SECURITIES ACT OF 1933
Release No. 7805 / February 29, 2000
SECURITIES EXCHANGE ACT OF 1934
Release No. 42471 / February 29, 2000
File No. 3-9723
|In the Matter of
Robert J. Meledandri, Jr.,
|Order Making Findings and
Imposing Remedial Sanctions and
In these proceedings instituted pursuant to Section 8A of the Securities Act of 1933 ("Securities Act"), and Sections 15(b), 19(h) and 21C of the Securities Exchange Act of 1934 ("Exchange Act"), Respondent Robert J. Meledandri, Jr. ("Meledandri") has submitted an Offer of Settlement ("Offer") which the Securities and Exchange Commission ("Commission") has determined to accept. Solely for the purpose of this proceeding and any other proceeding brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings contained herein, except for jurisdiction which he admits, Meledandri, by his Offer, consents to the findings and the imposition of the sanctions and other relief contained in this Order Making Findings and Imposing Remedial Sanctions and Cease-and-Desist Order ("Order").II.
On the basis of this Order and the Offer submitted by Meledandri, the Commission finds that:
A. Meledandri, age 32, is a former registered representative who was associated with several brokerage firms since 1989. From June 1994 until February 18, 1997, Meledandri was employed by the Allentown, Pennsylvania Branch Office of Prudential Securities, Inc. ("Prudential"). He has a history of customer complaints, most of which involve allegations of unauthorized trading and suitability.
B. As more fully described below, from November 1996 through February 18, 1997, Meledandri willfully violated Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder, in that he, directly or indirectly, in connection with the offer, purchase or sale of securities, by use of the means and instruments of transportation or communication in interstate commerce, or the means and instrumentalities of interstate commerce, or the mails, employed devices, schemes or artifices to defraud; obtained money or property by making or otherwise made untrue statements of material fact, or omitting to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; and engaged in transactions, acts, practices, and courses of business which have operated or would operate as a fraud or deceit upon any persons, including purchasers and sellers of such securities.
C. In June 1994, Meledandri became associated with Prudential's Allentown, Pennsylvania, branch office. Between November 1996 and February 19, 1997, Meledandri executed approximately 55 transactions in nine customer accounts without the customers' knowledge or consent. At the time that he executed these transactions, Meledandri knew, or was reckless in not knowing , that the customers had not authorized him to execute the transactions. As a result of these unauthorized transactions, Meledandri's customers suffered losses in excess of $500,000, and Meledandri earned commissions of $4,466.17.
D. In order to conceal his actions, Meledandri engaged in certain deceptive conduct. Among other things, he told some of the customers that the transactions were clerical mistakes. In another instance, he falsely claimed that the transaction was the result of the company declaring a stock split.
E. In addition to executing unauthorized securities transactions, in January 1997, Meledandri solicited a customer to purchase a so-called tax-free bond, valued at $20,000, purportedly being issued by a company called Cetronia Holdings ("Cetronia"). The customer tendered a check for $20,000, made payable to Cetronia, to purchase the purported bond.
F. In fact, the bond did not exist. Moreover, Meledandri failed to disclose that Cetronia was owned by he and his wife, and that the company had no operations other than a plan to issue an investment newsletter. Rather than purchasing the tax-free bond, Meledandri misappropriated the $20,000, and used it for his personal expenses. Meledandri tendered a check in the amount of $20,077 to the customer on or about March 5, 1997.III.
On the basis of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions and other relief specified in Meledandri's Offer of Settlement.
Accordingly, it is hereby ordered that:
A. Meledandri case and desist from committing or causing any violations and any future violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder;
B. Meledandri be, and hereby is, barred from association with any broker or dealer, with the right to reapply for association after three years to the appropriate self-regulatory organization, or if there is none, to the Commission;
C. Meledandri pay disgorgement in the amount of $4,466.17, together with prejudgment interest in the amount of $651; and a civil penalty in the amount of $10,000; and
D. the payments required by paragraph III.C. of this Order shall be made within ten days of the entry of this Order, by: (A) United States postal money order, certified check, bank cashier's check or bank money order; (b) made payable to the Securities and Exchange Commission; (C) hand-delivered or mailed to the Comptroller, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Stop 0-3, Alexandria, VA 22312; and (d) submitted under cover letter that identifies Meledandri as the Respondent in these proceedings, the file number of these proceedings, a copy of which cover letter and money order or check shall be sent to Ronald C. Long, District Administrator, Securities and Exchange Commission, Philadelphia District Officer, 601 Walnut Street, Suite 1120E, Philadelphia, PA 19106.
By the Commission,
Jonathan G. Katz