UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

ADMINISTRATIVE PROCEEDING

File No. 3-15014

In the Matter of

JP TURNER & COMPANY,

LLC, and WILLIAM L. MELLO

Respondents.

PROPOSED PLAN OF DISTRIBUTION

1. Purpose and Background. The Division of Enforcement submits this

Proposed Plan of Distribution (“Plan”) to the United States Securities and Exchange 

Commission (“Commission”) pursuant to Rule 1101 of the Commission’s Rules on Fair 

Fund and Disgorgement Plans (“Rules”).

1

 This Plan proposes a distribution of certain 

funds collected by the Commission in this proceeding for the benefit of affected 

customers that were harmed when their accounts were churned by three registered 

representatives employed by JP Turner & Company, LLC (“JP Turner”) from January 1, 

2008, through December 31, 2009.

On September 10, 2012, the Commission entered an Order Instituting 

Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 

1934 and Section 203(f) of the Investment Advisers Act of 1940, Making Findings, and 

Imposing Remedial Sanctions (“Order”) against JP Turner and its former president,

William L. Mello (collectively, “Respondents”).

2

 

The Order stated that Respondents failed reasonably to supervise three registered 

representatives who churned affected customers’ accounts for the purpose of generating 

commission business by engaging in excessive trading in disregard of the affected 

customers’ investment objectives and financial needs. According to the Order, JP Turner 

reaped approximately $845,000 in commissions, fees, and margin interest as a result of 

the registered representatives’ churning.

 

1

17 C.F.R. § 201.1101.

2 Exchange Act Rel. No. 67808 (Sept. 10, 2012). 
2

In anticipation of the institution of the proceedings, Respondents submitted Offers 

of Settlement, which the Commission accepted. Pursuant to the Order, JP Turner paid 

disgorgement of $200,000, prejudgment interest of $16,051, and a civil money penalty in 

the amount of $200,000, and William L. Mello paid a civil money penalty in the amount 

of $45,000 for a combined payment of $461,051. The penalties paid are to be transferred 

to the United States Treasury. The remaining amount, $216,051, constitutes the fund 

available for distribution (the “Distribution Fund”). The Distribution Fund is subject to 

the continuing jurisdiction and control of the Commission and the Distribution Fund is 

currently on deposit in a Commission designated non-interest bearing account at the 

United States Department of Treasury (“U.S. Treasury”). This Plan is subject to approval 

by the Commission, and the Commission retains jurisdiction over the implementation of 

this Plan. 

Under this Plan, the Distribution Fund, less any reserve for taxes, fees or other 

expenses of administering this Plan (the “Net Distribution Fund”), will be available for 

distribution to Eligible Customers as defined in paragraph 4 of this Plan.

2. Fund Administrator. Nichola L. Timmons, Assistant Director of

Distributions, Logistics and Services in the Commission’s Division of Enforcement, is 

proposed to act as the administrator of the Distribution Fund (“Fund Administrator”). As 

a Commission employee, the Fund Administrator will receive no compensation from the 

Distribution Fund for her services in administering the Distribution Fund. In accordance 

with Rule 1105(c) of the Commission’s Rules, 17 C.F.R. § 201.1105(c), no bond is 

required since the Fund Administrator is a Commission employee. In carrying out her 

duties, the Fund Administrator may be assisted by other Commission staff acting under 

her supervision. 

The Fund Administrator will, among other things: oversee the administration of 

the Distribution Fund; obtain mailing information for Eligible Customers, distribute 

money from the assets of the Distribution Fund in accordance with this Plan, resolve 

disputes, distribute the Distribution Fund to Eligible Customers, prepare a final 

accounting with assistance from the Tax Administrator as defined in paragraph 3 of this 

Plan, and provide the Tax Administrator with funds to pay tax liabilities and tax 

compliance fees and costs, pursuant to the Omnibus Order Directing the Appointment of 

Tax Administrator in Administrative Proceedings that Establish Distribution Funds 

(Exchange Act Rel. No. 68683 (Jan. 17, 2013)).

