Securities and Exchange Commission
Litigation Release No. 17907 / December 20, 2002
Securities and Exchange Commission v. W.J. Nolan & Co., Inc., (U.S.D.C. D.C., Case Number 1: 02CV00044, filed January 8, 2002)
On December 17, 2002, the Securities and Exchange Commission filed a Motion for an Order to Show Cause why a broker-dealer, W.J. Nolan & Co., Inc., and its president and majority shareholder, William J. Nolan, should not be held in contempt of court for failing to pay $192,028.29 in disgorgement and prejudgment interest ordered by the United States District Court for the District of Columbia on June 11, 2002. The Commission is asking the Court to enter an order finding W.J. Nolan and William Nolan in civil contempt and requiring W.J. Nolan and William Nolan to pay the previously-ordered disgorgement and prejudgment interest, plus post-judgment interest, immediately.
In its Motion, the Commission alleged that on September 24, 2001, the Commission entered an order against W.J. Nolan finding that registered representatives at W.J. Nolan's offices in Chicago, Illinois and on Park Avenue in New York engaged in a pattern of sales practice abuses, including churning customer accounts and making unsuitable and unauthorized trades in microcap and penny stocks. As a result of this conduct, the Commission found that W.J. Nolan failed to reasonably supervise those registered representatives in violation of Section 15(b)(4) of the Securities Exchange Act of 1934, allowed unregistered individuals to effect transactions in securities in violation of Section 15(b)(7) of the Exchange Act and Rule 15b7-1 thereunder and willfully failed to comply with the Commission's requirements for penny stock transactions in violation of Section 15(g) of the Exchange Act and Rules 15g-2, 15g-3 and 15g-6 thereunder. Among other things, the Commission's order required W.J. Nolan to pay disgorgement and prejudgment interest totaling $192,028.29 within thirty days of the entry of the order. William Nolan, on behalf of W.J. Nolan, consented to the entry of the Commission's September 24, 2001 order. Yet, W.J. Nolan failed to pay the disgorgement and prejudgment interest as ordered. William Nolan owned and made all decisions on behalf of W.J. Nolan throughout the relevant time period before and after the judgment. In October and November 2001, William Nolan caused W.J. Nolan to file a Form BDW with the Commission seeking to withdraw its registration as a broker-dealer with the Commission, sold assets belonging to W.J. Nolan for $750,000 and deposited the funds into his personal bank accounts in order to avoid paying the Commission's judgment. As a result, the Commission seeks to hold William Nolan personally in contempt of court for W.J. Nolan's failure to pay and is asking the Court to require William Nolan to pay the judgment.