United States of America
In the Matter of
KYLE G. KENNEDY,
|ORDER INSTITUTING ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS AND A CEASE-AND-DESIST ORDER PURSUANT TO SECTIONS 15(b) AND 21C OF THE SECURITIES EXCHANGE ACT OF 1934|
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be, and hereby are, instituted pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 ("Exchange Act"), against Kyle G. Kennedy ("Respondent").
In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (the "Offer") 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, and without admitting or denying the findings herein, except as to the Commission's jurisdiction over him and the subject matter of these proceedings, Respondent consents to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 ("Order"), as set forth below.
On the basis of this Order and Respondent's Offer, the Commission finds1 that:
1. Kennedy, age 43, resides in Lutz, Florida. From June 2000 through November 2001, Kennedy was a registered representative associated with Old Dominion Securities, Inc. ("Old Dominion"), a broker-dealer registered with the Commission.
2. Robert A. Magnan ("Magnan"), age 39, resides in Clearwater, Florida. On April 5, 1995, the Commission issued an order barring Magnan from association with any broker or dealer. See In the Matter of Robert A. Magnan, et al., Securities Act Rel. No. 7155, Exchange Act Rel. No. 35565 (April 5, 1995)(the "1995 Order").
3. In June 2000, Old Dominion agreed to sell stock in a private placement offering conducted by Investment Recovery Network, Inc., a Tampa, Florida company controlled by Magnan. At the time, Kennedy was aware that the Commission had barred Magnan from association with any broker or dealer.
4. Between June 2000 and December 2000, Old Dominion, aided and abetted
and caused by Kennedy, unlawfully permitted Magnan to become associated with the firm in violation of the Commission's 1995 Order. During that time period, Kennedy operated Old Dominion's Tampa office from Investment Recovery's headquarters and met with Magnan daily to discuss the Investment Recovery offering. Further, Magnan paid all of Old Dominion's expenses related to the Investment Recovery offering, including rent and secretarial services, and referred potential investors to Kennedy. With Kennedy's knowledge, Magnan also conducted a one to three hour sales presentation to potential investors, effectively making the sale of Investment Recovery stock to these investors.
5. As a result of the conduct described above, Kennedy willfully aided and abetted and caused Old Dominion's violation of Section 15(b)(6)(B)(ii) of the Exchange Act, which prohibits a broker or dealer to permit a person barred by the Commission to become or remain associated with the broker or dealer without the consent of the Commission.
6. Respondent has submitted a sworn Statement of Financial Condition dated October 4, 2002, and other evidence and has asserted his inability to pay disgorgement plus prejudgment interest, and a civil penalty.
7. Respondent undertakes to cooperate with the Commission staff in preparing for and presenting any civil litigation or administrative proceeding concerning any transaction that is the subject of the Order. Respondent understands that the Commission has considered his undertakings in determining the appropriate Order. Respondent understands that if he fails to comply with these undertakings, the Commission reserves the right to reopen this proceeding and reconsider the appropriateness of the Order imposed.
8. In determining whether to accept the Offer, the Commission has considered these undertakings.
In view of the foregoing, the Commission deems it appropriate to impose the sanctions specified in Respondent's Offer.
ACCORDINGLY, IT IS HEREBY ORDERED:
A. Pursuant to Section 21C of the Exchange Act, that Respondent Kennedy shall cease and desist from causing any violations and any future violations of Section 15(b)(6)(B)(ii) of the Exchange Act.
B. Pursuant to Section 15(b)(6) of the Exchange Act, that Respondent Kennedy be, and hereby is, suspended from association with any broker or dealer for a period of three months, effective on the second Monday following the entry of this Order. Respondent shall provide to the Commission, within 30 days after the end of the three month suspension period, an affidavit that he has complied fully with the sanctions described in this section.
C. Respondent shall pay disgorgement of $57,412.00 plus prejudgment interest, but that payment of such amount is waived based upon Respondent's sworn representations in his Statement of Financial Condition dated October 4, 2002 ("Financial Statement"), and other documents submitted to the Commission. Based upon Respondent's sworn representations in his Financial Statement and other documents submitted to the Commission, the Commission is not imposing a penalty against Respondent.
D. The Division of Enforcement ("Division") may, at any time following the entry of this Order, petition the Commission to: (1) reopen this matter to consider whether Respondent provided accurate and complete financial information at the time such representations were made; and (2) seek an order directing payment of disgorgement plus prejudgment interest, and the maximum civil penalty allowable under the law. No other issue shall be considered in connection with this petition other than whether the financial information provided by Respondent was fraudulent, misleading, inaccurate, or incomplete in any material respect. Respondent may not, by way of defense to any such petition: (1) contest the findings in this Order; (2) assert that payment of disgorgement, interest, or a penalty should not be ordered; (3) contest the amount of disgorgement and interest to be ordered; (4) contest the imposition of the maximum penalty allowable under the law; or (5) assert any defense to liability or remedy, including, but not limited to, any statute of limitations defense.
By the Commission.
Jonathan G. Katz
1 The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding on any other person or entity in this or any other proceeding.
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