# UNITED STATES OF AMERICA

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URL: https://www.frixlaw.com/law-library/documents/agency%3Asec%3Abc1280550a4c5199

## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
ADMINISTRATIVE PROCEEDING
File No. 101031 / September 16, 2024
In the Matter of
ALEXANDER CAPITAL, L.P.,
Respondent.

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ADMINISTRATIVE PROCEEDING
File No. 3-18562
In the Matter of
PHILIP A. NOTO II,
Respondent.

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PROPOSED PLAN OF
DISTRIBUTION

ADMINISTRATIVE PROCEEDING
File No. 3-18563
In the Matter of
BARRY T. EISENBERG,
Respondent.
I.

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OVERVIEW

1.
The Division of Enforcement submits this Proposed Plan of Distribution (the
“Plan”) to the United States Securities and Exchange Commission (the “Commission”) pursuant
to Rule 1101 of the Commission’s Rules on Fair Fund and Disgorgement Plans (the
“Commission’s Rules”), 17 C.F.R. § 201.1101. This Plan provides for the distribution of a Fair
Fund (the “Fair Fund”) comprised of disgorgement, prejudgment interest, and civil money
penalties paid by Alexander Capital, LP (“Alexander Capital”), Philip A. Noto II (“Noto”) and
Barry T. Eisenberg (“Eisenberg”) (collectively, the “Respondents”) in the above-captioned

matters, 1 along with funds collected from William C. Gennity and Rocco Roveccio (collectively,
the “Defendants”) in a related district court action, 2 and any additional funds collected in the
future.
2.
As described more specifically below, the Plan seeks to compensate investors
who were harmed by the Respondents’ conduct described in the Orders, in connection with
unsuitable investment recommendations and unauthorized trading in their Alexander Capital
accounts. Investors suffered losses in the form of handling fees, commissions, mark-ups and
mark-downs charged to them. Based on information obtained by the Commission staff during its
investigation and the review and analysis of applicable records, the Commission staff has
reasonably concluded that it has all records necessary to calculate each investor’s harm. As a
result, the Fair Fund is not being distributed according to a claims-made process, so procedures
for making and approving claims in accordance with Rule 1101(b)(4) of the Commission’s
Rules, 17 C.F.R. § 201.1101(b)(4), are not applicable.
3.
As calculated using the methodology detailed in the Plan of Allocation (attached
as Exhibit A), investors will be compensated for their losses based on fees associated with
trading in their Alexander Capital accounts from July 1, 2012 through September 30, 2014 (the
“Relevant Period”).
4.
In the view of the Commission staff, this methodology constitutes a fair and
reasonable allocation of the Fair Fund.
5.
The Commission has custody of the Fair Fund and shall retain control of the
assets of the Fair Fund. The Plan is subject to approval by the Commission, and the Commission
retains jurisdiction over its implementation.
II.

