NEW JERSEY BUREAU OF SECURITIES

HOWARD G. JAHRE IS THE SUBJECT OF A DECISION BY THE FINANCIAL INDUSTRY REGULATORY AUTHORITY EXPELLING HIM FROM A NATIONAL SECURITIES ASSOCIATION. BASED UPON THE FOREGOING, THE REVOCATION OF THE AGENT REGISTRATION OF HOWARD G. JAHRE IS IN THE PUBLIC INTEREST AND NECESSARY FOR THE PROTECTION OF INVESTORS.

Order

Revocation

HOWARD G. JAHRE ARE DENIED ALL EXEMPTIONS CONTAINED IN N.J.S.A. 49:3-50 SUBSECTION (A) PARAGRAPHS 9, 10, AND 11 AND SUBSECTION (B); AND FURTHER, THE EXEMPTIONS TO THE REGISTRATION REQUIREMENTS PROVIDED BY N.J.S.A. 49:3-56(B), N.J.S.A. 49:3-56(C), AND N.J.S.A. 49:3-56(G) ARE HEREBY REVOKED AS TO HOWARD G. JAHRE.

FINRA

ARTICLES III, SECTION 3(B), V, SECTION 2 OF THE FINRA BY-LAWS, NASD RULES 1031, 2110, 2211, 3010(A), 3010(B), 8210, INTERPRETATIVE MATERIAL-1000-1 - HOWARD JAHRE'S MEMBER FIRM RENTED OFFICE SPACE TO HEDGE FUND CLIENTS AND ALLOWED ONE HEDGE FUND ADVISOR TO PAY RENT WITH TRADING COMMISSIONS (SOFT DOLLARS) RATHER THAN CASH (HARD DOLLARS)CONTRARY TO THE SAFE HARBOR PROVISIONS OF SECTION 28(E) OF THE SECURITIES EXCHANGE ACT OF 1934. JAHRE KNEW, OR SHOULD HAVE KNOWN, IT WAS IMPROPER FOR THE ADVISOR TO USE SOFT DOLLARS FOR RENT AND KNEW, OR SHOULD HAVE KNOWN, THAT THE FUND'S PRIVATE PLACEMENT MEMORANDUM (PPM) DID NOT DISCLOSE THE SOFT DOLLAR RENT PAYMENTS IN THE OFFERING MATERIALS BUT EXPLICITLY STATED THAT THE ADVISOR WOULD PAY FOR OFFICE SPACE. JAHRE DISTRIBUTED INSTITUTIONAL SALES MATERIALS THAT PROJECTED PERFORMANCE; WERE EXAGGERATED, UNWARRANTED AND/OR MISLEADING; WERE NOT FAIR AND BALANCED; AND DID NOT PROVIDE A SOUND BASIS FOR EVALUATING THE FACTS REGARDING THE INVESTMENT. A MEMBER FIRM, THROUGH JAHRE, HIRED AN INDIVIDUAL WHO ENGAGED IN ACTIVITIES ON THE FIRM'S BEHALF WHEN HE WAS NOT PROPERLY REGISTERED AND ALLOWED HIM TO WORK FOR THE FIRM AFTER JAHRE BECAME AWARE THE INDIVIDUAL WAS STATUTORILY DISQUALIFIED. JAHRE WILLFULLY FILED MISLEADING FORMS U4 FOR THE STATUTORILY DISQUALIFIED INDIVIDUAL; ALLOWED ANOTHER INDIVIDUAL TO MAINTAIN HER LICENSE AT THE FIRM ALTHOUGH IT DID NOT EXPECT HER TO PERFORM ANY SERVICES THAT REQUIRED REGISTRATION. JAHRE FAILED TO ESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM TO PRESERVE THE FIRM'S ELECTRONIC COMMUNICATIONS AND MONITOR ACTIVITIES OF ITS REPRESENTATIVES AND FAILED TO ENFORCE THE FIRM'S OWN WRITTEN PROCEDURES GOVERNING E-MAIL AND IM RETENTION; AND FAILED TO ENSURE THAT ALL ASSOCIATED PERSONS WERE PROPERLY REGISTERED BEFORE ENGAGING IN ACTIVITIES REQUIRING REGISTRATION. JAHRE PROVIDED FALSE INFORMATION REGARDING E-MAIL RETENTION, SOFT DOLLARS FOR RENT, HEDGE FUND SALES MATERIALS, HEDGE FUND MARKETING AND PERFORMING CAPITAL INTRODUCTION SERVICES ON THE BEHALF OF HEDGE FUNDS IN RESPONSE TO FINRA REQUESTS FOR INFORMATION. JAHRE ALSO PROVIDED FALSE, SWORN TESTIMONY IN RESPONSE TO FINRA REQUESTS FOR INFORMATION.

