Administrative Proceeding

File No. 3-9599

UNITED STATES OF AMERICA

Before the
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.

April 20, 2010

_______________________________
In the Matter of
JOHN GARDNER BLACK
And
DEVON CAPITAL MANAGEMENT :
["Devon"]
_______________________________
: PETITIONER'S REQUEST FOR
: RECONSIDERATION OF THE
: COMMISSION'S APRIL 13, 2010
: ORDER GRANTING IN PART
PART AND DENYING IN PART PETITION
: TO SET ASIDE BAR ORDER

The Securities Exchange Commission ["Commission" or "SEC"] issued its adjudicatory order in
the above captioned proceeding on April 13, 2010, almost nine months after the last submission in this
matter. The Commission vacated that part of its May 4, 1998 order ["Order"] instituting an industry bar
prohibiting Petitioner John Gardner Black from associating with any broker, dealer or municipal
securities dealer. However, the Commission kept in place the industry bar against Black prohibiting him
from being associated with any investment adviser or investment company. Petitioner had argued that the
industry bar was founded upon a now authorized valuation practice.

The Commission denied vacating that portion of the Order because it has "...a strong interest in
the finality of [the Commission's] settlement orders" and not based upon the merits of Petitioner's
argument. However, the Commission had already breached the settlement agreement by its failure to
disclose material information on September 26, 1997, the value of the Collateralized Investment
Agreement ["CIA"]. The Commission also failed to disclose its interpretation that the CIA was a security
in the settlement on May 4, 1998. (A more important question for the Commission: Does and did the
SEC have a duty to inform the CIA's owners of the material fact of the CIA's value on September 26,
1997, valued pursuant to industry standards and legal precedent?)
 The Commission's violation of the settlement occurred on April 27, 2001 in District Court for the
Western District of Pennsylvania when the Commission filed a brief redefining the CIA as a security
rather than a two party contract, which the government had previously stipulated. In the alternative, the
Commission concealed a material fact from Petitioner, that the CIA was an investment contract as defined
in Securities and Exchange Commission v. W. J. Howey Co., 328 U.S. 293 (1946). Had that been
disclosed in 1998, Petitioner would not have entered into the settlement. It was the Commission that
breached the agreement three years later. The Commission cannot now invoke "the finality of settlement
orders" as a means of not granting Petitioner's request. Therefore, Orders imposing an industry bar on
Petitioner were never final.

I. Petitioner's Business Model

Petitioner managed approximately $345 million in assets "for approximately 100 investment
advisory clients, the vast majority of which are local school districts seeking to invest the proceeds of
municipal bond issues." [SEC's Complaint, ¶ 2]

Of the $345 million, approximately $233 million was invested "....in a form of investment called
a Collateralized Investment Agreement." [SEC's Complaint, ¶ 2]

Pursuant to governmental regulations, the value of the CIA was determined at its sale "...under
the economic accrual method, using the same compounding and interval and financial conventions used
to compute the yield on the [municipal] issue." [ 26 Code of Federal Regulations ["CFR"] § 1.148-5]

The value of the CIA determined pursuant to government regulations. [26 CFR § 1.148-5(d)]

Further, the valuation method and the issuance of the CIA was and is set by government
regulations. [26 CFR § 1.148-5(d)(6)(iii)]

The CIA, in compliance with government regulation, was only ever offered, purchased or sold at
market value. The value of the CIA was determined on an economic accrual method by discounting to
present value the expected cash flows on the investment at the rate the contract was awarded under
competitive bidding.
 The assets of Financial Management Sciences ["FMS"], the issuer of the CIA, were also valued
pursuant to government regulations. The assets of each class of investment were "blended" by treating
those investments as a single investment. [26 CFR § 1.148-5(b)(2)(i)] This is also the convention
followed by the industry and government agencies in the issuance of Collateralized Mortgage
Obligations, Real Estate Mortgage Conduits, and Collateralized Debt Obligations. [For example, the
Government National Mortgage Association REMIC Pass-Through Securities, Trust 2001-57 ["GNMA
2001"] contains the exact security, a Fannie Mae inverse floater, CUSIP 31359EEN7, that the
Commission alleged Petitioner had misrepresented by securitizing it for a value in excess of its market
value. GNMA 2001 has securitized the inverse floater for a value greater than its market value.]