BACKGROUND

6.
On June 29, 2018, the Commission issued separate, but related settled Orders
against the Respondents. In the Orders, the Commission found that from July 2012 to September
2014, the Respondents failed to reasonably supervise three registered representatives, formerly
associated with Alexander Capital, within the meaning of Section 15(b)(4)(E) of the Securities
Exchange Act of 1934 with a view to preventing and detecting those registered representatives’
violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Exchange Act
and Rule 10b-5 thereunder. Alexander Capital also failed to reasonably implement certain
policies and procedures and permitted a lax compliance environment whereby the registered
representatives made unsuitable investment recommendations to their customers, churned their
See Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of
1934, Making Findings, and Imposing Remedial Sanctions, Exchange Act Rel. No. 83562 (June 29, 2018), (Admin.
Proc. File No. 3-18561) (the “Alexander Capital Order”); Order Instituting Administrative Proceedings Pursuant to
Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions,
Exchange Act Rel. No. 83563 (June 29, 2018), (Admin. Proc. File No. 3-18562); Order Instituting Administrative
Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing
Remedial Sanctions, Exchange Act Rel. No. 83564 (June 29, 2018), (Admin. Proc. File No. 3-18563) (collectively,
the “Orders”).
2
SEC v. Gennity, et al., Civil Action No. 17-cv-7424 (S.D.N.Y. 2017).
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customers’ accounts, and engaged in unauthorized trading. The Commission ordered the
Respondents to pay $193,774.86 in disgorgement, $23,436.78 in prejudgment interest, and
$228,774.86 in civil money penalties, for a total of $445,986.50, to the Commission. In each of
the Orders, the Commission also created a fair fund, pursuant to Section 308(a) of the SarbanesOxley Act of 2002, so the penalties paid, along with the disgorgement and interest paid, can be
distributed to harmed investors.
7.
On April 6, 2023, the Commission ordered the consolidation of the assets of the
fair funds created pursuant to the Orders into a single fair fund, the Alexander Capital Fair Fund
(the “Fair Fund”), for purposes of distribution to harmed investors. See Order Consolidating Fair
Funds, Exchange Act Rel. No. 97258 (April 6, 2023) (“Consolidation Order”). The
Consolidation Order further ordered any additional funds collected in the future be added to the
Fair Fund. In the related district court action, the Court ordered all monies collected from
Defendants be combined with the Fair Fund.
8.
To date, the Respondents and Defendants have paid a total of $744,988.45, and
any additional funds collected from them will be added to the Fair Fund. The Fair Fund has been
deposited in a Commission-designated account at the United States Treasury, and any accrued
interest will be added to the Fair Fund.
III.

DEFINITIONS
As used in this Plan, the following definitions will apply:

9.
“Administrative Costs” shall mean any administrative costs and expenses,
including without limitation tax obligations, the fees and expenses of the Tax Administrator, and
investment and banking costs.
10.
“Certification Date” means the date established in accordance with this Plan by
which the Preliminary Claimant’s Certification Form must be postmarked or submitted
electronically in order to receive consideration under the Plan. The Certification Date shall be
sixty (60) day from the mailing of the Plan Notice.
11.
“Certification Form” means the form that will be mailed to each Preliminary
Claimant with the Plan Notice providing his, her, or its calculated Recognized Loss, and
confirming the name and mailing address of the payee to which a Distribution Payment should
be issued. The Certification Form may be accompanied by tax forms, as required, relating to the
tax treatment of any distribution.
12.
“Determination Notice” means the notice sent by the Fund Administrator within
forty-five (45) days of the Certification Date to all Preliminary Claimants that submitted a
deficient Certification Form. The Determination Notice will provide to each Preliminary
Claimant whose claim is deficient, in whole or in part, the reason(s) for the deficiency and in the
event the claim is denied, the Determination Notice will state the reason(s) for such denial. The