Decision

Bar (Permanent)

All Capacities

Indefinite

5/1/2012

EXTENDED HEARING PANEL DECISION RENDERED JANUARY 26, 2011, WHEREIN JAHRE AND HIS MEMBER FIRM WERE ORDERED TO PAY COSTS IN THE AMOUNT OF $15,119.90 AND JAHRE WAS BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY. EXTENDED HEARING PANEL DECISION STATED THAT JAHRE ALSO VIOLATED NASD RULE 2211(D)(1) AND 2110 BY DISTRIBUTING MISLEADING AND EXAGGERATED SALES MATERIALS. JAHRE AND HIS MEMBER FIRM WILLFULLY FILED FALSE AND MISLEADING FORMS U4 FOR STATUTORILY DISQUALIFIED INDIVIDUAL. FEBRUARY 7, 2011: HOWARD GORDON JAHRE HAS APPEALED THE EXTENDED HEARING DECISIONS TO THE NAC. NAC DECISION RENDERED MAY 1, 2012, WHEREIN THE FINDINGS MADE ARE AFFIRMED AND THE SANCTIONS IMPOSED BY THE HEARING PANEL ARE HELD THEREFORE, JAHRE VIOLATED NASD RULES 2211(D)(1) AND 2110 BY DISTRIBUTING EXAGGERATED, MISLEADING AND UNBALANCED INSTITUTIONAL SALES MATERIALS; VIOLATED NASD RULES 1031 AND 2110 BY ALLOWING UNREGISTERED PERSONS TO ACT IN REGISTERED CAPACITIES; VIOLATED ARTICLE III, SECTION 3(B) OF NASD'S BY-LAWS AND NASD RULE 2110 BY EMPLOYING A STATUTORILY DISQUALIFIED INDIVIDUAL; VIOLATED ARTICLE V, SECTION 2 OF NASD'S BY-LAWS, NASD RULE 2110, AND IM-1000-1 BY WILLFULLY FILING MISLEADING FORMS U4; VIOLATED NASD RULES 1031 AND 2110 BY ALLOWING A REGISTERED REPRESENTATIVE TO PARK HER LICENSE AT HIS MEMBER FIRM; VIOLATED NASD RULES 3010 AND 2110 BY FAILING TO ESTABLISH AND MAINTAIN AN ADEQUATE SUPERVISORY SYSTEM, FAILING TO ESTABLISH, MAINTAIN, AND ENFORCE WRITTEN SUPERVISORY PROCEDURES, AND FAILING TO HOLD AN ANNUAL COMPLIANCE MEETING; VIOLATED NASD RULES 8210 AND 2110 BY PROVIDING FALSE RESPONSES TO FINRA REQUESTS FOR INFORMATION AND PROVIDING FALSE TESTIMONY; AND VIOLATED NASD RULE 2110 BY IMPROPERLY ALLOWING A HEDGE FUND TENANT TO PAY ITS RENT TO HIS FIRM WITH SOFT DOLLARS. ACCORDINGLY, JAHRE IS BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ALL CAPACITIES, ORDERED TO PAY, JOINTLY AND SEVERALLY, $15,119.90 IN COSTS, AND TO PAY AN IMPOSED APPEAL COSTS OF $1,705.90. THE BAR IS EFFECTIVE AS OF THE DATE OF THIS DECISION. AS A RESULT OF THE FINDINGS THAT JAHRE ACTED WILLFULLY, HE IS SUBJECT TO STATUTORY DISQUALIFICATION UNDER ARTICLE III, SECTION 4 OF FINRA'S BY-LAWS AND EXCHANGE ACT SECTION 3(A)(39)(F). ON MAY 25, 2012, JAHRE APPEALED THIS DECISION TO THE SECURITIES AND EXCHANGE COMMISSION AND THE SANCTION IS IN EFFECT PENDING REVIEW. ON OCTOBER 12, 2012, THE SEC ISSUED AN ORDER GRANTING THE REQUEST TO WITHDRAW THE APPLICATION FOR REVIEW AND DISMISSED THE REVIEW PROCEEDING. THE NAC DECISION IS FINAL OCTOBER 12, 2012.

