UNITED STATES OF AMERICA
In the Matter of
Thomas M. Durkin
| ORDER INSTITUTING
TO SECTION 203(f) OF THE
ACT OF 1940, MAKING
FINDINGS AND IMPOSING
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be instituted pursuant to Section 203(f) of the Investment Advisers Act of 1940 ("Advisers Act") against Thomas M. Durkin ("Durkin").
In anticipation of the institution of these proceedings, Durkin has submitted an Offer of Settlement to the Commission which the Commission has determined to accept. Solely for the purposes of these proceedings and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party and, without admitting or denying the findings contained herein, except as to the Commission's jurisdiction over him and over the subject matter of this proceeding and to the matters set forth in paragraphs II.1., 2. and 5. below and the entry of the injunction and criminal conviction set forth in paragraphs II.4. and 8., which are admitted, Durkin consents to entry by the Commission of the findings and remedial sanctions set forth below.
Accordingly, IT IS ORDERED that proceedings against Durkin be, and hereby are, instituted.
On the basis of this Order and the Offer of Settlement submitted by Durkin, the Commission finds that:
1. During the period 1997 through 2000, Durkin was president of Cashel Management Co., Inc. ("Cashel"), an investment adviser registered with the Commission.
2. On August 2, 2002, the Commission filed a Complaint in the United States District Court for the Northern District of Ohio against Durkin captioned SEC v. Thomas M. Durkin and John E. Orin, Jr., 1:02CV 1505 (N.D. Ohio 2002).
3. The Commission's Complaint alleges that from about 1997 through 2000, Durkin engaged in fraudulent practices in the accounts of numerous Cashel customers. The Complaint alleges that Durkin's activities included: (1) making material misrepresentations to customers about RxRemedy, Inc. securities; (2) making material misrepresentations to Cashel customers about how their accounts would be managed; (3) failing to follow customers' directions with regard to transactions in their accounts; (4) making unauthorized trades in option contracts with customer funds; and (5) failing promptly to amend Cashel filings when information in those filings became materially inaccurate.
4. On August 19, 2002, in SEC v. Durkin, the Court entered an order enjoining Durkin from violating Section 10(b) of the Securities Exchange Act of 1934 [15 U.S.C. § 78j(b)] and Rule 10b-5 promulgated thereunder [17 C.F.R. § 240.10b-5], Sections 206(1) and 206(2) of the Advisers Act [15 U.S.C. § 80b-6(1) and (2)], and Section 204 of the Advisers Act [15 U.S.C. § 80b-4] and Rule 204-1(b)(1) thereunder [17 C.F.R. § 275.204-1(b)(1)]. Durkin, without admitting or denying the allegations in the Complaint, consented to the entry of the order.
5. On March 12, 2002, Durkin pled guilty to a criminal information charging him with conspiracy, wire fraud, and aiding and abetting bank fraud. United States v. Thomas M. Durkin, Criminal Case No. 01 CR 574 (N.D. Ohio 2002).
6. The criminal information alleged that Durkin, while president of Cashel, participated in a conspiracy to defraud numerous Cashel clients by withdrawing funds from client accounts and using them for risky investments in a start-up company while disregarding the clients' instructions and making false representations and omitting facts about the investments and the start-up company's ability to repay the investments.
7. Durkin's criminal conviction arose out of the conduct of the business of an investment adviser because he was charged with a scheme involving the investment of funds from the accounts of an investment adviser's clients and also includes charges of wire fraud in violation of 15 U.S.C. § 1343.
8. Durkin's judgment of conviction was entered on June 6, 2002.
In view of the foregoing, the Commission deems it appropriate and in the public interest to accept the Offer of Settlement of Thomas M. Durkin and to impose the sanction specified therein.
Accordingly, IT IS ORDERED that Respondent Thomas M. Durkin is barred from association with any investment adviser.
For the Commission, by its Secretary, pursuant to delegated authority.
Jonathan G. Katz
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