Determination Notice will also notify the Preliminary Claimant of the opportunity to cure any
deficiency, request reconsideration, or dispute the determination made by the Fund
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Administrator and provide instructions regarding what is required to do so.
13.
“Distribution Payment” means a payment from the Fair Fund to a Payee in
accordance with the terms of this Plan.
14.
“Eligible Claimant” means a Preliminary Claimant, who is determined to have
suffered a Recognized Loss, pursuant to the Plan of Allocation, and who is not an Excluded
Party or an Unresponsive Preliminary Claimant.
15.
“Excluded Party” shall mean: (a) the Respondents, and Respondents’ advisers,
agents, nominees, assigns, creditors, heirs, distributees, spouses, parents, children, or controlled
entities; (b) the Defendants, and Defendants’ advisers, agents, nominees, assigns, creditors, heirs,
distributees, spouses, parents, children, or controlled entities; and (c) any purchaser or assignee
of another Person’s right to obtain a recovery from the Fair Fund for value; provided, however,
that this provision shall not be construed to exclude those Persons who obtained such a right by
gift, inheritance or devise.
16.
“Fair Fund” means the Alexander Capital Fair Fund created by the Commission
pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, for the benefit of investors
harmed by Respondents’ violations described in the Alexander Capital Order and referenced in
the Consolidation Order.
17.
“Final Determination Notice” means the written notice sent by the Fund
Administrator to (a) any Preliminary Claimant who timely submitted a written dispute of his, her
or its calculated Recognized Loss notifying the Preliminary Claimant of her resolution of the
dispute; and (b) those Preliminary Claimants who have not responded to the Plan Notice by
returning the Certification Form and/or any tax forms requested, as described in paragraph 41
notifying the Preliminary Claimant that he, she, or it has been deemed an Unresponsive
Preliminary Claimant. The Final Determination Notice will constitute the Fund Administrator’s
final ruling regarding the status of the claim. A Final Determination Notice will not be sent to
any Preliminary Claimant those whose Plan Notice were returned as “undeliverable,”
18.
“Net Available Fair Fund” means the Fair Fund, plus any interest or earnings,
less Administrative Costs.
19.
“Payee” means an Eligible Claimant whose distribution amount is equal to or
greater than $10.00, as calculated in accordance with the Plan of Allocation, who will receive a
Distribution Payment.
20.
“Person” means natural individuals as well as legal entities such as corporations,
partnerships, or limited liability companies.
21.
“Plan Notice” means a written notice from the Fund Administrator to each
Preliminary Claimant regarding the Commission’s approval of the Plan, including, as
appropriate: a statement characterizing the distribution; a link to the approved Plan posted on the
Commission’s website and instructions for requesting a copy of the Plan; the Certification Form
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and specification of any other information needed, such as tax forms, to prevent him, her, or it
from being deemed an Unresponsive Preliminary Claimant; his, her, or its calculated Recognized
Loss; a description of the tax information reporting and other related tax matters; the procedure
for the distribution as set forth in the Plan; and the name and contact information for the Fund
Administrator as a resource for additional information or to contact with questions regarding the
distribution.
22.
“Plan of Allocation” means the methodology used by the Fund Administrator to
calculate if a Preliminary Claimant has suffered a Recognized Loss. The Plan of Allocation is
attached as Exhibit A.
23.
“Preliminary Claimant” means a Person, or their lawful successors, identified
by the Fund Administrator based on its review and analysis of applicable records obtained by the
Commission staff during its investigation, who may have suffered a loss due to the Respondents’
misconduct as described in the Orders in the form of fees associated with trading in their
Alexander Capital Accounts during the Relevant Period.
24.
“Recognized Loss” means the amount of loss calculated in accordance with the
Plan of Allocation.
25.