3. Tax Administrator. The Commission has appointed Damasco and 

Associates, LLP as the Tax Administrator (“Tax Administrator”) of the Distribution Fund 

(Exchange Act Rel. No. 67958 (Oct. 2, 2012)). The Fund Administrator will cooperate 

with the Tax Administrator in providing information necessary to accomplish the income 

tax compliance and any other work ordered to the Tax Administrator by the Commission. 

The Tax Administrator will be compensated for reasonable costs and expenses from the 

Distribution Fund in accordance with its 2011-2012 Engagement Letter Agreement with 

the Commission, and tax obligations will be paid out of the Distribution Fund.
3

4. Specification of Eligible Distribution Fund Recipients. The Fund 

Administrator will make distributions from the Net Distribution Fund to those JP Turner 

customers that have been harmed by the conduct described in the Order (individually, 

each an “Eligible Customer” and collectively, the “Eligible Customers”). A customer

will be deemed harmed only if that customer suffered a net harm by virtue of the conduct 

described in the Order and as calculated pursuant to paragraph 7 of this Plan.3

5. No claims-made process. The Distribution Fund is not being distributed 

according to a claims-made process, so the procedures for providing notice and for 

making and approving claims are not applicable.

6. Qualified Settlement Fund. The Distribution Fund constitutes a Qualified 

Settlement Fund (“QSF”) under Section 468B(g) of the Internal Revenue Code, 26 

U.S.C. § 468B(g), and related regulations, 26 C.F.R. §§ 1.468B-1 through 1.468B-5.

7. Methodology for Determining Distribution Amounts. The Fund 

Administrator will determine the amount to be distributed to each Eligible Customer in 

the following manner. First, the Fund Administrator will determine, for each affected 

customer, using brokerage statements and other information collected by the Commission 

staff, the total amount of commissions, fees, and margin interest that each affected 

customer was charged as a result of the churning described in the Order (“Gross Harm

Amount”). 

Second, for each affected customer, the Fund Administrator will determine a net 

harm amount suffered by virtue of the conduct described in the Order (“Net Harm

Amount”). The Net Harm Amount is defined as the affected customer’s Gross Harm 

Amount, less any monies the affected customer received as settlements, insurance, or 

other payments in connection with the conduct at issue in this matter from Respondents, 

or any other third party. 

Because the total of all Eligible Customers’ Net Harm Amounts is less than the 

approximate amount of the Net Distribution Fund, the Fund Administrator anticipates the 

Distribution Fund will be able to pay each Eligible Customer the Net Harm Amount, plus 

the time value of money. The Fund Administrator will then calculate the present value of 

each affected customer’s Net Harm Amount by adjusting the customer’s harm amounts 

for the time value of money.4Each affected customer with a Present Value of Net Harm

Amount that is greater than $100 is an Eligible Customer for purposes of receiving a 

 

3 The Commission staff is aware of approximately seven (7) JP Turner customers who were harmed by the 

conduct described in the Order. However, since some of these customers have already been fully 

reimbursed for their harm, they do not meet the definition of an Eligible Customer for purposes of this 

Plan. As a result of the smaller pool of Eligible Customers, it is anticipated that all Eligible Customers will 

be fully reimbursed for their harm (the commissions, fees, and margin interest that each affected customer 

was charged as a result of the churning).

4 The present value calculation applies interest to the harm amount and compounds quarterly from the date

of the harm through December 31, 2014 using the Federal quarterly short-term interest rate, as determined 

by the Internal Revenue Service for each calendar quarter. 
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distribution pursuant to this Plan. An Eligible Customer’s payment from the Distribution 

Fund will not exceed his or her Present Value Net Harm Amount.

