U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21534 / May 26, 2010
SEC v. Gene T. Mancinelli, 06 CV 7885 (JGK) (S.D.N.Y.)
Former Wall Street Access Broker Settles Charges of Late Trading and Deceptive Market Timing of Mutual Funds
The Commission announced today that on May 3, 2010, the Honorable John G. Koeltl of the United States District Court for the Southern District of New York entered a final judgment against Gene T. Mancinelli in SEC v. Gene T. Mancinelli, 06 CV 7885 (S.D.N.Y.). Mancinelli consented to the entry of the final judgment.
The Commission's complaint against Mancinelli, a former broker at Wall Street Access, a registered broker-dealer, alleged that Mancinelli permitted his hedge fund customers to late trade and deceptively market time mutual funds. The complaint alleged that from approximately April 2001 through October 2001, Mancinelli and others acting at his direction accepted and executed more than 2,000 late trades in mutual funds for a hedge fund customer. The complaint also alleged that Mancinelli and his market timing customers utilized deceptive tactics to deceive mutual funds and facilitate these customers' market timing strategies. The complaint further alleged that Mancinelli and Wall Street Access benefited from the late trading and market timing through, among other things, the fees Mancinelli's customers paid. At the same time, the mutual funds were harmed by the market timing and late trading of Mancinelli and his customers.
The final judgment: (i) permanently enjoins Mancinelli from future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and from aiding and abetting violations of Section 15(c) of the Exchange Act and Rule 10b-3 thereunder; (ii) finds that Mancinelli is liable for disgorgement of $158,799 plus prejudgment interest of $35,337.48 for a total of $194,136.48, but based on Mancinelli's sworn representations and other documents and information submitted to the Commission does not order him to pay a civil penalty and waives payment of all but $45,000 of the disgorgement and prejudgment interest; and (iii) directs Mancinelli to pay disgorgement of $45,000.
In a separate administrative proceeding, the Commission issued an the Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions (Order) as to Mancinelli. The Order finds that Chekholko willfully aided and abetted and caused CI-Moscow's violation of Section 15(a) of the Exchange Act. The Order bars Mancinelli from association with any broker or dealer with the right to reapply for association after three years. Mancinelli consented to the issuance of the Order without admitting or denying any of the findings in the Order except as to the entry of the final judgment. (In the Matter of Gene T. Mancinelli, Release No. 62153 (May 21, 2010); Admin. Proc. File No. 3-13911).
See also Litigation Release No. 19857 (October 2, 2006).