U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21446 / March 10, 2010
Securities and Exchange Commission v. Jose O. Vianna, Jr. and Creswell Equities, Inc., Case No. 10 Civ. 1842 (GBD) (S.D.N.Y.)
SEC Charges Broker With Defrauding Institutional Customer of Over $3.3 Million
The Securities and Exchange Commission today announced that it has charged a stock broker with a fraudulent scheme to divert millions of dollars in trading profits from a large institutional customer of the broker to another of the broker's customers.
The complaint, filed on March 9, 2010 in federal court in Manhattan, alleges that Jose O. Vianna, Jr., a former registered representative at a New York based broker-dealer named Maxim Group LLC ("Maxim"), diverted profitable trades from the account of a large Spanish bank, referred to in the Complaint as Customer A, to the account of Creswell Equities, Inc. ("Creswell"), a British Virgin Islands company. The Commission's complaint alleges that over $3.3 million in trading profits were diverted from Customer A to Creswell.
The complaint alleges that 57 times between July 2007 and March 2008, Vianna simultaneously entered orders in the accounts of Customer A and Creswell to trade the same amounts of the same stock. Each time, he placed a buy order in one customer's account and a sell order in the other customer's account. When the market moved to make Customer A's trade profitable and Creswell's trade unprofitable, Vianna improperly misused his access to Maxim's order management system to divert Customer A's profitable trade to Creswell and Creswell's unprofitable trade to Customer A by changing Maxim's records to inaccurately reflect the account for which the orders were entered. However, when the market moved so that Creswell's trade was profitable and Customer A's unprofitable, Vianna let the trades remain as originally entered.
The Commission's complaint charges Vianna with securities fraud in violation of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 and also charges Vianna with aiding and abetting violations by Maxim of the books and records requirements of Section 17(a) of the Exchange Act, and Rule 17a-3. The Commission seeks permanent injunctive relief from Vianna, as well as disgorgement of ill-gotten gains plus prejudgment interest, and civil money penalties.
The Commission's complaint also charges Creswell as a relief defendant, and seeks disgorgement of Creswell's illicit profits, plus prejudgment interest. On March 9, 2010, the Court entered an order temporarily freezing Creswell's assets pending a hearing on the Commission's application to freeze Creswell's assets for the duration of the action.
The Commission acknowledges assistance provided by the Spanish Comisión Nacional del Mercado de Valores and by the Swiss Financial Market Supervisory Authority.
See Also: SEC Complaint