“Relevant Period” is from July 1, 2012 through September 30, 2014.

26.
“Unresponsive Preliminary Claimant” means a Preliminary Claimant whose
address the Fund Administrator has not been able to verify and/or who does not timely respond
to the Fund Administrator’s attempts to obtain information, including the Certification Form or
any information sought in the Plan Notice. Unresponsive Preliminary Claimants will not be
eligible for a distribution under the Plan.
IV.

TAX COMPLIANCE

27.
On July 15, 2019, the Commission appointed Miller Kaplan Arase LLP as the tax
administrator (the “Tax Administrator”) for the Fair Fund to handle the tax obligations of the
Fair Fund. 3 The Tax Administrator will be compensated for reasonable fees and expenses from
the Fair Fund in accordance with its 2019-2021 Engagement Letter Agreement with the
Commission.4
28.
The Fair Fund constitutes a Qualified Settlement Fund (“QSF”) under Section
468B(g) of the Internal Revenue Code of 1986, as amended, 26 U.S.C. § 468B(g), and related
regulations, 26 C.F.R. §§ 1.468B-1 through 1.468B-5. The Tax Administrator is the
administrator of such QSF for purposes of Treas. Reg. § 1.468B-2(k)(3)(I) and shall satisfy the
tax-related administrative requirements imposed by Treas. Reg. § 1.468B-2, including, but not
limited to:

See Order Appointing Tax Administrator, Exchange Act Rel. No. 86382 (July 15, 2019).
See Omnibus Order Directing the Appointment of Tax Administrator in Administrative Proceedings that Establish
Distribution Funds, Exchange Act Rel. No. 85174 (Feb. 22, 2019).

