UNITED STATES OF AMERICA
In the Matter of
BRIAN R. CASSIDY,
|ORDER INSTITUTING ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS AND A CEASE-AND-DESIST ORDER PURSUANT TO SECTION 8A OF THE SECURITIES ACT OF 1933, SECTIONS 15(b) AND 21C OF THE SECURITIES EXCHANGE ACT OF 1934, SECTIONS 203(f) AND 203(k) OF THE INVESTMENT ADVISERS ACT OF 1940, AND SECTION 9(b) OF THE INVESTMENT COMPANY ACT OF 1940 AS TO BRIAN R. CASSIDY|
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act of 1933 ("Securities Act"), Sections 15(b) and 21C of the Securities Exchange Act of 1934 ("Exchange Act"), Sections 203(f) and 203(k) of the Investment Advisers Act of 1940 ("Advisers Act"), and Section 9(b) of the Investment Company Act of 1940 ("Investment Company Act") against Brian R. Cassidy ("Cassidy" or "Respondent").
In anticipation of the institution of these proceedings, Cassidy has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission's jurisdiction over him and the subject matter of these proceedings, Cassidy consents to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order pursuant to Section 8A of the Securities Act of 1933, Sections 15(b) and 21C of the Securities Exchange Act of 1934, Sections 203(f) and 203(k) of the Investment Advisers Act of 1940, and Section 9(b) of the Investment Company Act of 1940 as to Brian R. Cassidy ("Order"), as set forth below.
On the basis of this Order and Cassidy's Offer, the Commission finds1 that:
1. Brian R. Cassidy, age 38, is a resident of Yardley, Pennsylvania. From January 1999 through April 2000, Cassidy was a portfolio manager with Penn Street Advisors, Inc. ("Penn Street"), which was then an investment adviser registered with the Commission. Cassidy was also a principal of a registered broker-dealer and an officer of a registered investment company during this same period. Cassidy resigned from these three entities in April 2000.
2. From February 1999 through April 2000, Cassidy engaged in unauthorized equity trading in an account of one of Penn Street's advisory clients.
3. In February 1999, the client's account was valued at approximately $6 million. At all relevant times, Cassidy was aware that the client had expressly directed that investments in the account were to be restricted to government-backed securities only. Notwithstanding his awareness of this restriction and without authorization to deviate from it, Cassidy traded aggressive growth stocks in the client account during this period. As a result of his unauthorized trading, the client account lost approximately $1.2 million, most of which occurred in March 2000.
4. Cassidy concealed his unauthorized trading by lying to the client and by creating and sending to the client false account statements for the period April 1999 through July 1999.
5. Based on the above-described conduct, Cassidy willfully violated Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, which prohibit fraudulent conduct in the offer and sale of securities and in connection with the purchase or sale of securities.
6. Based on the above-described conduct, Cassidy willfully aided and abetted and caused violations of Sections 206(1) and 206(2) of the Advisers Act, which prohibit fraudulent conduct by an investment adviser.
7. Based on the above-described conduct, Cassidy willfully aided and abetted and caused violations of Section 204 of the Advisers Act and Rules 204-2(a)(1), (3) and (7) thereunder, which require that investment advisers registered with the Commission maintain and preserve certain books and records.
8. Cassidy has submitted a sworn Statement of Financial Condition dated February 25, 2003 and other evidence and has asserted his inability to pay a civil penalty.
In view of the foregoing, the Commission deems it appropriate, in the public interest, to impose the sanctions specified in Respondent Cassidy's Offer.
ACCORDINGLY, IT IS HEREBY ORDERED:
1. Pursuant to Section 8A of the Securities Act, Section 21C of the Exchange Act, and Section 203(k) of the Advisers Act, that Cassidy cease and desist from committing or causing any violations and any future violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 204, 206(1) and 206(2) of the Advisers Act and Rules 204-2(a)(1), (3) and (7) thereunder; and
2. Pursuant to Section 15(b)(6) of the Exchange Act, Section 203(f) of the Advisers Act, and Section 9(b) of the Investment Company Act, that Cassidy be, and hereby is, barred from association with any broker, dealer, or investment adviser, and is prohibited from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter.
3. Based upon Cassidy's sworn representations in his Statement of Financial Condition dated February 25, 2003, and other documents submitted to the Commission, the Commission is not imposing a penalty against Cassidy.
4. The Division of Enforcement may, at any time following the entry of this Order, petition the Commission to: (1) reopen this matter to consider whether Cassidy provided accurate and complete financial information at the time such representations were made; and (2) seek an order directing payment of the maximum civil penalty allowable under the law. No other issue shall be considered in connection with this petition other than whether the financial information provided by Cassidy was fraudulent, misleading, inaccurate, or incomplete in any material respect. Cassidy may not, by way of defense to any such petition: (1) contest the findings in this Order; (2) assert that payment of a penalty should not be ordered; (3) contest the imposition of the maximum penalty allowable under the law; or (4) assert any defense to liability or remedy, including, but not limited to, any statute of limitations defense.
By the Commission.
Jonathan G. Katz
1 The findings herein are made pursuant to Cassidy's Offer of Settlement and are not binding on any other person or entity in this or any other proceeding.
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