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U.S. Securities and Exchange Commission

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23001 / May 23, 2014

Securities and Exchange Commission v. Frederick J. O'Meally et al., Civil Action No. 06-CV-6483-LTS (S.D.N.Y.)

Second Circuit Court of Appeals Reverses District Court Judgment Against Former Prudential Securities Broker Related to Market Timing Practices

The Securities and Exchange Commission announced today that on May 19, 2014, the United States Court of Appeals for the Second Circuit overturned the judgment against Frederick J. O'Meally entered by a federal court in New York on March 12, 2013. In that final judgment, the court had ordered O'Meally to pay over $763,000 in disgorgement, prejudgment interest, and a civil penalty.

On December 14, 2011, a federal jury returned a verdict in the Commission's favor against O'Meally, a resident of Bay Shore, New York. O'Meally is a former registered representative of broker-dealer Prudential Securities Inc. The jury found O'Meally liable for violations of Sections 17(a)(2) and/or (3) of the Securities Act of 1933. The verdict against O'Meally followed a month-long trial in U.S. District Court in Manhattan.

The Commission filed its Complaint on August 28, 2006 against four registered representatives formerly employed by Prudential Securities, Inc. The Complaint alleged that, between 2001 and 2003, certain mutual fund companies detected market timing activity by the defendants and attempted to block the defendants and their hedge fund customers from further trading in their funds. The Complaint further alleged that the defendants used fraudulent and deceptive trading practices to conceal their and their customers' identities to evade these blocks. Cases against the three other defendants had been resolved previously by settlement.

In reversing the judgment against O'Meally, the Second Circuit Court of Appeals concluded that there was insufficient evidence to support a finding of negligence.

The Commission also brought related enforcement actions against several other parties associated with Prudential Securities concerning deceptive market timing activities, as well as a settled enforcement action against Prudential Securities itself on August 28, 2006, in which Prudential agreed to pay $270 million that was later distributed to harmed investors.

For further information about the Commission's action in SEC v. O'Meally et al. and related proceedings, see Litigation Release No. 22643 (March 13, 2013) [final judgment against O'Meally]; Litigation Release No. 22196 (December 16, 2011) [jury verdict against O'Meally]; Litigation Release No. 21882 (March 10, 2011) [settlement with Jason N. Ginder]; Litigation Release No. 20910 (February 25, 2009) [settlement with Michael L. Silver and Brian P. Corbett]; Litigation Release No. 19813 (August 28, 2006) [filing of complaint in SEC v. O'Meally et al.]; Release No. 34-64098 (March 18, 2011) [settled administrative proceeding against Ginder]; Release No. 34-59640 (March 27, 2009) [settled administrative proceeding against Corbett]; Release No. 34-59639 (March 27, 2009) [settled administrative proceeding against Silver]; and Release No. 34-54371 (August 28, 2006) [settled administrative proceeding against Prudential Equity Group, LLC, formerly known as Prudential Securities, Inc.].

 

http://www.sec.gov/litigation/litreleases/2014/lr23001.htm


Modified: 05/23/2014