UNITED STATES OF AMERICA
In the Matter of
|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 Nicholas Antonelli ("Antonelli" or "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 as set forth below.
On the basis of this Order and Respondent's Offer, the Commission finds1 that:
1. Antonelli is 43 years of age and resides in Commack, New York. Antonelli was employed by Donald & Co. Securities, Inc. ("Donald & Co.") as a registered representative at their Garden City branch office from in or around October 2000 until in or around July 2002. Antonelli holds Series 7 and 63 licenses.
2. Donald & Co. was registered with the Commission as a broker-dealer from May 25, 1977 until September 10, 2002 when Donald & Co. filed a Form BD-W. Donald & Co. was a member of the NASD. The firm's main office was located in Tinton Falls, New Jersey, and the firm maintained 10 branch offices. On July 24, 2002, Donald & Co. filed notice, pursuant to Rule 17a-11 of the Exchange Act, that it was in a position of a net capital deficiency and closed its branch offices, including its Garden City office.
3. From in or around October 2000 through in or around July 2002, while employed by Donald & Co. at its Garden City branch office, Respondent solicited clients and others to invest in The Classica Group, Inc. ("Classica"). In connection with the solicitations, Respondent made inflated price predictions and misleading statements about Classica, opened accounts without authorization, and received excessive undisclosed commissions for causing his clients and others to purchase Classica stock.
4. Respondent falsely told customers that favorable announcements about Classica would be coming out shortly, and that the price would increase substantially. Specifically, Respondent falsely told at least one investor that Classica was to be acquired by "Nestle," and that he was a principal of Donald & Co. Respondent caused Donald & Co. clients and others to purchase Classica at inflated prices. While doing so, Respondent knew that Donald & Co. employees sold Classica out of their own holdings at the same time at a profit. Respondent knew or was reckless in not knowing that his representations to investors about Classica were false and material.
5. Respondent, at times, also refused to execute orders to sell Classica unless the sale could be made to another Garden City office customer. According to Garden City office policy, if a client insisted that Classica be sold, the broker was responsible for the shares until a buyer was found for those same shares.
6. Through his conduct, Respondent participated in the offering of the common stock of Classica, a "penny stock" as that term is used in Section 15(b)(6) and as defined by Section 3(a)(51) of the Exchange Act and Rule 3a51-1 thereunder.
7. As a result of the conduct described above, Respondent willfully violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, which prohibit fraudulent conduct in connection with the purchase or sale of securities.
The Respondent's Offer does not include an agreement to pay disgorgement or penalties. The issue of disgorgement and penalties will be resolved at a later date. As a part of his offer of settlement of this matter, Respondent agrees that if Respondent fails to submit an offer of settlement with respect to disgorgement and penalties that is acceptable to the Commission, then the Commission may reopen this proceeding against the Respondent for the purpose of resolving the issue of disgorgement and penalties. If the Commission reopens this proceeding, Respondent agrees that he will not contest the findings of fact or law in this Order as a basis for any Commission determination to order disgorgement or penalties that may be appropriate and in the public interest.
In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified in Respondent Antonelli's Offer.
Accordingly, it is hereby ORDERED:
A. Pursuant to Section 21C of the Exchange Act, that Respondent Antonelli cease and desist from committing or causing any violations and any future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
B. Pursuant to Section 15(b)(6) of the Exchange Act, that Respondent Antonelli be, and hereby is, barred from association with any broker or dealer.
C. That Respondent be, and hereby is, barred from participating in any offering of a penny stock, including: acting as a promoter, finder, consultant, agent or other person who engages in activities with a broker, dealer or issuer for purposes of the issuance or trading in any penny stock, or inducing or attempting to induce the purchase or sale of any penny stock.
D. 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.
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