UNITED STATES SECURITIES AND EXCHANGE COMMISSION

SEC ADMIN RELEASE 34-74798; IA RELEASE 40-4069, APRIL 23, 2015: THE SEC DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED PURSUANT TO SECTION 15(B)(6) OF THE SECURITIES EXCHANGE ACT OF 1934 AND SECTION 203(F) OF THE INVESTMENT ADVISERS ACT OF 1940 AGAINST TRACY MORGAN SPAETH. IN ANTICIPATION OF THE INSTITUTION OF THESE PROCEEDINGS, RESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT, WHICH THE COMMISSION HAS DETERMINED TO ACCEPT. SOLELY FOR THE PURPOSE OF THESE PROCEEDINGS AND ANY OTHER PROCEEDINGS BROUGHT BY OR ON BEHALF OF THE COMMISSION, OR TO WHICH THE COMMISSION IS A PARTY, RESPONDENT ADMITS THE COMMISSION'S JURISDICTION OVER HIM AND THE SUBJECT MATTER OF THESE PROCEEDINGS, AND THE FINDINGS, AND CONSENTS TO THE ENTRY OF THIS ORDER INSTITUTING ADMINISTRATIVE PROCEEDINGS PURSUANT TO SECTION 15(B)(6) OF THE SECURITIES EXCHANGE ACT OF 1934 AND SECTION 203(F) OF THE INVESTMENT ADVISERS ACT OF 1940, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS. ON THE BASIS OF THIS ORDER AND RESPONDENT'S OFFER, THE COMMISSION FINDS THAT ON DECEMBER 4, 2014, SPAETH ENTERED A PLEA OF NOLO CONTENDERE, AND WAS FOUND GUILTY OF ONE COUNT OF SELLING SECURITIES WITHOUT REGISTRATION IN VIOLATION OF SECTION 581-29(B) OF THE TEXAS SECURITIES CODE, BEFORE THE 364TH DISTRICT COURT IN LUBBOCK COUNTY, TEXAS, IN THE MATTER ACTION NO. 2013-400,253 (TX. 2014). ON THE SAME DAY, SPAETH WAS SENTENCED TO 10 YEARS CONFINEMENT, BUT THAT SENTENCE WAS SUSPENDED AND SPAETH WAS PLACED ON EIGHT YEARS OF COMMUNITY SUPERVISION.

Order

Bar (Permanent)

SEE COMMENTS

4/23/2015

UNREGISTERED SECURITIES

UNREGISTERED SECURITIES - ORIGINALLY INDICTED ON 2 COUNTS

FELONY

Pled guilty

SECURITIES FRAUD

Dismissed

UNREGISTERED DEALER

Dismissed

TEXAS

1.THE INTERESTS IN HCM CONSTITUTE "SECURITIES" AS THE TERM "SECURITIES" IS DEFINED BY SECTION 4.A OF THE TEXAS SECURITIES ACT. RESPONDENT DID NOT HAVE A REASONABLE BASIS TO BELIEVE THAT INVESTMENTS IN HCM WERE SUITABLE RECOMMENDATIONS FOR ANY CLIENT. RESPONDENT'S RECOMMENDATIONS WITHOUT SUCH REASONABLE BASIS CONSTITUTE INEQUITABLE PRACTICES IN RENDERING SERVICES AS AN INVESTMENT ADVISER. PURSUANT TO SECTION 14.A(3) OF THE TEXAS SECURITIES ACT, THE AFOREMENTIONED INEQUITABLE PRACTICES IN RENDERING SERVICES AS AN INVESTMENT ADVISER CONSTITUTE BASES FOR THE SUSPENSION OF RESPONDENT'S REGISTRATION WITH THE SECURITIES COMMISSIONER. PURSUANT TO SECTION 14.A(9) OF THE TEXAS SECURITIES ACT, THE AFOREMENTIONED SUSPENSIONS FROM MEMBERSHIP BY SELF REGULATORY ORGANIZATIONS CONSTITUTE BASES FOR THE SUSPENSION OF RESPONDENT'S REGISTRATION WITH THE SECURITIES COMMISSIONER. 1.RESPONDENT ACKNOWLEDGES THAT RESPONDENT HAS REPRESENTED TO THE STAFF OF THE TEXAS STATE SECURITIES BOARD THAT RESPONDENT HAS PAID BACK TO CLIENTS ALL COMMISSIONS RESPONDENT HAD PREVIOUSLY RECEIVED FROM HCM, AN AMOUNT EQUALING $72,223.42. RESPONDENT UNDERTAKES AND AGREES TO PAY TO CERTAIN OTHER CLIENTS THAT INVESTED IN HCM $19,343.21 WITHIN TEN (10) BUSINESS DAYS FROM THE ENTRY OF THIS ORDER. IN CONNECTION WITH SUCH PAYMENTS, RESPONDENT FURTHER UNDERTAKES AND AGREES TO ENSURE THAT THE SUM OF RESPONDENT'S PAYMENTS IN OCTOBER 2011 AND NOVEMBER 2011 AND PURSUANT TO THIS UNDERTAKING EQUAL AT LEAST FIVE (5) PERCENT OF EACH CLIENT'S INVESTMENT IN HCM. RESPONDENT FURTHER UNDERTAKES AND AGREES TO PROVIDE TO THE DIRECTOR OF THE INSPECTIONS AND COMPLIANCE DIVISION EVIDENCE OF THE RETURN OF THE AFOREMENTIONED FEES TO CLIENTS WITHIN TWENTY (20) BUSINESS DAYS FROM THE ENTRY OF THIS ORDER. 1.IT IS THEREFORE ORDERED THAT THE INVESTMENT ADVISER REPRESENTATIVE REGISTRATION OF TRACY MORGAN SPAETH IS HEREBY SUSPENDED FOR A PERIOD OF TWO (2) YEARS FROM THE DATE THIS ORDER IS SIGNED BY THE SECURITIES COMMISSIONER. IT IS FURTHER ORDERED THAT TRACY MORGAN SPAETH COMPLY WITH THE TERMS OF THE UNDERTAKING ENCLOSED HEREIN.

