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U.S. Securities and Exchange Commission



SECURITIES AND EXCHANGE COMMISSION V. EDWARD R. VOCCOLA, Civil Action No. 01CV11359-NG (D. MA) United States District Court for the District of Massachusetts (August 6, 2001)


The Securities and Exchange Commission today filed civil fraud charges in federal court against attorney Edward R. Voccola of Hingham, Massachusetts, alleging that during February through August, 2000, he bought over $7.4 million of securities in a free-riding scheme. Free-riding is the practice of purchasing securities without intending to pay for them and using the proceeds of the sale of stock to pay for the purchase. Voccola opened accounts at the Boston offices of ten brokerage firms and bought millions of dollars of stock, which he paid for with 38 worthless checks totaling more than $4.9 million. He then quickly sold the stock, often at a profit, to pay for the original purchases and buy additional stock. However, if the trades lost money, he never paid for the loss. Instead, he defrauded the brokerage firms by shifting the loss to them.

According to the complaint, during the first three weeks of his scheme, Voccola bought more than $2.1 million of securities, which he sold at a profit of nearly $300,000. Voccola allegedly wrote bad checks in purported payment for these purchases. The complaint alleges that Voccola then continued his free-riding but less successfully; overall he withdrew profits of approximately $20,000, leaving brokerage firms with net losses of approximately $195,000.

The complaint alleges that Voccola moved from one brokerage firm to another as each firm detected his scheme. According to the complaint, when Voccola opened accounts he falsely told many of the firms that he was employed by State Street Bank and earned $750,000 per year. In two instances, Voccola provided fictitious social security numbers to open accounts at a brokerage firm that had already barred him from further trading.

The Commission's complaint further alleges that Voccola's free-riding scheme took place when he was under criminal indictment for tax evasion and continued even after a federal court ordered him to restrict his securities trading. According to the complaint, after his indictment in March, 2000, Voccola was allowed pre-trial release on condition that he not engage in any criminal activity. In July, 2000, when federal authorities alerted the court to Voccola's stock fraud in violation of his terms of release, the court ordered that he buy securities only with ready funds, rather than writing personal checks. Voccola then continued to buy stock without paying for it, in violation of the court order.

The Commission's complaint charges that Voccola's conduct violated the antifraud provisions of the Securities Act of 1933 (Section 17(a)) and the Securities Exchange Act of 1934(Section 10(b) and Rule 10b-5 thereunder). The complaint seeks a permanent injunction against violations of the securities laws, disgorgement by Voccola of his illegal profits and the losses he caused the brokerage firms to incur, and civil monetary penalties.


Modified: 08/07/2001