SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17209 \ October 26, 2001
SECURITIES AND EXCHANGE COMMISSION v. DANIEL PATRICK O'CONNELL, United States District Court for the Northern District of California, Civil Action No. C-01-3980
SEC SUES SAN FRANCISCO STOCKBROKER FOR DEFRAUDING CLIENTS OUT OF $6 MILLION
The Securities and Exchange Commission announced today that it has sued San Francisco stockbroker Daniel Patrick O'Connell, 37, for misappropriating $6 million in client funds. The Commission alleges O'Connell fraudulently transferred the money from his clients' accounts into his own trading account in the hopes of generating a quick personal profit, but instead lost nearly all the money in a four-week spree of securities speculation.
In a complaint filed in the United States District Court for the Northern District of California, the Commission alleges that O'Connell, working alone in the San Francisco branch of a New York brokerage firm, acted as the broker for a wealthy Silicon Valley family. In March 2001, O'Connell informed his clients that he was using $2 million from their accounts to purchase low-risk bonds on their behalf. Instead, O'Connell transferred the $2 million to an account he had opened in the name of a fictitious company. O'Connell invested the funds in the stock market, hoping to generate a quick personal profit, but lost most of the money. Over the following weeks, O'Connell misappropriated an additional $4 million from his clients' accounts, again losing much of the money in highly speculative trading. By the time O'Connell's theft was detected in mid-April, O'Connell had lost approximately $4.3 million in client funds.
O'Connell, without admitting or denying the allegations, has agreed to a settlement permanently barring him from the brokerage industry and enjoining him from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
In a separate matter, the Office of the United States Attorney for the Northern District of California has announced the filing of criminal charges against O'Connell for his misconduct. The Commission has declined to seek disgorgement or civil penalties in its settlement with O'Connell based on an anticipated restitution order in the criminal proceeding and O'Connell's demonstrated inability to pay.