U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19771 / July 24, 2006
Leslie Mersky, et al., Civil Action No. 93-CV-5200 (E.D. Pa.)
Civil and Administrative Proceedings Resolved as to Gerard McCallion in Connection With a Fraudulent Initial Public Offering
McCallion to Pay $7631 and Barred From Association With Any Broker or Dealer
The Securities and Exchange Commission ("Commission") announced today that it has resolved certain administrative and district court proceedings with Gerard McCallion ("McCallion"). On July 20, 2006, the Honorable Berle M. Schiller, United States District Court Judge, signed a Final Judgment permanently enjoining McCallion from violations of antifraud provisions of the federal securities laws ("Final Judgment"). Securities and Exchange Commission v. Mersky, et al., Civil Action No. 93-5200 (E.D. Pa.). McCallion consented to the Final Judgment without admitting or denying the allegations of the Commission's complaint, except as to jurisdiction.
In the civil injunctive action filed by the Commission in 1993, the Commission alleges that McCallion, as president of Cantor Capital Corp. ("Cantor"), facilitated a fraudulent initial public offering by a shell company. The complaint alleges that McCallion knowingly or recklessly permitted Cantor, which underwrote the offering, to sell the stock to three related purchasers using multiple names, opening new accounts for each name and creating the appearance that the offering was public. In January 1994, the Commission's civil action was stayed upon the request of the office of the United States Attorney for the Eastern District of Pennsylvania.
The Final Judgment permanently enjoins McCallion from violating Section 17(a) of the Securities Act of 1933, and Section 10(b) of Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Final Judgment orders McCallion to pay disgorgement together with prejudgment interest in the amount of $7,631. The Commission did not seek a civil penalty because the alleged wrongdoing preceded the effective date of the Securities Enforcement Remedies and Penny Stock Reform Act of 1990. (Pub. L. No. 101-429, 104 Stat. 931 (1990)).
The Commission also announced today that it issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions barring McCallion from association with any broker or dealer. This order is based on the permanent injunction contained in the Final Judgment.
The civil action continues with respect to additional defendants.