U.S. Securities & Exchange Commission
SEC Seal
Home | Previous Page
U.S. Securities and Exchange Commission

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 49369 / March 5, 2004

INVESTMENT ADVISERS ACT OF 1940
Release No. 2218/ March 5, 2004

Admin. Proc. File No. 3-11422


In the Matter of

FREDERICK W. MCCARTHY

Respondent.



:
:
:
:
:
:
:
:
:
:

ADMINISTRATIVE PROCEEDINGS PURSUANT TO SECTION 15(b) OF THE SECURITIES EXCHANGE ACT OF 1934 AND SECTION 203(f) OF THE INVESTMENT ADVISERS ACT OF 1940, MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONS

I.

The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Section 203(f) of the Investment Advisers Act of 1940 ("Advisers Act") against Frederick W. McCarthy ("McCarthy" or "Respondent").

II.

In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (the "Offer") that 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, and the findings contained in Sections III.2 and III.4 below, which are admitted, Respondent consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Section 203(f) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions ("Order"), as set forth below.

III.

On the basis of this Order and Respondents' Offer, the Commission finds that:

1. McCarthy, age 61, is a resident of Palm Beach, Florida. McCarthy has served as a principal and the chairman of Triumph Capital Group, Inc. ("Triumph") since its founding in 1990. Triumph, which is based in Boston, Massachusetts and West Palm Beach, Florida, is an investment firm that currently manages funds totaling approximately $360 million. Triumph received management fees from its funds, and through its management, made the investment decisions for the funds. A Triumph entity, Tri-Conn II Advisors, L.P., in which McCarthy was a principal, was the general partner of Triumph Connecticut II L.P. Triumph Connecticut II L.P. was a private investment fund in which the State of Connecticut pension fund, having invested $200 million in November 1998, was the sole limited partner. At all relevant times, Triumph and Tri-Conn II Advisors, L.P. acted as unregistered investment advisers. McCarthy was also, at all relevant times, a registered representative with a Triumph entity, Triumph Corporate Finance Group, Inc., which is a broker or dealer registered with the Commission.

2. On October 28, 2003, a final judgment was entered by consent against McCarthy, permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act in the civil action entitled Securities and Exchange Commission v. Paul J. Silvester, et al. , Civil Action Number 3:00-CV-1941, in the United States District Court for the District of Connecticut.

3. The Commission's complaint, filed October 10, 2000, alleged, among other things, that Triumph and McCarthy provided $2 million in consulting contracts to associates of the Connecticut State Treasurer (the "Treasurer") in order to secure the Treasurer's decision to invest $200 million in state pension funds in a Triumph investment fund. The Commission's complaint further alleged that McCarthy violated his fiduciary duty to the state pension fund by failing to disclose the quid pro quo arrangement to the state pension fund.

4. On September 4, 2003, McCarthy pleaded guilty to one count of theft or bribery concerning programs receiving federal funds, in violation of 18 U.S.C. 666, in the United States District Court for the District of Connecticut. McCarthy's plea agreement provides that (i) the United States Attorney will recommend that McCarthy be sentenced to 15 months imprisonment and (ii) the sentencing guidelines call for a penalty ranging from $4,000 to $40,000.

5. The count of the indictment to which McCarthy pleaded guilty alleged, among other things, that McCarthy, beginning on or about November 1998, rewarded the Treasurer by providing consulting contracts valued at approximately $2 million to the Treasurer's associates, at least in part, for the Treasurer's decision to increase the investment of state pension assets in a Triumph investment fund.

IV.

In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified in Respondent's Offer.

Accordingly, it is hereby ORDERED:

Pursuant to Section 15(b)(6) of the Exchange Act and Section 203(f) of the Advisers Act, that Respondent McCarthy be, and hereby is barred from association with any broker, dealer, or investment adviser;

Any reapplication for association by the Respondent will be subject to the applicable laws and regulations governing the reentry process, and reentry may be conditioned upon a number of factors, including, but not limited to, the satisfaction of any or all of the following: (a) any disgorgement ordered against the Respondent, whether or not the Commission has fully or partially waived payment of such disgorgement; (b) any arbitration award related to the conduct that served as the basis for the Commission order; (c) any self-regulatory organization arbitration award to a customer, whether or not related to the conduct that served as the basis for the Commission order; and (d) any restitution order by a self-regulatory organization, whether or not related to the conduct that served as the basis for the Commission order.

By the Commission.

Jonathan G. Katz
Secretary


http://www.sec.gov/litigation/admin/34-49369.htm


Modified: 03/05/2004