SEC Sues Dean Witter, 2 Branch Managers

The Securities and Exchange Commission is suing Dean Witter Reynolds Inc. and two of its managers, accusing them of failing to supervise a broker who defrauded four elderly investors of $320,000 during a four-year period. The SEC alleges that the firm and managers Henry Auwinger and Dennis Peterson each failed “reasonably” to supervise Michael Oberholzer, a former broker in Dean Witter’s Hayward branch office, who has already settled charges. “This is a case of lack of vigilance,” top SEC enforcement chief Richard Walker said. But Dean Witter, which merged with Morgan Stanley, said in a statement that it “disputes the SEC staff’s characterization of this matter. Mr. Oberholzer was terminated from employment with the firm, restitution was made to the customers, and the firm has cooperated with the staff’s inquiry. The firm looks forward to defending this matter vigorously.” Possible sanctions against Dean Witter include a censure or limitations on its activities plus civil penalties. Auwinger, now a manager in the firm’s Sacramento branch, and Peterson, who supervises the Hayward branch office, may be subject to a censure or suspension from their jobs in addition to civil penalties, the SEC said. Peterson’s attorney, Gilbert Serota, said: “I think the charges are without merit. I think Mr. Peterson properly supervised these accounts. He intends to vigorously defend himself.” Auwinger’s attorney did not immediately return a phone call seeking comment.