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(a)

Obtaining a taxpayer identification number;

(b)

Requesting funds necessary for the timely payment of all applicable taxes,
the payment of taxes for which the Tax Administrator has received funds,
and the filing of applicable returns; and

(c)

Fulfilling any information reporting or withholding requirements imposed
on distributions from the Fair Fund.

29.
All tax obligations will be paid from the Fair Fund, subject to the review and
approval of Commission staff.
V.

FUND ADMINISTRATOR

30.
Jennifer Cardello is proposed to be the fund administrator for the Fair Fund
(“Fund Administrator”). As a Commission employee, the Fund Administrator shall receive no
compensation, other than her regular salary as a Commission employee, for her services in
administering the Fair Fund. In accordance with Rule 1105(c) of the Commission’s Rules, 5 no
bond is required since the Fund Administrator is a Commission employee.
31.
The Fund Administrator will be responsible for administering the Fair Fund in
accordance with the Plan.
32.
To carry out the purposes of this Plan, the Fund Administrator is authorized to
make and implement immaterial changes to the Plan upon agreement of the Commission staff. If
a change is deemed to be material by the Commission staff, Commission approval is required
prior to implementation by amending the Plan.
33.
The Fund Administrator may extend any procedural deadline contained in the
Plan for good cause shown, if agreed upon by the Commission staff.
VI.

PLAN PROCEDURES
Specification of Preliminary Claimants

34.
Using information obtained during its investigation, the Commission has
identified the Preliminary Claimants. Preliminary Claimants are limited to only those Persons
who may have suffered a loss due to the Respondents’ misconduct as described in the Orders in
the form of fees associated with trading in their Alexander Capital Accounts during the Relevant
Period.

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17 C.F.R. § 201.1105(c).

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Procedures for Locating and Notifying Preliminary Claimants
35.
Within thirty (30) days of Commission approval of the Plan, the Fund
Administrator will send the Plan Notice to each Preliminary Claimant’s last known email address
(if known) and/or mailing address.
Undeliverable Mail
36.
If any mailing is returned as undeliverable, the Fund Administrator will make the
best practicable efforts to ascertain a Preliminary Claimant’s correct address. If another address
is obtained, the Fund Administrator will then resend it to the Preliminary Claimant’s new address
within twenty-one (21) days of receipt of the returned mail. If the mailing is returned again, and
the Fund Administrator, despite best practicable efforts, is unable to find a Preliminary
Claimant’s correct address, the Fund Administrator, in its discretion, may deem such Preliminary
Claimant an Unresponsive Preliminary Claimant.
37.
Any Preliminary Claimant who relocates or otherwise changes contact
information after receipt of the Plan Notice must promptly communicate any change in address
or contact information to the Fund Administrator.
Procedures to Request Plan Notice
38.
Any Person who does not receive a Plan Notice, as described in paragraph 35, but
who is aware of this Plan (e.g., through other Preliminary Claimants or from www.sec.gov) and
believes they should be included as a Preliminary Claimant should contact the Fund
Administrator within sixty (60) days from the approval of the Plan to establish that they should
be considered a Preliminary Claimant. Such Person should include with that communication,
documentation sufficient to support their claim that they should be considered a Preliminary
Claimant, as well as contact information (physical address, telephone number, and email address,
(if available)) for responsive communications. The Fund Administrator will send the Person a
Plan Notice within fifteen (15) days of receiving the Person’s documentation, if the Fund
Administrator determines that the Person should have received a Plan Notice.
Certification Requirement by Preliminary Claimants and Failure to Respond to Plan
Notice
39.
In order to maintain classification as a Preliminary Claimant, the Certification
Form must be signed by the Preliminary Claimant under penalty of perjury under the laws of the
Unites States and returned to the Fund Administrator by the deadline stated in the Plan Notice.
The Certification Form must be executed by the Preliminary Claimant, unless the Fund
Administrator accepts such Certification Form from a successor, heir, administrator, or other
Person authorized to act on the Preliminary Claimant’s behalf. Those authorized to act on behalf
of Preliminary Claimants will be eligible to participate in the distribution to the same extent the
original investor would have been eligible under the terms of the Plan.

