SEC Charges Former Municipal Bond Salesperson with Fraud
Aug. 31, 2021
File No. 3-20505
August 31, 2021 - The Securities and Exchange Commission today instituted a settled enforcement action against Anthony A. Falsetta, a former Drexel Hamilton, LLC municipal sales registered representative, for fraudulently obtaining retail priority allocations of new issue municipal bonds for broker-dealers who were not entitled to such priority.
According to the SEC's order, in certain offerings co-managed by Drexel Hamilton between January 2016 and April 2018, Falsetta placed certain orders as retail customer orders, despite the fact that he knew those orders were for broker-dealers looking to buy bonds for their inventory, and therefore did not qualify for retail priority. The order finds that Falsetta's deceptive conduct misled issuers and senior managing underwriters into allocating bonds to broker-dealers instead of retail investors and, in some instances, resulted in legitimate retail investors being crowded out of offerings.
The order finds that Falsetta willfully violated the antifraud provisions of Section 17(a)(3) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, as well Municipal Securities Rulemaking Board Rules G-11(k) and G-17. Without admitting or denying the findings, Falsetta consented to a cease-and-desist order imposing a $40,000 civil penalty and industry and penny stock bars, with a right to apply for reentry after three years.
The SEC's investigation was conducted by Joseph Chimienti, Laura Cunningham, Warren Greth, Cori Shepherd, and Jonathan Wilcox of the Division of Enforcement's Public Finance Abuse Unit, with assistance from Deputy Unit Chief Mark Zehner and Assistant Director Kevin Guerrero. The investigation was supervised by Ivonia K. Slade.