UNITED STATES OF AMERICA
In the Matter of
JOHN ADAMS, JR., et al.
|ORDER MAKING FINDINGS AND IMPOSING SANCTIONS BY DEFAULT AGAINST DANIEL PETRONELLI|
This Order bars Daniel Petronelli from association with a broker-dealer, based on his felony conviction. He was convicted of conspiracy to commit securities fraud during his employment with a broker-dealer that used fraudulent sales practices to sell speculative securities to unsuspecting investors.
The Securities and Exchange Commission (Commission) issued its Order Instituting Proceedings (OIP) in this matter on February 15, 2002, pursuant to Section 15(b) of the Securities Exchange Act of 1934 (Exchange Act).1 The OIP alleges that Petronelli was associated with a broker-dealer from April 1992 to November 1995, and was convicted of conspiracy to commit securities fraud on July 5, 2000. Petronelli was served with the OIP on June 8, 2002. He failed to file an Answer, due twenty days after he was served. See 17 C.F.R. § 201.220(b); OIP at 5. The Division of Enforcement has filed a Motion for Default, asking that Petronelli be barred from association with any broker or dealer. A respondent who fails to file an Answer to the OIP may be deemed to be in default, and the administrative law judge may determine the proceeding against him. See 17 C.F.R. §§ 201.155(a), .220(f). On July 1, Petronelli was ordered to show cause by July 11 why he should not be held in default and barred from association with any broker or dealer. He did not respond.
Petronelli is in default because he failed to file an Answer or otherwise to defend the proceeding. See 17 C.F.R. §§ 201.155(a)(2), .220(f). Accordingly, the undersigned finds that the allegations in the OIP as to him are true.
II. FINDINGS OF FACT
Petronelli was employed as a registered representative, a branch manager, and a regional vice president from April 1992 to November 1995 at a registered broker-dealer, L.C. Wegard & Co., Inc. (Wegard). Wegard operated as a boiler room, and Petronelli and others participated in a conspiracy to commit securities fraud by inducing unsuspecting investors to purchase speculative high-risk securities through the use of fraudulent and deceptive sales practices. Petronelli was convicted of conspiracy to commit securities fraud on July 5, 2000. See United States v. Daniel Petronelli, No. 98-414-05 (D. N.J. July 5, 2000).
III. CONCLUSIONS OF LAW
Petronelli has been convicted, within ten years of the commencement of this proceeding, of "conspiracy to commit" a felony that "involves the purchase or sale of any security" and also "arises out of the conduct of the business of a broker [or] dealer" within the meaning of Sections 15(b)(4)(B) and 15(b)(6)(A)(ii) of the Exchange Act. His unlawful conduct was recurring and egregious. There are no mitigating circumstances.
The Division requests that Petronelli be barred from association with any broker or dealer. This sanction will serve the public interest and the protection of investors, pursuant to Sections 15(b) and 19(h) of the Exchange Act. It accords with Commission precedent and the sanction considerations set forth in Steadman v. SEC, 603 F.2d 1126, 1140 (5th Cir. 1979).
IT IS ORDERED that DANIEL PETRONELLI IS BARRED from association with any broker or dealer.
Carol Fox Foelak
Administrative Law Judge
1 The proceeding was originally captioned John Adams, Jr., Ronald Bongo, Samuel Del Presto, Sean Hart, Curtis Marchand, III, Michael McDermott, Palmer Myers, David Nelson, Daniel Petronelli, Gary Smolokoff, Malik Tawil, Lawrence Weil, and Neil White. It has ended as to the twelve respondents other than Petronelli. See John Adams, Jr., Exch. Act Rel. No. 46109 (A.L.J. June 25, 2002) (Sean Hart and David Nelson); John Adams, Jr., Exch. Act Rel. No. 46063 (A.L.J. June 12, 2002) (Ronald Bongo and Samuel Del Presto); John Adams, Jr., Exch. Act Rel. No. 45917 (A.L.J. May 13, 2002) (Neil White); John Adams, Jr., 77 SEC Docket 1593 (A.L.J. Apr. 29, 2002) (Curtis Marchand, III); John Adams, Jr., 77 SEC Docket 1408 (A.L.J. Apr. 23, 2002) (Malik Tawil); John Adams, Jr., 77 SEC Docket 1295 (A.L.J. Apr. 17, 2002) (John Adams, Jr., Michael McDermott, Palmer Myers, and Gary Smolokoff); John Adams, Jr., 77 SEC Docket 893 (A.L.J. Apr. 4, 2002) (Lawrence Weil).
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