UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE ACT OF 1934
Release No. 42083 / November 1, 1999
File No. 3-10087
In the Matter of :
ROBERT J. CARUCCI : ORDER INSTITUTING
: PROCEEDINGS, MAKING
and : FINDINGS, AND IMPOSING
: REMEDIAL SANCTIONS
R.M. CARUCCI CORP., :
The Securities and Exchange Commission ("Commission") deems it appropriate in the public interest for the protection of investors that public administrative proceedings be, and hereby are, instituted against Robert J. Carucci ("Carucci") and R.M. Carucci Corp. (collectively "the Respondents"), pursuant to Sections 15(b) and 19(h) of the Securities Exchange Act of 1934 ("Exchange Act").
In anticipation of the institution of this administrative proceeding, the Respondents have submitted Offers of Settlement ("Offer") which the 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 to which the Commission is a party, and without admitting or denying the findings contained herein, except the Commission's findings set forth in paragraphs III. A., III. B., III. C. and IV.D. below, which the Respondents admit, the Respondents consent to the issuance of this Order Instituting Proceedings, Making Findings, and Imposing Remedial Sanctions ("Order").
Accordingly, it is ordered that an administrative proceeding be and hereby is instituted against Carucci and R.M. Carucci Corp. pursuant to Sections 15(b) and 19(h) of the Exchange Act.
On the basis of this Order and the Offer, the Commission finds that:
A. Carucci was the president and sole owner of R.M. Carucci Corp., which has been registered with the Commission as a broker-dealer since December 1986. R.M. Carucci Corp. was the name under which Carucci conducted an independent brokerage business on the floor of the New York Stock Exchange ("NYSE").
B. On May 18, 1998, Carucci pleaded guilty to one count of violating Section 11(a) of the Exchange Act and Rule 11a-1 thereunder in U.S. v. Robert J. Carucci, 98 Cr. 448 (S.D.N.Y.).
C. On December 10, 1998, Carucci was permanently enjoined, on consent, by the United States District Court for the Southern District of New York in SEC v. R.M. Carucci Corp., et al., 96 Civ. 1366 (the "Injunctive Action"), from violating Section 17(a) of the Securities Act of 1933 ("Securities Act"), Sections 11(a) and 10(b) of the Exchange Act and Rules 11a-1 and 10b-5 thereunder, NYSE Rules 90(a), 91, 92(a), 95(a), and 111(a) and aiding and abetting violations of Section 17(a)(1) of the Exchange Act and Rule 17a-3 thereunder.
D. On December 10, 1998, R.M. Carucci Corp. was permanently enjoined, on consent, by the United States District Court for the Southern District of New York in the Injunctive Action from violating Section 17(a) of the Securities Act, Sections 10(b) and 17(a) of the Exchange Act and Rules 10b-5, 17a-3 and 17a-5 thereunder.
E. The Commission's Amended Complaint in the Injunctive Action alleged, in part, as follows: Carucci entered into an illegal profit sharing arrangement with the principals of a non-NYSE member broker-dealer to engage in illegal trading on the floor of the NYSE. Pursuant to the arrangement, an account was opened at the non-member broker-dealer and falsely identified as a firm proprietary account, when, in fact, it was controlled by Carucci. From October 1993 through at least December 1996, as Carucci learned of potentially advantageous trading opportunities from his unique position on the floor of the NYSE, Carucci initiated and executed transactions for the account that he controlled at the non-NYSE member broker-dealer. On some occasions, Carucci executed transactions for this account while he or R.M. Carucci Corp. held unexecuted customer orders for the same securities and he also filled customer orders by purchasing securities from, or selling securities to, his customers from the account he controlled at the non-NYSE member broker-dealer. Carucci agreed to split the profits from the activity in the account with the principals of the non-NYSE member broker-dealer, with Carucci receiving seventy percent of the profits and the principals of the non-NYSE member broker-dealer receiving thirty percent. To the extent the account suffered losses, Carucci and the principals of the non-NYSE member broker-dealer shared the losses in the same percentages. Various books and records, including order tickets, were falsified to conceal the true nature of the transactions. In addition, R.M. Carucci Corp. filed inaccurate monthly and quarterly reports with the New York Stock Exchange in a further attempt to conceal the true nature of the transactions.
Based upon the foregoing, it is in the public interest to impose the sanctions specified in the Offer. Accordingly,
It is hereby ordered, effective immediately, that
(i)Carucci be, and hereby is, barred from association with any broker or dealer with the right to reapply for association after five years to the appropriate self-regulatory organization, or if there is none, to the Commission; and
(ii)R.M. Carucci Corp.'s registration as a broker-dealer is revoked.
By the Commission.
Jonathan G. Katz