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U.S. Securities and Exchange Commission

SECURITIES AND EXCHANGE COMMISSION

LITIGATION RELEASE NO. 17980 / February 11, 2003

U.S. V. RICHARD CALLIPARI, United States District Court for the District of Rhode Island, No. 02-CR-67-ALL

FORMER FIDELITY EMPLOYEE CONVICTED OF OBSTRUCTING AND IMPEDING SEC INVESTIGATION

The Securities and Exchange Commission announced that a federal jury convicted Richard P. Callipari, formerly of Johnston, Rhode Island, of corruptly endeavoring to obstruct and impede an SEC investigation by means of false, misleading, evasive and deceptive testimony. In February 1998, as the SEC was investigating Callipari's activities, he gave sworn testimony, which the evidence showed was false. Callipari also was convicted of conspiring to defraud Fidelity and ten counts of wire fraud.

Callipari was a Fidelity trader in Boston whose job was eliminated in April 1997. Beginning in July 1997, according to the evidence, Callipari was working as a trader for JAS Securities, a New York city broker-dealer firm. Callipari allowed a co-conspirator, Thomas J. Connolly, a Fidelity trader, to trade in index options on the Chicago Board of Options Exchange for the benefit of Callipari's JAS account, even though JAS had no account at Fidelity and Connolly was not authorized to make such trades.

Between July and early September 1997, Connolly made successful trades for Callipari, earning $500,000 in profits. Callipari received about $220,000 of those profits. In mid-September, however, Connolly's trading turned negative, resulting in about $2.39 million in losses. Callipari tried to reject all of the losing trades, telling traders at the Chicago Board that he had not authorized them, and, as a result, Fidelity ended up incurring all of the $2.39 million in losses.

The statutory maximum prison sentence for each count is five years in federal prison. The conspiracy and wire fraud counts also carry fines of up to $250,000 or twice the amount of gain or loss. The obstruction count carries a maximum fine of $250,000.

The case was investigated by the Federal Bureau of Investigation in Boston, with assistance from the Securities and Exchange Commission.

 

http://www.sec.gov/litigation/litreleases/lr17980.htm

Modified: 02/12/2003