UNITED STATES SECURITIES AND EXCHANGE COMMISSION

SEC ADMIN RELEASES 33-9454, 34-70473, IA RELEASE 3674, INVESTMENT COMPANY ACT OF 1940 RELEASE 30694, SEPTEMBER 23, 2013: THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION") DEEMED IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE INSTITUTED PURSUANT TO SECTION 8A OF THE SECURITIES ACT OF 1933 ("SECURITIES ACT"), SECTIONS 15(B) AND 21C OF THE SECURITIES EXCHANGE ACT OF 1934 ("EXCHANGE ACT"), SECTION 203(F) OF THE INVESTMENT ADVISERS ACT OF 1940 ("ADVISERS ACT"), AND SECTION 9(B) OF THE INVESTMENT COMPANY ACT OF 1940 ("COMPANY ACT") AGAINST BRIAN T. MAYER ("MAYER"). THE DIVISION OF ENFORCEMENT ALLEGES THAT: RESPONDENT MAYER, ALONG WITH OTHER RESPONDENTS, WERE AMONG THE TOP-SELLING BROKERS AT THEIR BROKER-DEALER/INVESTMENT ADVISER FIRM. THEY SOLD MILLIONS OF DOLLARS OF FIRM PRIVATE PLACEMENTS IN SPITE OF NUMEROUS RED FLAGS, INCLUDING A POLICY-WHICH WAS CLEARLY INCONSISTENT WITH THE TERMS OF THE OFFERINGS-THAT REQUIRED THEM TO "REPLACE" CUSTOMERS SEEKING TO REDEEM NOTES WITH NEW CUSTOMERS BEFORE THE REDEMPTION WOULD BE HONORED. BASED ON THE CONDUCT, RESPONDENT MAYER COMMITTED THE FOLLOWING VIOLATIONS: A) MAYER WILLFULLY VIOLATED SECTIONS 5(A) AND (C) OF THE SECURITIES ACT BY OFFERING AND SELLING NOTES FOR WHICH NO REGISTRATION STATEMENTS WERE IN EFFECT; B) MAYER WILLFULLY VIOLATED SECTION 17(A) OF THE SECURITIES ACT AND SECTION 10(B) OF THE EXCHANGE ACT AND RULE 10B-5 THEREUNDER, BY KNOWINGLY OR RECKLESSLY, OR NEGLIGENTLY, FAILING TO PERFORM REASONABLE DUE DILIGENCE TO FORM A REASONABLE BASIS FOR THE RECOMMENDATIONS TO CUSTOMERS, AND MADE MISREPRESENTATIONS AND OMISSIONS IN RECOMMENDING FOUR FUNDS AND TRUST OFFERINGS. THE RESPONDENTS, AS ASSOCIATED PERSONS OF A BROKER-DEALER, HAD AN OBLIGATION TO CONDUCT A REASONABLE INVESTIGATION OF THE ISSUERS IN ORDER TO FORM A REASONABLE BASIS FOR ANY RECOMMENDATION TO CUSTOMERS REGARDING THE FIRM OFFERINGS. BY MAKING A RECOMMENDATION, THE RESPONDENTS IMPLICITLY REPRESENTED TO THEIR CUSTOMERS THAT THEY HAD AN ADEQUATE BASIS FOR THE RECOMMENDATION. A BROKER HAS A DUTY TO INVESTIGATE THE TRUTH OF THE REPRESENTATIONS HE MAKES TO CUSTOMERS, BECAUSE, BY VIRTUE OF HIS TITLE, CUSTOMERS ARE ENTITLED TO PRESUME THAT THE REPRESENTATIONS MADE WERE THE RESULT OF REASONABLE INVESTIGATION. THE RESPONDENTS BLINDLY RELIED UPON THE FIRM'S PRINCIPALS, EVEN IN THE FACE OF RED FLAGS. THE RESPONDENTS, AS LICENSED SECURITIES PROFESSIONALS, KNEW OR SHOULD HAVE KNOWN THAT SECURITIES ISSUED BY SMALLER COMPANIES OF RECENT ORIGIN REQUIRE MORE THOROUGH INVESTIGATION. THEY SHOULD NOT SIMPLY PARROT THE MARKETING INFORMATION FURNISHED BY THE PRINCIPALS, PARTICULARLY IN THE FACE OF RED FLAGS. IN ADDITION, WHERE RESPONDENTS LACKED ESSENTIAL INFORMATION ABOUT AN ISSUER OR ITS SECURITIES WHEN MAKING A RECOMMENDATION, THEY FAILED TO DISCLOSE THIS FACT AS WELL AS THE RISKS THAT AROSE FROM THEIR LACK OF INFORMATION. THE RESPONDENTS' DUE DILIGENCE, WHICH AT BEST CONSISTED OF READING THE PPMS, WAS WHOLLY INADEQUATE, DESPITE THEIR KNOWLEDGE THAT THE ISSUERS WERE COMPLETELY CONTROLLED BY THE PRINCIPALS. THERE WERE NUMEROUS RED FLAGS, MOREOVER, THAT SHOULD HAVE ALERTED THE RESPONDENTS TO THE NEED FOR A THOROUGH INVESTIGATION. INSTEAD, THE RESPONDENTS BLINDLY SOLD WHATEVER PRIVATE PLACEMENT THE PRINCIPALS TOLD THEM TO SELL. THE RESPONDENTS ALSO MADE MATERIAL MISREPRESENTATIONS AND OMISSIONS WHEN RECOMMENDING THE FOUR FUNDS AND TRUST OFFERINGS TO THEIR CUSTOMERS.