II. The Commission's Complaint

On September 26, 1997, in ex parte proceedings, the Commission filed its complaint against
Petitioner and his companies. That complaint alleges that the CIA was "...an investment which pays a
specified rate of return to clients over a fixed period, and which is fully protected or collateralized by a
pool of securities equalling [sic] the amount of the client's principal investment." [SEC's Complaint, ¶ 3]

The complaint alleged that Black and his companies had entered into contracts with various
municipalities under which a pool of securities owned by FMS was to have a market value equal to the
market value of the CIAs outstanding. Because the pool had less forced liquidation value than the value
of the CIAs outstanding "...new clients invested into the CIA program would be immediately diluted by
as much as 45 percent." ." [SEC's Complaint, ¶ 5]

The SEC's complaint did not address the value of the CIA predicated upon the economic accrual
method or a reasonable expectation of profits. Instead the complaint alleges that Black breached his
contract by not maintaining assets in the pool equal to the value of the CIAs outstanding, but does not
define or state that value. The Commission's complaint effectively characterizes the CIA as some form of
repurchase agreement, only redeemable by requiring Black's companies to buy the CIA back from the
customer. The complaint does not state that the CIA could have been sold at any time to any other
investor, taxable or tax-exempt or that the CIA's market value was greater than the value Black had
represented to his customers.
 By characterizing the CIA as a two party contract which Black and his companies had allegedly
breached, the Commission claimed jurisdiction and the court, in ex parte proceedings, agreed. The
Commission deceived Black into executing the settlement agreement by withholding the information that
the Commission considered the CIA a security and not disclosing the value of the CIA which it obtained
during the August 1997 audit of Devon and did not contest in its ex parte complaint.

III. The Contract between Black and the Government

On January 24, 2000, the government and Black executed the Joint Stipulation of Facts ["JSF"],
previously submitted to the Commission by Petitioner. The government stipulated that the assets of FMS,
consisting of $164 million of client assets and $7 million of FMS assets, were yielding "...approximately
fourteen percent annually." [Joint Stipulation of Facts, ¶ 52]

The government stipulated in the JSF that "[a]t all material times, the CIA was a contract
between Devon, on behalf of a client, and FMS as a guarantor...." The CIA was a two party contract.

IV. The Commission's April 27, 2001 Brief

The Commission filed a brief in district court for the Western District of Pennsylvania redefining
the character of the CIA. The Commission disclosed that the CIA was not a two party contract between
Devon and FMS as the government had contracted but rather a security, specifically an investment
contract. The Commission quoted the definition of an investment contract "...as (1) an investment of
money, (2) in a common enterprise, (3) with a reasonable expectation of profits to be derived from the
entrepreneurial or managerial efforts of others." [SEC April 27, 2001 Brief, page 16]

The Commission stated that the CIA's value was to be determined based on profits generated by
the efforts of the manager employing all the corporate assets. Those assets and the cash flows generated
and reasonably expected to be generated on those assets, must be valued. This is the identical procedure
required by government regulations, as noted above, as well as legal precedent and industry convention.
 When the Commission submitted its brief on April 27, 2001, it was aware of the contract
executed between Black and the government on January 24, 2000, the Joint Stipulation of Facts in which
the government stipulated that the CIA was a two party contract. The Commission also knew the
complaint it filed as well as the settlement agreement did not define the CIA as an investment contract.
Further, the Commission knew that the CIA's value, determined by an expectation of profits, was never
disclosed by the Commission, either its own valuation or the valuation in the Commission's possession
that was done by Petitioner.

V. Subsequent Government Statements

In September of 2003, the US Attorney for the Western District of Pennsylvania, Mary Beth
Buchanan, stated in a court filed brief that the "...Government alleged that the defendant [Black]
misrepresented the value of the assets underlying the ...CIAs. The CIAs themselves were not susceptible
to independent evaluation."

