DATE: January 16, 1998


CONTACT: Matt Neubert (602) 542-0605
Norma Martens (602) 542-7720


In three separate consent orders negotiated by the Securities Division, the Arizona Corporation Commission cited one registered dealer and two securities salesmen for conduct involving the sale of products that were not recorded on the records of the securities dealer with whom the salesmen were registered, a practice called "selling away." Commissioner-Chairman Jim Irvin stated: "We feel this sends a clear message to securities firms and employees that proper registration and training is a requirement to conduct business in Arizona."

In one order, Allmerica Investments, Inc. ("Allmerica"), a Massachusetts corporation and national securities dealer registered in Arizona, agreed to pay a $50,000 penalty and reimburse investor losses resulting from the fraudulent conduct of a former salesperson. The Order provides that Allmerica will reimburse all losses, dollar for dollar, incurred by clients of former salesperson Denise E. Brittain. Many of Brittain's clients were residents of the Navajo Reservation. To date, Allmerica has reimbursed over $458,895 to approximately 27 of Brittain's former clients.

The Order concludes that Allmerica had a duty to reasonably supervise its salesmen to prevent and detect violations of the Securities Act of Arizona. The Order further concludes that Allmerica did not make, maintain and preserve complete books and records relating to securities transactions by Brittain; and that Allmerica was on notice of potential violations by Brittain and failed to act in a timely fashion consistent with the responsibilities it owed to its clients by not discovering Brittain's fraudulent conduct. Allmerica has agreed to implement new procedures that will improve its ability to monitor the compliance of its registered salesmen.

In a prior related matter, on December 18, 1996, the Commission revoked Brittain's registration in Arizona pursuant to a Consent and Order of Revocation and to Cease and Desist, in which Brittain admitted that she failed to disclose her own securities activities under her dba, Brittain Financial Services; that she controlled customer funds through bank accounts established with herself as signatory; and that she commingled customer funds in these accounts.

In unrelated matters, the Commission suspended two Phoenix securities salesmen for effecting unauthorized securities transactions. The salesmen were also ordered to requalify on the series 63 securities licensing exam and pay penalties.

John G. Schaefer, while employed with SunAmerica Securities, and J. Michael Hall, while employed with World Marketing Alliance Securities, sold securities for a company called Federal Funding Foundation Corporation ("FFFC"), without notifying or receiving the approval of their respective firms. Schaefer sold $50,000 worth of FFFC's "High Yield Secured Notes," while Hall sold $30,000 of the same FFFC notes.

"This conduct is commonly referred to as 'selling away' and constitutes a dishonest or unethical practice under Arizona law," stated Michael G. Burton, Sr., Director of the Securities Division. Schaefer was suspended for 90 days and ordered to pay an administrative penalty of $1,600. Hall was suspended for 30 days and ordered to pay a penalty of $1,000. According to Burton, "The Division will continue to investigate the activities of securities salesmen who sell securities without the approval of their supervising dealers and will bring enforcement actions for violative conduct where appropriate."

Burton encourages "anyone who has invested with Brittain or Brittain Financial Services to contact Sherye Gordon of the Securities Division at (602) 542-4242. The Division will continue to bring enforcement actions where appropriate against securities salesmen who sell securities without the approval of their supervising dealers, and to scrutinize dealers in the oversight of their registered salesmen. It is the Division's expectation that all dealers will be vigilant in detecting and suppressing violations by their salesmen."

The Securities Division encourages all persons to fully research any investment opportunity prior to investing. The Division also encourages persons who have questions about the security, the salesman and/or the securities firm, to call the Division at 542-4242 or E-mail at