Consent

Suspension

ALL CAPACITIES

2 YEARS

5/23/2013

5/23/2015

Undertaking

PER THE UNDERTAKING, RESPONDENT UNDERTAKES AND AGREES TO PAY BACK INVESTORS.

FINRA

FINRA RULE 2010, NASD RULES 2210, 3040: SPAETH PARTICIPATED IN PRIVATE SECURITIES TRANSACTIONS WITHOUT PROVIDING PRIOR WRITTEN NOTICE TO, OR RECEIVING PRIOR WRITTEN APPROVAL FROM, HIS MEMBER FIRM. SPECIFICALLY, SPAETH PROMOTED TO AND ASSISTED SEVERAL CLIENTS WITH PURCHASING LIMITED PARTNERSHIP INTERESTS IN A SECURITY, FOR A TOTAL INVESTMENT OF OVER $8,000,000. IN CONNECTION WITH THE PRIVATE SECURITIES TRANSACTION, SPAETH PROVIDED A WEBINAR TO HIS CLIENTS REGARDING FOREIGN EXCHANGE CURRENCY TRADING SOFTWARE. THE WEBINAR FAILED TO PROVIDE A SOUND BASIS FOR EVALUATING THE PRODUCTS AND SERVICES BEING OFFERED, FAILED TO DISCLOSE THE RISKS OF THE SOFTWARE AND STRATEGY BEING PROMOTED, WAS EXAGGERATED AND MISLEADING, AND CONTAINED PERFORMANCE FORECASTS.

Acceptance, Waiver & Consent(AWC)

Civil and Administrative Penalty(ies)/Fine(s)

$50,000.00

Suspension

ALL CAPACITIES

TWO YEARS

9/17/2012

9/16/2014

WITHOUT ADMITTING OR DENYING THE FINDINGS, SPAETH CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS; THEREFORE, HE IS FINED $50,000 AND SUSPENDED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ALL CAPACITIES FOR TWO YEARS. THE FINE IS DUE AND PAYABLE EITHER IMMEDIATELY UPON RE-ASSOCIATION WITH A MEMBER FIRM FOLLOWING HIS SUSPENSION OR PRIOR TO ANY APPLICATION OR REQUEST FOR RELIEF FROM ANY STATUTORY DISQUALIFICATION RESULTING FROM THIS OR ANY OTHER EVENT OR PROCEEDING, WHICHEVER IS EARLIER. THE SUSPENSION IS IN EFFECT FROM SEPTEMBER 17, 2012, THROUGH SEPTEMBER 16, 2014.

WITHOUT ADMITTING OR DENYING THE FINDINGS, SPAETH CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS; THEREFORE, HE IS FINED $50,000 AND SUSPENDED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ALL CAPACITIES FOR TWO YEARS. THE FINE IS DUE AND PAYABLE EITHER IMMEDIATELY UPON RE-ASSOCIATION WITH A MEMBER FIRM FOLLOWING HIS SUSPENSION OR PRIOR TO ANY APPLICATION OR REQUEST FOR RELIEF FROM ANY STATUTORY DISQUALIFICATION RESULTING FROM THIS OR ANY OTHER EVENT OR PROCEEDING, WHICHEVER IS EARLIER. THE SUSPENSION IS IN EFFECT FROM SEPTEMBER 17, 2012, THROUGH SEPTEMBER 16, 2014.

NATIONAL FUTURES ASSOCIATION

NFA CASE NO. 11-BCC-036, NOVEMBER 17, 2011: ON NOVEMBER 17, 2011, THE NFA ISSUED A COMPLAINT AGAINST TRACY MORGAN SPAETH, ALLEGING HE USED DECEPTIVE AND MISLEADING PROMOTIONAL MATERIAL IN VIOLATION OF NFA COMPLIANCE RULE 2-36(B)(1), AS INCORPORATED BY AND THROUGH NFA COMPLIANCE RULE 2-39(A). THE NFA ALSO ALLEGES THAT SPAETH FAILED TO OBSERVE JUST AND EQUITABLE PRINCIPLES OF TRADE IN THAT HE SOLICITED HIS CUSTOMERS TO OPEN ACCOUNTS AT FIRMS WHICH MAINTAINED NO BOOKS AND RECORDS, WERE SUBJECT TO EMERGENCY DISCIPLINARY ACTIONS BY THE NFA, AND WHICH USED UNREGULATED AND UNAUTHORIZED COUNTERPARTIES, IN VIOLATION OF NFA COMPLIANCE RULE 2-36(C), AS INCORPORATED BY AND THROUGH NFA COMPLIANCE RULE 2-39(A). FINALLY, THE NFA ALLEGED THAT SPAETH PROVIDED FALSE AND MISLEADING INFORMATION TO THE NFA, IN VIOLATION OF NFA COMPLIANCE RULE 2-2(F).

Decision

Bar (Temporary/Time Limited)

NFA MEMBERSHIP, ASSOCIATE MEMBERSHIP OR PRINCIPAL STATUS WITH NFA MEMBER

THREE YEARS

4/11/2012

WITHDRAWAL