VI. Summary

The government has stipulated that the assets in the CIA program were generating approximately
$23 million per year in profits. Even after expenses and assuming a discount rate of 6%, the value of the
enterprise exceeded $270 million, versus a stated value $235 million. Any owner of the CIA could have
sold the CIA for the value represented in monthly statements.

This Commission stated on April 27, 2001, three and one-half years after filing its complaint
against Petitioner, that the CIA was a security and not the agreed upon two party contract. The value of
that security was to be determined by a reasonable expectation of profits of the enterprise, pursuant to
case law, industry convention and government regulation.

Either the Commission determined that the CIA was two party contract in 1998 when it executed
the settlement agreement, which deprived the Commission of jurisdiction to enter into the settlement
agreement and institute the industry bar against Black; or the Commission knew in 1998 that the CIA was
an investment contract with value to be determined by an expectation of profits and withheld that
determination from Black, deceiving him into executing the settlement.

Regardless, the Commission cannot deny Black's petition to vacate the industry bar against him
preventing his association with an investment advisor or an investment company based upon the finality
of a settlement that the SEC entered into either fraudulently or without jurisdiction; or that Black entered
into without full knowledge of the facts. The existence of the April 27, 2001 brief by the SEC defining the
CIA as a security is evidence that not all information required for a settlement was in the settlement
agreement and disclosed to all parties. The settlement agreement in 1998 was not and could not have been
final.

Accordingly, Black again requests that the Commission vacate the industry bar against him in its
entirety and to do so in a timely fashion. Black further requests that the Commission release a public
statement that the CIA was worth approximately $270 million on September 26, 1997, versus Black's
representation of $235 million.

April 20, 2010

Respectfully Submitted,

John G. Black, Pro Se

1446 Centre Line Road
Warriors Mark, Pa. 16877
814-632-8631
 Administrative Proceeding

File No. 3-9599

UNITED STATES OF AMERICA

Before the
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.

April 20, 2010

_______________________________
In the Matter of
JOHN GARDNER BLACK
And
DEVON CAPITAL MANAGEMENT :
["Devon"]
_______________________________
: PETITIONER'S REQUEST FOR
: RECONSIDERATION OF THE
: COMMISSION'S APRIL 13, 2010
: ORDER GRANTING IN PART
PART AND DENYING IN PART PETITION
: TO SET ASIDE BAR ORDER

CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of this Petitioner’s Request for Reconsideration of the
Commission's April 13, 2010 Order Granting in Part and Denying in Part Petition to Set Aside Bar Order
was sent on April 21, 2010 via United States first class mail, postage prepaid and addressed to:

Kenneth H. Hall Elizabeth M. Murphy

Attorney for Div. of Enforcement Secretary
Securities and Exchange Commission Securities and Exchange Commission
100 F Street, N.E. 100 F Street, N.E.
Washington, D.C. 20549 Washington, D.C. 20549

_____________________________
John G. Black
 JOHN GARDNER BLACK
1446 Centre Line Road
Warriors Mark, Pa. 16877

April 20, 2010

Kenneth H. Hall
Attorney for Div. of Enforcement
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549

Re: File No. 3-9599

Dear Mr. Hall,

Enclosed please find two copies of Petitioner’s Request for Reconsideration of the Commission's
April 13, 2010 Order Granting in Part and Denying in Part Petition to Set Aside Bar Order which is being
filed in the above referenced proceeding.

Sincerely,

John G. Black
 JOHN GARDNER BLACK
1446 Centre Line Road
Warriors Mark, Pa. 16877

April 20, 2010

Elizabeth M. Murphy
Secretary
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549

Re: File No. 3-9599

Dear Ms. Murphy,

Enclosed please find two copies of Petitioner’s Request for Reconsideration of the Commission's
April 13, 2010 Order Granting in Part and Denying in Part Petition to Set Aside Bar Order which is being
filed in the above referenced proceeding.

Sincerely,

John G. Black