UNITED STATES SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
RELEASE NO. 49460 / March 23, 2004
FILE NO. 3-11438
COMMISSION ISSUES ORDER AGAINST DANIEL E. EMMENEGGER, ALLEGING THAT HE VIOLATED THE SECURITIES LAWS BY ENGAGING IN FRAUDULENT TRADING
The Securities and Exchange Commission ("Commission") today issued an Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 ("Exchange Act") ("Order") against Daniel E. Emmenegger ("Emmenegger").
In the Order, the staff alleges that Emmenegger, an options trader and one-time clerk for Susquehanna Investment Group ("Susquehanna"), defrauded Susquehanna by filling options contracts orders Emmenegger himself placed through an undisclosed personal brokerage account. Since at least June 2002, Emmenegger, using these personal brokerage accounts, placed limit buy orders for options contracts for which he was the trading assistant on the AMEX floor, at prices well below the market price. These orders would go unfilled during the regular course of the trading day since no seller would accept Emmenegger's below-market prices. At or near the close of the trading day, Emmenegger manually filled his personal buy orders from Susquehanna's proprietary account at the below-market prices. Emmenegger did not report the trades to the tape as required by AMEX rules. By filling his personal buy orders from Susquehanna's proprietary account at prices well below the prevailing market price, Emmenegger caused losses in Susquehanna's proprietary account. Thereafter, Emmenegger sold the options contracts through his personal brokerage account at market prices in riskless transactions and profited from the spread between the artificially low purchase prices he obtained and the market sale prices.
The staff alleges that Emmenegger willfully violated, and committed or caused violations of, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide Emmenegger an opportunity to dispute the allegations, and to determine what sanctions, if any, are appropriate and in the public interest. The Commission directed that an administrative law judge shall issue an initial decision in this matter within 300 days from the date of service of the Order Instituting Proceedings.