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40.
The Fund Administrator will review all Certification Forms. Each Preliminary
Claimant will have the burden of proof to establish their identity as a Preliminary Claimant. The
Fund Administrator will have the right to request, and the Preliminary Claimant will have the
burden of providing to the Fund Administrator, any additional information and/or documentation
deemed relevant by the Fund Administrator.
41.
If a Preliminary Claimant fails to return the Certification Form and any other
information needed, such a tax forms, within sixty (60) days from the initial mailing of the Plan
Notice, the Fund Administrator will make no fewer than two (2) attempts to contact the
Preliminary Claimant by telephone or email, if known to the Fund Administrator. If a
Preliminary Claimant fails to respond to the Fund Administrator’s contact attempts as described
in this paragraph, the Fund Administrator, in her discretion, may deem such Preliminary
Claimant an Unresponsive Preliminary Claimant.
Review of Certification Forms and Deficiency Process
42.
The Fund Administrator will provide a Determination Notice within forty-five
(45) days of the Certification Date to each Preliminary Claimant who has filed a deficient
Certification Form with the Fund Administrator. The Determination Notice will provide to each
Preliminary Claimant whose claim is deficient, in whole or in part, the reason(s) for the
deficiency (e.g., failure to provide required information or documentation). In the event the
claim is denied, in whole or in part, the Determination Notice will state the reason(s) for such
denial. The Determination Notice will also notify the Preliminary Claimant of the opportunity to
cure any deficiency, request reconsideration, or dispute the determination made by the Fund
Administrator and provide instructions regarding what is required to do so.
43.
Any Preliminary Claimant with a deficient claim will have thirty (30) days from
the date of the Determination Notice to cure any deficiencies identified in the Determination
Notice.
44.
Any Preliminary Claimant seeking reconsideration of a denied claim must advise
the Fund Administrator in writing within thirty (30) days of the date of the Determination Notice.
All requests for reconsideration must include the necessary documentation to substantiate the
basis upon which the Preliminary Claimant is requesting reconsideration of his, her, or its claim.
45.
The Fund Administrator will have the authority, in its sole discretion, to waive
technical claim deficiencies and approve claims on a case-by-case basis, or in groups of claims.
All determinations made by the Fund Administrator in accordance with the Plan in any dispute,
request for reconsideration, or request to cure a deficient claim will be final and not subject to
appeal.
Dispute Process
46.
Disputes will be limited to Preliminary Claimant’s Recognized Loss calculation.
Within forty-five (45) days of the emailing and/or mailing of the Plan Notice, the Fund
Administrator must receive the Certification Form and a written communication detailing any
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dispute along with supporting documentation. The Fund Administrator will investigate any
dispute. Such investigation will include a review of the written dispute as well as any supporting
documentation
Final Determination Notices
47.
Within one hundred eighty (180) days of Commission approval of the Plan, the
Fund Administrator will send a Final Determination Notice to (a) any Preliminary Claimant who
timely submitted a written dispute as described in paragraph 46 above, notifying the Preliminary
Claimant of her resolution of the dispute; and (b) those Preliminary Claimants who have not
responded to the Plan Notice, as described in paragraph 41 above, notifying the Preliminary
Claimant that he, she, or it has been deemed an Unresponsive Preliminary Claimant. Those
Preliminary Claimants whose Plan Notices were returned as undeliverable will not receive a
Final Determination Notice.
Distribution Methodology
48.
The Fund Administrator will calculate each Preliminary Claimant’s Recognized
Loss in accordance with the Plan of Allocation. All Preliminary Claimants who are determined
to have a Recognized Loss, and who are not deemed an Excluded Party or an Unresponsive
Preliminary Claimant will be deemed an Eligible Claimant. All Eligible Claimants whose
distribution amount is equal to or greater than $10.00, as calculated in accordance with the Plan
of Allocation, will be deemed a Payee and receive a Distribution Payment.
Establishment of a Reserve
49.
Before determining the amount of funds available for distribution and calculating
each Payee’s Distribution Payment, the Fund Administrator, in conjunction with the Tax
Administrator, will establish a reserve to pay Administrative Costs and to accommodate any
unexpected expenditures (the “Reserve”).
50.
After all Distribution Payments are made and Administrative Costs paid, any
remaining amounts in the Reserve will become part of the Residual described in paragraph 63
below.
Preparation of the Payment File
51.
Within two hundred ten (210) days of Commission approval of the Plan, the Fund
Administrator will compile and send to the Commission staff the Payee information, including
the name, address, calculated Recognized Loss, and the amount of the Distribution Payment for
all Payees (the “Payee List”) to make disbursements through the U.S. Treasury.
Distribution of the Fair Fund
52. Pursuant to Rule 1101(b)(6) of the Commission’s Rules, 17 C.F.R.
§ 201.1101(b)(6), the Commission staff will obtain an order from the Commission authorizing
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the disbursement of funds from the Net Available Fair Fund for distribution to Payees in
accordance with the Payee List. The U.S. Treasury will mail checks or electronically transfer
funds to each Payee as instructed by the Fund Administrator in accordance with the Payee List.
53.
All checks will bear a stale date of one (1) year from the date of issuance. Checks
that are not negotiated by the stale date will be voided. A Payee’s claim will be extinguished if
he, she, or it fails to negotiate his, her or its check by the stale date, and the funds will remain in
the Fair Fund, except as provided in paragraph 57.
54.
All Distribution Payments will be preceded or accompanied by a communication
that includes, as appropriate: (a) a statement characterizing the distribution; (b) a statement that
the tax treatment of the distribution is the responsibility of each Payee and that the Payee should
consult his, her or its tax advisor for advice regarding the tax treatment of the distribution; (c) a
statement that checks will be void and cannot be reissued after one (1) year from the date the
original check was issued; and (d) contact information for the Fund Administrator for questions
