UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 46856 / November 20, 2002
File No. 3-10890
In the Matter of
ENRIQUE E. PERUSQUIA
| ORDER MAKING FINDINGS
AND IMPOSING REMEDIAL
SANCTION BY DEFAULT|
Respondent Enrique E. Perusquia is in default under Rule 155(a) of the Securities and Exchange Commission's Rules of Practice, 17 C.F.R. §§ 201.155(a), because he has failed to file an answer in this matter and because he has failed to file a response to my Order to Show Cause, which I issued on October 23, 2002, allowing him until November 13, 2002, to show cause why he should not be found to be in default and sanctioned as the Division of Enforcement requests.
Accordingly, I find the following allegations in the Order Instituting Proceedings, dated September 16, 2002, are true:
- Perusquia was employed as a registered representative at Lehman Brothers Inc. (Lehman), a broker-dealer, from 1987 to June 1994. Perusquia was employed as a registered representative at PaineWebber, a broker-dealer, from June 1994 to March 1998.
- Perusquia pled guilty to securities fraud, was sentenced to 78 months incarceration and ordered to pay $68 million in criminal restitution.
- On January 30, 2002, the United States Attorney's Office for the Northern District of California filed a criminal information against Perusquia, alleging six counts of securities fraud, in violation of Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. United States v. Perusquia, No. 02-CR-40013 CW.
- On February 11, 2002, Perusquia filed a plea agreement in which he pled guilty to two counts of securities fraud in violation of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
- On May 31, 2002, the United States District Court for the Northern District of California entered judgment against Perusquia, pursuant to the written plea agreement. The Court accepted the guilty plea, sentenced Perusquia to 78 months incarceration to be followed by three years of supervised release. The Court ordered Perusquia to pay $68 million in restitution and a $200 special assessment. The Court dismissed the remaining counts against Perusquia pursuant to motion by the U.S. Attorney.
- In addition to the customary terms of release, the Court imposed certain special conditions, including a condition that Perusquia "shall not be employed in the securities field or employed with any financial institution."
- In his written plea agreement, Perusquia admitted that he forged, and caused others to forge, the signatures on the accounts of a wealthy client in order to make tens of millions of dollars of unauthorized trades in the stocks of a small group of speculative gold mining companies. Perusquia also admitted to forging, or causing others to forge, client signatures in order to trade on margin, without the clients' knowledge or consent. As a result of Perusquia's conduct, the client lost at least $68 million.
- Perusquia admitted that in return for investing in these companies, Perusquia received commissions in the form of cash and stock, which he failed to disclose to his client. In his plea agreement, Perusquia estimated that he received a total of over $1.3 million in cash and over 600,000 shares of stock in undisclosed commissions from his unauthorized trades at both Lehman and PaineWebber.
- Perusquia also admitted in his plea agreement to misappropriating $1.68 million from his client's accounts.
ACCORDINGLY, it is
ORDERED, pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934, that Respondent Enrique E. Perusquia, be, and hereby is, BARRED from associating with a broker or dealer.
Robert G. Mahony
Administrative Law Judge