UNITED STATES OF AMERICA
|In the Matter of
FRANK J. CANNATA,
ORDER INSTITUTING A PROCEEDING
MAKING FINDINGS AND IMPOSING
REMEDIAL SANCTIONS PURSUANT TO
SECTION 15(b)(6) OF THE SECURITIES
EXCHANGE ACT OF 1934
The Commission deems it appropriate and in the public interest to institute a public administrative proceeding pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. § 78o(b)(6)] to determine what action, if any, is necessary in light of the entry of a permanent injunction against Frank J. Cannata ("Cannata") on January 24, 2000, which occurred in the United States District Court for the Southern District of New York.
In anticipation of the institution of these proceedings, Cannata has submitted an Offer 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 or conclusions contained herein, except for those contained in Section III.1., 2., and 3., which are admitted, Cannata consents to the issuance of this Order Instituting A Proceeding, Making Findings and Imposing Remedial Sanctions Pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934 (the "Order"), the entry of the findings contained herein, and the imposition of the sanction set forth below.
ACCORDINGLY, IT IS ORDERED that this proceeding pursuant to Section 15(b)(6) of the Exchange Act be and hereby is instituted.
On the basis of this Order and Cannata's Offer, the Commission finds that:
1. From January 1992 through June 1992, Cannata was associated with The Stamford Company ("Stamford"), a broker-dealer registered with the Commission pursuant to Section 15 of the Exchange Act;
2. From June 1992 through September 1992, Cannata was associated with Josephthal Lyon & Ross, Inc. ("Josephthal"), a broker-dealer registered with the Commission pursuant to Section 15 of the Exchange Act;
3. Cannata is permanently enjoined by judgment of the United States District Court for the Southern District of New York, in the action styled Securities and Exchange Commission v. Steven H. Schiffer, Joann R. Schulz, Gary S. Kramer, Jonathan Solow, Frank J. Cannata, Peter G. Mintz, Estate of Gary S. Kramer, and Gary S. Kramer Trust, Civil Action No. 5853 (S.D.N.Y., judgment entered January 24, 2000), from violating Sections 9(a)(2) and 10(b) of the Exchange Act and Rule 10b-5 thereunder; and
4. The Commission's complaint in SEC v. Schiffer et al. alleges, with respect to Cannata, as follows: From May 1992 through August 1992, Cannata participated in a scheme to manipulate the price of the common stock of Phoenix Laser Systems, Inc. ("Phoenix"), a now-defunct company that was in the business of developing a laser workstation to perform eye surgery. During this period, Cannata was associated with registered broker-dealers headquartered in New York, New York; and, beginning in July 1992, he was simultaneously employed by Phoenix as a consultant pursuant to a written agreement which provided that he would receive thousands of dollars of monthly compensation from Phoenix. As part of the scheme to manipulate the price of Phoenix common stock, which traded on the American Stock Exchange, Cannata caused a number of purchases of Phoenix common stock to be executed for the accounts of his clients. These purchases were executed during the day and often at or near the end of the trading day, in a manner that increased the price of the stock. The end-of-day purchases frequently caused Phoenix's daily closing price to be higher than it would have been in the absence of those purchases. Although Cannata solicited and caused a number of these purchases to be executed while he was simultaneously employed by Phoenix and a registered broker-dealer, he did not disclose to the broker-dealer or to his customers that he had entered into an employment agreement with Phoenix.
Based on the foregoing, the Commission deems it appropriate and in the public interest to accept the Offer submitted by Cannata and impose the sanctions that are consented to in that Offer.
Accordingly, IT IS HEREBY ORDERED that, effective immediately, that Cannata 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.
By the Commission
Jonathan G. Katz
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