In the view of the Fund Administrator, this methodology constitutes a fair and 

reasonable allocation of the Distribution Fund. Based on this methodology, it is 

anticipated that there will be one distribution to the Eligible Customers, which will take 

place as outlined in paragraph 9 of this Plan, with each Eligible Customer’s Distribution 

Amount equal to his or her Present Value of Net Harm Amount. Based on this 

methodology, the individual Net Harm Amounts and Distribution Amounts for Eligible 

Customers are as follows:

8. Procedures for Locating and Notifying Eligible Customers. On the basis 

of information obtained by the Commission staff based on review and analysis of 

applicable records, the Fund Administrator will identify the Eligible Customers. Within 

sixty (60) days of the Commission’s approval of this Plan, the Fund Administrator will 

send each Eligible Customer a notice by United States Postal Service regarding the 

Commission’s approval of this Plan, and a check for each customer’s Distribution Fund 

payment, and, including as appropriate, a statement characterizing the distribution, a link 

to this Plan on the Commission’s website and instructions for requesting a copy of this 

Plan, a Net Harm Amount calculation and a preliminary Gross Distribution Amount, a 

description of the tax information reporting and other related tax matters, the procedure 

for the distribution as set forth in this Plan, and the name of the Fund Administrator to 

contact with questions regarding the distribution (“Plan Notice”).5 The Fund 

Administrator will coordinate with the Tax Administrator to request information from 

each Eligible Customer that is needed to accomplish the distribution in accordance with 

applicable tax requirements relating to the Distribution Fund.

 

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Information obtained from JP Turner may be provided to the Fund Administrator for purposes of 

contacting investors.

Eligible 

Customer

Gross 

Harm 

Amount

Third 

Party

Payment

Received

Net Harm 

Amount

Time 

Value of 

Money on 

Net Harm 

Amount

Distribution 

Amount

Eligible 

Customer #1 $90,684 None $90,684 $1,903 $92,587

Eligible 

Customer #2 $35,706 None $35,706 $715 $36,421

Eligible 

Customer #3 $53,080 None $53,080 $2,464 $55,544

Total $179,470 $0 $179,470 $5,082 $184,552
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If a Plan Notice and Distribution Fund payment are returned as undeliverable, the 

Fund Administrator will make all reasonable efforts to ascertain an Eligible Customer’s 

correct address. The Fund Administrator will then resend the Plan Notice and 

Distribution Fund payment to the Eligible Customer’s new address within thirty (30) days 

of receipt of the returned Plan Notice and distribution check. If the Plan Notice and 

Distribution Fund payment are returned again, and the Fund Administrator, despite all 

reasonable efforts, is unable to find an Eligible Customer’s correct address, the Eligible 

Customer’s payment will be deemed undistributed funds to be handled as described in 

paragraph 16.

9. Distribution Timing. The Fund Administrator will use her best efforts to

start the distribution within sixty (60) days of this Plan’s approval. 

10. Bureau of the Fiscal Service; Validation and Approval of Disbursement of 

the Distribution Fund. The Distribution Fund disbursement to Eligible Customers will be 

implemented by the Commission and disbursed through the U.S. Treasury’s Bureau of 

the Fiscal Service (“BFS”), which will mail checks or electronically transfer funds to 

each payee as instructed by the Fund Administrator. The Fund Administrator will 

compile the payee information and prepare a payment file in a Commission-approved 

format for submission to the Commission to make the disbursements through BFS. 

Pursuant to Rule 1101(b)(6), the Fund Administrator will obtain an order from the 

Commission to disburse the Distribution Fund. 

The Fund Administrator will work with BFS to obtain information about 

uncashed checks, any returned items due to non-delivery, insufficient addresses, and/or 

other deficiencies. The Fund Administrator is responsible for researching and reconciling 

errors and reissuing payments when possible. The Fund Administrator also is responsible 

for accounting for all payments. Checks issued by BFS will state on their face that they 

are valid for one year. If any checks issued are not cashed within the one year time 

period, the Fund Administrator will work with BFS to identify all uncashed checks. 