MR. JAHRE AND HEDGE FUND CAPITAL PARTNERS DISPUTE ALL OF THE ALLEGATIONS IN WHOLE OR IN PART AND HAVE FILED A NOTICE OF APPEAL TO THE NATIONAL ADJUDICATORY COUNCIL. THEY VIGOROUSLY DENY THE ALLEGATIONS AND FINDINGS OF LAW AND OF FACT AS FOLLOWS: 1.THE RESPONDENTS DID NOT VIOLATE RULES 8210 AND 2110 IN THAT NO MISLEADING OR FALSE TESTIMONY WAS INTENTIONALLY PROVIDED TO FINRA AND THAT THERE WAS NO WILLFUL FILING OF ANY FORM U-4. 2. THERE WAS NO VIOLATION OF RULE 2110 IN THAT NO SOFT DOLLARS WERE USED BY A HEDGE FUND TO PAY RENT. 3.THERE WAS NO VIOLATION OF RULE 2211 (D)(1) AND 2110 BOTH AS A MATTER OF LAW AND A MATTER OF CONTENT. 4.THERE WAS NO VIOLATION OF RULES 2211(B)(2)(A) AND 2110 IN THAT THE INSTITUTIONAL SALES MATERIALS WERE KEPT IN AN ELECTRONIC FILE AS REQUIRED. 5.THERE WERE NO VIOLATIONS OF RULES 1031 AND 2110 IN THAT THE UNREGISTERED EMPLOYEES WERE NOT REQUIRED TO BE REGISTERED FOR THE MINISTERIAL DUTIES THEY PERFORMED, OR WERE NOT REQUIRED TO BE REGISTERED FOR SOME ACTS AS A MATTER OF LAW. 6.THERE WERE NO VIOLATIONS OF RULES 1031 AND 2110 IN THAT NO INDIVIDUAL WAS INTENTIONALLY PERMITTED TO PARK THEIR LICENSE WITH THE FIRM. 7.THERE WAS NO VIOLATION OF OF RULES 3010(A), 3010(B) AND 2110 AS IT PERTAINS TO ANNUAL COMPLIANCE MEETINGS AND THE REGISTRATION OF ASSOCIATED PERSONS. TO THE EXTENT THAT THE NAC DISAGREES IN WHOLE OR IN PART WITH THE CONTENT OF THE APPEAL, I RESPECTFULLY SUBMIT THAT THE SANCTIONS WHICH WERE IMPOSED BY THE HEARING PANEL ON THE RESPONDENTS WERE EXTREMELY SEVERE AND UNWARRANTED BY THE VIOLATIONS COMMITTED BY THE RESPONDENTS

FINRA

ARTICLE V, SECTION 3 OF FINRA BY-LAWS, NASD RULE 2110, AND INTERPRETIVE MATERIAL-1000-1: JAHRE, ACTING ON BEHALF OF HIS MEMBER FIRM, FILED A MISLEADING AND INACCURATE FORM U5 FOR AN INDIVIDUAL MARKING HIS REASON FOR TERMINATION AS "VOLUNTARY" WITH NO COMMENTS. MARKING THE FORM U5 TERMINATION REASON AS VOLUNTARY WAS MISLEADING AND INACCURATE BECAUSE HIS TERMINATION WAS FOR CAUSE.

Decision & Order of Offer of Settlement

Monetary/Fine

$10,000.00

Suspension

WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, RESPONDENT CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS; THEREFORE, RESPONDENT IS FINED $10,000 AND SUSPENDED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY PRINCIPAL CAPACITY FOR TEN BUSINESS DAYS. THE SUSPENSION IS IN EFFECT FROM MARCH 2, 2009 THROUGH MARCH 13, 2009.

TO AVOID THE COSTS OF LITIGATION, MR. JAHRE SETTLED THE MATTER WITHOUT ADMITTING OR DENYING THE ALLEGATIONS.