regarding the Distribution Payment. The letter or other mailings to Payees characterizing a
Distribution Payment will be prepared by the Tax Administrator and submitted to the
Commission staff for review and approval.
55.
All Distribution Payments, either on their face or in the accompanying mailing,
will clearly indicate that the money is being distributed from the Fair Fund established by the
Commission to compensate investors for harm as a result of securities law violations.
Post Distribution; Handing of Returned or Uncashed Checks; and Reissues
56.
The Fund Administrator shall use its best efforts to make use of commercially
available resources and other reasonably appropriate means to locate all Payees whose checks
are returned to the Fund Administrator as “undeliverable.” If new address information becomes
available, the Fund Administrator will repackage the distribution check and send it to the new
address. If new address information is not available after a diligent search (and in no event no
later than one (1) year after the initial mailing of the original check) or if the distribution check is
returned again, the check shall be voided, and the Fund Administrator shall instruct the issuing
financial institution to stop payment on such check. If the Fund Administrator is unable to find a
Payee’s correct address, the Fund Administrator, in her discretion, may remove such Payee from
the distribution and the allocated Distribution Payment will remain in the Fair Fund for
distribution, if feasible, to the remaining Payees.
57.
The Fund Administrator will reissue checks or electronic payments to Payees
upon the receipt of a valid, written request from the Payee if prior to the initial stale date. In
cases where a Payee is unable to endorse a Distribution Payment check as written (e.g., name
changes, IRA custodian changes, or recipient is deceased) and the Payee or a lawful
representative requests the reissuance of a Distribution Payment check in a different name, the
Fund Administrator will request, and must receive, documentation to support the requested
change. The Fund Administrator will review the documentation to determine the authenticity
and propriety of the change request. If, in the discretion of the Fund Administrator, such change
request is properly documented, the Fund Administrator will issue an appropriately redrawn
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Distribution Payment to the requesting party. In no event will a check be reissue after one (1)
year from the date of the original issuance without the approval of Commission staff.
58.
The Fund Administrator will work with the U.S. Treasury and maintain
information about uncashed checks and 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 is also
responsible for accounting for all payments. The amount of all uncashed and undelivered
payments will continue to be held in the Fair Fund.
59.
The Fund Administrator will make and document its best efforts to contact Payees
to follow-up on the status of uncashed distribution checks over $100 (other than those returned
as “undeliverable”) and take appropriate action to follow-up on the status of uncashed checks.
The Fund Administrator may reissue such checks, subject to the time limits detailed herein.
60.
At the discretion of the Fund Administrator, certain costs that were not factored
into the Reserve, such as bank fees for the return of a payment, may reduce the Payee’s
Distribution Payment. In such situations, the Fund Administrator will immediately notify the
Tax Administrator of the reduction in the Distribution Payment.
Receipt of Additional Funds
61.
Should any additional funds be received pursuant to Commission or Court order,
agreement, or otherwise, prior to the Commission’s termination of the Fair Fund, such funds will
be added to the Fair Fund and distributed, if feasible, in accordance with the Plan, pursuant to the
Commission’s Rules.
Disposition of Undistributed Funds
62.
If funds remain following the initial distribution and payment of all
Administrative Costs, the Fund Administrator, in consultation with the Commission staff, may
seek subsequent distribution(s) of any available remaining funds, pursuant to the Commission’s
Rules. All subsequent distributions shall be made in a manner that is consistent with this Plan.
63.
A residual within the Fair Fund will be established for any amounts remaining
after the final disbursement to Payees from the Fair Fund and the payment of all Administrative
Costs (the “Residual”). The Residual may include funds from, among other things, amounts
remaining in the Reserve, distribution checks that have not been cashed, checks or electronic
payments that were not delivered or were returned to the Commission, and tax refunds for
overpayment of taxes or for waiver of IRS penalties.
64.
All funds remaining in the Residual that are infeasible to distribute to investors
will be transferred to the U.S. Treasury, subject to Section 21F(g)(3) of the Securities Exchange
Act of 1934 (the “Exchange Act”), after the final accounting is approved by the Commission.
Returning such money to the Respondents would be inconsistent with the equitable principle that
no Person should profit from his wrongdoing. Therefore, in these circumstances distributing
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disgorged funds to the U.S. Treasury is the most equitable alternative.
Administrative Costs
65.
All Administrative Costs will be paid from the Fair Fund in accordance with the
Commission’s Rules.
Accountings
66.
When all funds have been disbursed, except for the Residual described in
paragraph 63 of the Plan, the Fund Administrator will submit a final accounting pursuant to Rule
1105(f) of the Commission’s Rules, 17 C.F.R. § 201.1105(f), for the Commission’s approval
prior to termination of the Fair Fund and discharge of the Fund Administrator. Since the funds
are being held in a Commission-designated account at the U.S. Treasury and the Fund
Administrator is a Commission employee, no interim accountings will be made.
Termination of the Fair Fund
67.
The Fair Fund will be eligible for termination and the Fund Administrator will be
eligible for discharge after all of the following have occurred (a) a final accounting, in a standard
accounting format provided by the Commission staff, has been submitted by the Fund
Administrator and approved by the Commission; and (b) all Administrative Costs have been
paid. Once the Commission has approved the final accounting, the Commission staff will seek
an order from the Commission authorizing: (a) the transfer of the Residual that is infeasible to
return to investors, and any amounts returned to the Fair Fund in the future that is infeasible to
return to investors, to the general fund of the U.S. Treasury, subject to Section 21F(g)(3) of the
Exchange Act; (b) discharge of the Fund Administrator; and (c) termination of the Fair Fund.
VII.