In the event that there are uncashed checks, the Fund Administrator will determine the 

extent to which under the circumstances in this distribution it would be appropriate and 

feasible to make additional efforts to contact investors holding such checks. Following 

the conclusion of any efforts by the Fund Administrator to locate any such investors, 

remaining uncashed checks will be deemed undistributed funds to be handled as 

described in paragraph 16 of this Plan.

11. Accountings. When all funds have been disbursed except for the residual 

described in paragraph 16 of this Plan, the Fund Administrator will submit a final 

accounting pursuant to Rule 1105(f) for the approval of the Commission prior to the 

discharge of the Fund Administrator. Since the funds are being held in a Commission 

designated account at the U.S. Treasury, and Commission staff is proposed as the Fund 

Administrator, no interim accountings will be made.

12. Expenses of Administration. Fees and other expenses of administering this 

Plan will be paid from the Distribution Fund. 
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13. Amendments and Procedural Deadline Extensions. The Fund 

Administrator will take reasonable and appropriate steps to distribute the Distribution 

Fund according to this Plan. If there are any changes to the Plan that are determined to 

be material, Commission approval is required prior to implementation by amending this 

Plan, which may be done upon the motion of any party, the Fund Administrator, or upon 

the Commission’s own motion. Immaterial changes may be made by the Fund 

Administrator. For good cause shown, the Fund Administrator may extend any of the 

procedural dates set forth in this Plan.

14. Procedure for the Receipt of Additional Funds. No additional funds are 

expected to be received for this matter so this Plan does not provide for a procedure for 

such funds.

15. Procedures for Disputing Amounts Received. Disputes will be limited to 

calculations of disbursement amounts to Eligible Customers. Within thirty (30) days of 

the date that an Eligible Customer’s disbursement is made, the Fund Administrator must 

receive a written communication detailing the dispute along with any supporting 

documentation. The Fund Administrator will investigate the dispute, and such 

investigation will include a review of the written dispute as well as any supporting 

documentation. Within thirty (30) days of receipt of the written dispute, the Fund 

Administrator will notify the Eligible Customer of her resolution of the dispute, which 

will be final. This procedure will be set forth in the Plan Notice.

16. Disposition of Undistributed Funds. A residual account within the 

Distribution Fund will be established for any amounts remaining after the final 

disbursement to Eligible Customers from the Distribution Fund. The residual account 

may include funds reserved for future taxes and related expenses, distributions from 

checks that have not been cashed, from checks that were not delivered or from funds 

returned to the Commission, tax refunds for overpayment or for waiver of IRS penalties. 

All funds remaining in the residual account will be transferred to the U.S. Treasury after 

the final accounting is approved by the Commission.

17. Final Accounting and Discharge of the Fund Administrator. Following the 

final disbursement from the Distribution Fund to Eligible Customers, the Fund 

Administrator will make arrangements for the final payment of taxes and Tax 

Administrator fees and will submit a final accounting to the Commission. When the 

Commission has approved the final accounting, staff will seek an order from the 

Commission: (1) to transfer the remaining residual amounts to the U.S. Treasury; and (2) 

to discharge the Fund Administrator.

18. Notice of Proposed Plan and Opportunity for Comment. The Notice of 

the Proposed Plan of Distribution and Opportunity for Comment (“Notice”) will be 

published in the SEC Docket and on the Commission’s website at http://www.sec.gov. 

Any person or entity wishing to comment on this Plan must do so in writing by 

submitting their comments within thirty (30) days of publication of the Notice (i) to the 
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Office of the Secretary, United States Securities and Exchange Commission, 100 F 

Street, NE, Washington, DC 20549-1090; (ii) by using the Commission’s Internet 

comment form (www.sec.gov/litigation/admin.shtml); or (iii) by sending an email to rulecomments@sec.gov. Comments submitted by email or via the Commission’s website 

should include “Administrative Proceeding File Number 3-15014” in the subject line. 

Comments received will be available to the public. Thus, persons should only submit 

information that they wish to make publicly available.