U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20497 / March 14, 2008
Securities and Exchange Commission v. Martin J. Druffner, et. al., United States District Court for the District of Massachusetts Civil Action No. 1:03-cv-12154-NMG
Final Judgment Entered Against Former Prudential Registered Representative Marc J. Bilotti Concerning Deceptive Market Timing Practices
The Securities and Exchange Commission announced that the U.S. District Court in Massachusetts entered a final judgment against Marc J. Bilotti, a defendant in a civil injunctive action brought by the Commission. The Commission's complaint charged that Bilotti, 37, of Charlestown, Massachusetts, defrauded mutual fund companies and the funds' shareholders in order to place in market timing trades on behalf of his customers at Prudential Securities, Inc. The District Court's order, entered March 3, 2008, permanently enjoins Bilotti from violating the antifraud provisions of the federal securities law and orders Bilotti to pay a penalty of $20,000. In a separate related action, the SEC issued an Order barring Bilotti from associating with any broker, dealer or investment adviser, with a right to reapply after three years.
In the District Court action, the Commission's complaint alleged Bilotti, a registered representative at the Boston branch office of Prudential Securities from 1999 to 2003, defrauded mutual fund companies and the funds' shareholders in order to engage in market timing. Bilotti knew that the fund companies monitored activity in their funds and imposed restrictions on excessive trading, the complaint alleged. To conceal his own identity and the identities of his customers, Bilotti used numerous registered representative identification numbers and opened customer accounts under fictitious names, the complaint alleged. His use of multiple accounts and identification numbers was intended to, and did, make it more difficult for the fund companies to detect their clients' market timing, thus misleading the fund companies to process transactions they would otherwise have rejected, the complaint alleged. The Court's injunction bars Bilotti from violating 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.
Bilotti consented to the issuance of the final judgment in the District Court action without admitting or denying the allegations in the Commission's complaint, and consented to the Commission's Order without admitting or denying its findings.
For further information, please see: Litigation Release Numbers 18784 (July 14, 2004), and 18444 (November 4, 2003). See also Exchange Act Release No. 54371 (August 28, 2006) [settled Order against Prudential Equity Group, LLC, formerly known as Prudential Securities, Inc., concerning deceptive market timing by its registered representatives].