NOTICE OF PROPOSED PLAN AND OPPORTUNITY FOR COMMENT

68.
The Notice of the Proposed Plan of Distribution and Opportunity for Comment
(the “Notice”) shall be published on the Commission’s website
http://www.sec.gov/litigation/fairfundlist.htm. Any Person wishing to comment on the Plan
must do so in writing by submitting their comments within thirty (30) days of the date of the
Notice (a) to the Office of the Secretary, United States Securities and Exchange Commission,
100 F Street, N.E., Washington, D.C. 20549-1090; (b) by using the Commission’s Internet
comment form (www.sec.gov/litigation/admin.shtml); or (c) by sending an e-mail to rulecomments@sec.gov. Comments submitted by e-mail or via the Commission’s website should
include “Administrative Proceeding File Nos. 3-18561, 3-18562, and 3-18563 in the subject line.
Comments received will be publicly available. Persons should only submit comments that they
wish to make publicly available.

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Exhibit A
PLAN OF ALLOCATION
This Plan of Allocation is designed to compensate investors based on their losses on fees
associated with trading in their Alexander Capital accounts from July 1, 2012 through September
30, 2014 (the “Relevant Period”) due to the misconduct of the Respondents’ conduct described
in the Orders. Based upon records obtained by the Commission during its investigation, the
Fund Administrator has identified those investors, or their lawful successors, who were harmed
by the misconduct during the Relevant Period (the “Preliminary Claimants”).
Staff at the Commission has calculated each Preliminary Claimant’s “Recognized Loss”
using records obtained by the Commission during its investigation. The Recognized Loss for
each Preliminary Claimant is equal to the sum of fees associated with trading (including, but not
limited to, commissions, mark-ups, mark-downs, and handling fees) in the Preliminary
Claimant’s account at Alexander Capital during the Relevant Period.
To avoid payment of a windfall, the Recognized Loss will be reduced by the amount of
any compensation for the loss that resulted from the conduct described in the Orders that was
received from Respondents or another source (e.g., class action settlement), to the extent known
by the Fund Administrator.
Any Preliminary Claimant who suffered a Recognized Loss pursuant to this Plan of
Allocation, and who is not an Excluded Party or an Unresponsive Preliminary Claimant, as
defined in the Plan, will be deemed an Eligible Claimant.
Additional Provisions
Allocation of Funds: If the Net Available Fair Fund, as defined in the Plan, is equal to or
exceeds the sum of Recognized Losses of all Eligible Claimants, each Eligible Claimant’s
distribution amount will equal his, her or its Recognized Loss, plus “Reasonable Interest” if
applicable. If the Net Available Fair Fund is less than the sum of the Recognized Losses of all
Eligible Claimants, each Eligible Claimant’s distribution amount will equal his, her or its “Pro
Rata Share” of the Net Available Fair Fund (and no Reasonable Interest). In either case, the
distribution amount will be subject to the “Minimum Distribution Amount.”
Reasonable Interest: If the Net Available Fair Fund exceeds that necessary to pay all Eligible
Claimants his, her, or its Recognized Loss in full, the Fund Administrator, in consultation with the
Commission staff, may include interest in the distribution amount to compensate Eligible Claimants for
the time value of his, her, or its respective Recognized Losses. Reasonable Interest will be calculated
using the Short-term Applicable Federal Rate plus three percent (3%), compounded quarterly from the
end of the Relevant Period through the approximate date of the disbursement of the funds. If there are
insufficient funds to pay Reasonable Interest in full to all Eligible Claimants, each Eligible Claimant’s
Reasonable Interest amount will be equal to his, her or its Pro Rata Share of the excess funds.

Pro Rata Share: A Pro Rata Share computation is intended to measure Eligible Claimants’
Recognized Losses against one another. The Fund Administrator shall determine each Eligible
Claimant’s Pro Rata Share as the ratio of his, her, or its Recognized Loss to the sum of Recognized
Losses of all Eligible Claimants.
Minimum Distribution Amount: The Minimum Distribution Amount will be $10.00
(inclusive of Reasonable Interest, if any). If an Eligible Claimant’s distribution amount is less
than the Minimum Distribution Amount, that Eligible Claimant will be deemed ineligible to
receive a Distribution Payment and his, her, or its distribution amount will be reallocated on a
pro-rata basis to Eligible Claimants whose distribution amounts are greater than or equal to the
Minimum Distribution Amount.
Payee: An Eligible Claimant whose distribution amount equals or exceeds the Minimum
Distribution Amount will be deemed a Payee.
Distribution Payment: Each Payee will receive a Distribution Payment equal to his, her,
or its calculated distribution amount. In no event will a Payee receive from the Fair Fund more
than his, her, or its Recognized Loss, plus Reasonable Interest, if applicable.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Asec%3Abc1280550a4c5199. Public record. Not legal advice.