Order

Cease and Desist

Disgorgement

$17,791.00

Monetary Penalty other than Fines

$2,426.24

Mr. Mayer denies the SEC's allegations of wrongdoing and has appealed the initial decision of the administrative law judge ("ALJ") to the Commission due to (1) erroneous conclusions of law that were made and applied, (2) erroneous findings that were made despite overwhelming evidence to the contrary, and (3) prejudicial error that was committed in the conduct of the hearing. There has been no final order entered by the Commission and no finding of wrongdoing by the Commission. On June 21, 2018, and prior to any final order of the SEC, the United States Supreme Court in Lucia v. SEC, 585 U.S. ___ (2018) held that the Commission's ALJs must be constitutionally appointed, and one who timely challenges the constitutional validity of the appointment of an officer who adjudicates his case (as Mayer has done here) is entitled to a new hearing before a properly appointed official who has not previously heard his case and issued an initial decision on the merits. Mr. Mayer contends that any new proceeding would be time-barred under 28 U.S.C. § 2462. Following the Court's decision in Lucia, the SEC issued an order staying all pending administrative proceedings. ________________________________________In September 2013, the SEC commenced proceedings against 10 individuals, including Mr. Mayer, before an administrative law judge (ALJ) regarding the sale of certain private placements from 2003 to 2009 at McGinn Smith & Co. ("McGinn Smith"). In June 2018, the United States Supreme Court ruled in Lucia v. SEC, 138 S. Ct. 2044 (2018), that, as Mr. Mayer had maintained throughout, the ALJs were not constitutionally appointed. As a result of the Supreme Court's ruling, the ALJ's initial, non-binding decision, issued on May 21, 2015, was nullified in its entirety, and the SEC ordered that there be a new hearing before a new, constitutionally-appointed ALJ. Moreover, the ALJ had rejected the allegation of the Division of Enforcement ("Division") that McGinn Smith brokers, including Mr. Mayer, were required to "replace" customers seeking to redeem notes with new customers before the redemption would be honored. After the Supreme Court's decision in Lucia, the Division proposed that the proceeding be resolved on a "no admit, no deny" basis solely with respect to a negligence claim. All other claims were abandoned, including any claim that Mr. Mayer had acted fraudulently or had violated Sections 5(a) and (c) of the Securities Act of 1933 ("Securities Act"), or violated Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"), or Rule 10b-5 thereunder, or Section 17(a)(1) of the Securities Act, as the SEC had originally alleged in 2013. The Division's proposed resolution did not include any suspension, bar, or monetary penalty, but did include $17,791 in disgorgement, about 20 percent of the amount originally claimed by the Division. (The reference to "Monetary penalty other than fines" does not refer to a penalty, but rather to prejudgment interest on the disgorgement amount.) To avoid many more years of protracted litigation and expense, including litigating that the proceeding is barred by the statute of limitations in 28 U.S.C. § 2462, and that the ALJs are still unconstitutional on another ground (an issue not addressed by the Supreme Court), Mr. Mayer accepted the SEC's proposal. Mr. Mayer paid the settlement amount on January 16, 2019. As agreed with the Division, the settlement amount will go to the benefit of investors in the McGinn Smith private placements.

MR. MAYER WAS ACCUSED OF FAILURE TO SUPERVISE.

$155,484.39

$20,000.00

SETTLEMENT STATES "NOTHING CONTAINED HEREIN SHALL BE DEEMED TO CONSTITUTE AN ADMISSION OF ANY LIABILITY OR WRONGDOING BY ANY OF THE PARTIES WITH RESPECT TO ANY OF THE CLAIMS."