U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20458 / February 14, 2008
SEC v. Mark Barbera, 08 CV 1538 (MGC) (SDNY)
Commission Settles with Former Chief Financial Officer of Formerly Registered Broker-Dealer Trautman Wasserman & Company, Inc.
The Securities and Exchange Commission today filed a settled civil action in the U.S. District Court for the Southern District of New York against Mark Barbera (Barbera), the former Chief Financial Officer of formerly registered broker-dealer Trautman Wasserman & Company, Inc. (TWCO). The complaint alleges that TWCO engaged in a scheme to defraud mutual funds through, among other conduct, late trading. Between January 2001 and September 2003, TWCO accepted thousands of orders from its hedge fund customers to trade mutual funds after 4:00 p.m. ET, but executed the trades as though they had been received prior to 4:00 p.m. ET. This illegal conduct generated significant revenues for TWCO and harmed mutual fund investors by diluting the value of their investment. Mark Barbera (Barbera), TWCO's chief financial officer, sought capacity that could be used for mutual fund trading. Additionally, Barbera was present for parts of various discussions between TWCO partners and officers where the practice of submitting trades after 4:00 p.m. ET was discussed. Further, Barbera approved using TWCO assets to trade mutual funds through a proprietary account, which subsequently traded on the basis of news and market conditions after the market close, but those trades were priced at that day's net asset value. The CEO of TWCO generally placed the trades in the proprietary account, and Barbera monitored the TWCO proprietary account for net capital purposes. As a result of his conduct, Barbera violated Section 17(a)(2) of the Securities Act of 1933 (Securities Act).
The complaint seeks as relief a final judgment directing Barbera to pay a civil money penalty pursuant to Section 20(d) of the Securities Act. Barbera consented, without admitting or denying the allegations in the complaint, to the entry of a final judgment directing him to pay a civil penalty of $60,000. [SEC v. Mark Barbera, Civil Action Number 08 CV 1538 (MGC) (S.D.N.Y.)] (LR-20458).
In a separate administrative proceeding, the Commission issued an Order Making Findings and Imposing Remedial Sanctions Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Section 9(b) of the Investment Company Act of 1940, and Instituting a Cease-and-Desist Proceeding Pursuant to Section 8A of the Securities Act of 1933, Section 21C of the Securities Exchange Act of 1934 and Section 9(f) of the Investment Company Act of 1940, Making Findings and Imposing a Cease-and-Desist Order as to Mark Barbera (Order). The Order finds that Barbera willfully violated Section 17(a)(2) of the Securities Act, and caused violations of Section 15(c) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 22c-1, as adopted under Section 22(c) of the Investment Company Act of 1940 (Investment Company Act). The Order directs Barbera to cease and desist from committing or causing any violations and any future violations of Section 17(a)(2) of the Securities Act, from causing any violations and any future violations of Section 15(c) of the Exchange Act, and from committing or causing any violations and any future violations of Rule 22c-1, as adopted under Section 22(c) of the Investment Company Act. Further, the Order suspends Barbera from association with any broker or dealer, and prohibits Barbera from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter, for a period of six (6) months. Barbera consented to the issuance of the Order without admitting or denying the Commission's findings, except as to the Commission's jurisdiction over him and the subject matter of the proceedings. (In the Matter of Trautman Wasserman & Company, Inc.; Rel. 33-8780 (Feb. 5, 2007); Rel. 33-8894 (Feb. 14, 2008); File No. 3-12559).