U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20273 / September 11, 2007
Securities and Exchange Commission v. Orlando Joseph Jett, 06 Civ. 13723 (S.D.N.Y.)
Court Enforces Commission's $8.21 Million Disgorgement Order against Orlando Joseph Jett
On September 7, 2007, the United States District Court for the Southern District of New York entered a judgment enforcing the March 5, 2004 Opinion and Order of the Securities and Exchange Commission directing that Orlando Joseph Jett pay disgorgement of $8.21 million and a $200,000 civil penalty, and ordering Jett to cease and desist from future violations of certain provisions of the federal securities laws.
The Commission's Opinion and Order of March 5, 2004 found that Jett, while a government bond trader, managing director, and senior vice president of Kidder, Peabody & Co., then a registered broker-dealer, had, with fraudulent intent, exploited an anomaly in Kidder's automated trading records system to book non-existent profits of approximately $264 million, when in fact Jett's trading activities caused Kidder losses of $75 million. It further found that Jett's actions constituted a scheme to defraud under Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and that Jett's actions had violated the "books and records" provisions of Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-3(a)(2) thereunder.
The Commission's Opinion and Order barred Jett from association with any registered broker-dealer, directed Jett to cease and desist from future violations of these provisions of the federal securities laws, and ordered Jett to disgorge the $8.21 million in bonuses Jett had received as a result of his fraudulent transactions and pay a civil penalty of $200,000.
The Commission brought an action in 2006 to enforce the Commission's order against Jett. The Court's opinion held that Jett could not challenge the merits of the Commission's order in the enforcement proceedings, in that Jett had not filed a timely appeal to the Court of Appeals, which has exclusive jurisdiction to review Commission orders. The Court denied Jett's assertion that he had been denied due process of law in that he claimed not to have received a copy of the Commission's Opinion and Order, finding that the Commission had sent copies by certified and first class mail to Jett's last known address (and faxed a copy to a number Jett had provided to the Commission), and that this was reasonably calculated under the circumstances to inform Jett of the Opinion and Order.
For further information, see the Commission's Opinion and Order, Securities Exchange Act Rel. No. 49366 (March 5, 2004).