UNITED STATES SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 15932 / October 7, 1998 SEC OBTAINS PRELIMINARY INJUNCTION AGAINST TAMPA, FLORIDA INVESTMENT ADVISER THAT OBSTRUCTED SEC EXAMINATION SEC v. The Barr Financial Group, Inc. and Alfred E. Barr, Civil Action No. 98-1806-CIV-17-T-17E The Securities and Exchange Commission (SEC) announced that on September 11, 1998, the U.S. District Court for the Middle District of Florida issued a preliminary injunction against The Barr Financial Group, Inc. (BFG), an SEC registered investment adviser located in Tampa, Florida that, the SEC alleges, claims to have over $72 million in client funds under management. The preliminary injunction also applies to BFG's CEO, Alfred E. Barr (Barr), age 40, of Tampa, Florida. The preliminary injunction enjoins BFG and Barr from violating or aiding and abetting violations of Section 204 of the Advisers Act and also specifically ordered BFG and Barr to produce to the SEC that same day five categories of documents that the Advisers Act and rules promulgated thereunder require registered investment advisers to maintain. The Court entered the preliminary injunction over defendants' argument that the Advisers Act permits registered investment advisers to keep confidential client identifying information, even from the SEC's examination staff. The preliminary injunction followed a temporary restraining order that the Court entered on September 3, following the SEC's filing of a complaint which alleged that BFG, aided and abetted by Barr, repeatedly refused to give the SEC records containing client identifying information, in violation of Section 204 of the Advisers Act. The SEC's complaint alleges that the defendants "consistently . . . responded to the SEC's attempts to exercise its well- established examination rights with obstruction, veiled threats, and intimidation." Additionally, the SEC's court papers provide evidence that BFG and Barr appear to be financially troubled and may have made fraudulent misrepresentations about Barr's credentials. Also on September 11, the SEC filed a motion seeking to have Barr and BFG show cause why they should not be held in contempt for having failed to comply with the temporary restraining order and the preliminary injunction. In a separate order entered on September 11, the Court ordered that the U.S. Marshal's Service take possession of computers maintained at Barr's house in order to maintain the status quo of the information contained therein. The SEC subsequently alleged that Barr failed to provide all relevant computers to the U.S. Marshal's Service and also failed to provide to the SEC all of the documents that BFG possessed encompassed by the categories of documents specified in the preliminary injunction. On September 24, 1998 the Court held a hearing on the SEC's motion to hold Barr in contempt of the preliminary injunction order. On September 28, 1998, the Court issued an order finding denying the contempt motion because, at the contempt hearing, BFG and Barr produced additional documents to the SEC and represented to the Court that they would fully cooperate with the SEC, including cooperating by providing a computer that Barr had previously withheld from the U.S. Marshal's Service and providing access to the information on the computer so that the SEC can verify that BFG has provided all of the records it maintains. In its order denying the motion to hold the defendants in civil contempt, however, the Court also referred the matter to the office of the United States Attorney to investigate the testimony Barr had given in Court. The SEC's complaint charges BFG with having violated Section 204 of the Advisers Act, 15 U.S.C. 80b-4 and charges that Barr is liable for BFG's violations as an aider and abetter under Section 209(d) of the Advisers Act, 15 U.S.C. 80b-9(d).