Court found that Feathers was also liable as a control 

person under Section 20(a) of the Exchange Act because he controlled SBCC and the Funds. 

III.

In view of the allegations made by the Division of Enforcement, the Commission deems it 

necessary and appropriate in the public interest that public administrative proceedings be instituted 

to determine:

A. Whether the allegations set forth in Section II hereof are true and, in connection 

therewith, to afford Respondent an opportunity to establish any defenses to such allegations; 

B. What, if any, remedial action is appropriate in the public interest against Respondent 

pursuant to Section 15(b) of the Exchange Act; 
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IV.

IT IS ORDERED that a public hearing for the purpose of taking evidence on the questions 

set forth in Section III hereof shall be convened at a time and place to be fixed, and before an 

Administrative Law Judge to be designated by further order as provided by Rule 110 of the 

Commission’s Rules of Practice, 17 C.F.R. § 201.110.

IT IS FURTHER ORDERED that Respondent shall file an Answer to the allegations 

contained in this Order within twenty (20) days after service of this Order, as provided by Rule 220 

of the Commission’s Rules of Practice, 17 C.F.R. § 201.220. 

If Respondent fails to file the directed answer, or fails to appear at a hearing after being 

duly notified, the Respondent may be deemed in default and the proceedings may be determined 

against him upon consideration of this Order, the allegations of which may be deemed to be true as 

provided by Rules 155(a), 220(f), 221(f) and 310 of the Commission’s Rules of Practice, 17 C.F.R. 

§§ 201.155(a), 201.220(f), 201.221(f) and 201.310.

This Order shall be served forthwith upon Respondent personally or by certified mail.

IT IS FURTHER ORDERED that the Administrative Law Judge shall issue an initial 

decision no later than 210 days from the date of service of this Order, pursuant to Rule 360(a)(2) 

of the Commission’s Rules of Practice.

In the absence of an appropriate waiver, no officer or employee of the Commission 

engaged in the performance of investigative or prosecuting functions in this or any factually related 

proceeding will be permitted to participate or advise in the decision of this matter, except as 

witness or counsel in proceedings held pursuant to notice. Since this proceeding is not “rule 

making” within the meaning of Section 551 of the Administrative Procedure Act, it is not deemed 

subject to the provisions of Section 553 delaying the effective date of any final Commission action.

For the Commission, by its Secretary, pursuant to delegated authority.

Elizabeth M. Murphy

Secretary