U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20910 / February 25, 2009
Securities and Exchange Commission v. Frederick O'Meally, et. al., United States District Court for the Southern District of New York, Civil Action No. 1:06-cv-06483-LTS
Final Judgments Entered Against Former Prudential Registered Representatives Michael L. Silver and Brian P. Corbett Concerning Deceptive Market Timing PracticesThe Securities and Exchange Commission announced today that on February 24, 2009, the U.S. District Court for the Southern District of New York entered final judgments by consent against Michael L. Silver and Brian Corbett, two defendants in a civil injunctive action filed by the Commission in August 2006. The Commission's Complaint charged that Silver, 37, of Woodcliff, New Jersey, and Corbett, 36, of Baltimore, Maryland, were registered representatives associated with Prudential Securities, Inc., who defrauded mutual fund companies and the funds' shareholders in order to place in market timing trades at mutual funds that were trying to detect and block such trading. Without admitting or denying the allegations in the Commission's Complaint, Silver and Corbett consented to the entry of final judgments enjoining them from violating the antifraud provisions of the federal securities laws. The final judgment against Silver also orders him to pay a civil penalty of $175,000.
The Commission's Complaint alleged that, from at least January 2001 until September 2003, certain mutual fund companies tried to detect and block market timing activity. The Complaint alleged that Silver and Corbett defrauded mutual fund companies by hiding their and their hedge fund customers' identities through the use of multiple customer account numbers and broker identification numbers. The Complaint alleged that, among other deceptive practices, when mutual funds succeeded in identifying and attempted to block the defendants' trading activity under one customer account or broker identification number, the defendants often simply switched to a different customer account for the same customer or a different broker identification number and continued placing market timing trades.
The final judgments imposed permanent injunctions prohibiting Silver and Corbett 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. Silver was also ordered to pay a civil monetary penalty of $175,000. The final judgment against Corbett does not impose a civil monetary penalty based on Corbett's sworn representations in his statement of financial condition and other information provided to the Commission. Silver and Corbett have also each consented to be prohibited from association with a broker-dealer or investment adviser, with a right to reapply after three years in related administrative proceedings to be instituted after entry of the permanent injunctions.
The Commission's civil action remains pending against Frederick O'Meally and Jason Ginder.
For further information, please see: Litigation Release No. 19813 (August 28, 2006); please also see Exchange Act Release No. 54371 (August 28, 2006) (settlement with Prudential Equity Group, LLC, formerly known as Prudential Securities, Inc.)