UNITED STATES OF AMERICA
In the Matter of
THOMAS CAVALLINO and
|ORDER INSTITUTING PROCEEDINGS, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS|
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted against Thomas Cavallino ("Cavallino") and Oakwood Securities, Inc. ("Oakwood"), pursuant to Sections 15(b) of the Securities Exchange Act of 1934 ("Exchange Act").
In anticipation of the institution of this administrative proceeding, Cavallino has submitted an Offer of Settlement ("Offer") on behalf of himself and Oakwood 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. and III. C. below, which Cavallino admits, Cavallino and Oakwood 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 Cavallino and Oakwood pursuant to Section 15(b) of the Exchange Act.
On the basis of this Order and the Respondents' Offers, the Commission finds that:
A. During the period from January 1993 through February 1998, Cavallino was a principal of Oakford, a broker-dealer registered with the Commission, and worked as an independent floor broker on the floor of the New York Stock Exchange ("NYSE").
B. On May 20, 1999, Cavallino pleaded guilty to conspiracy to violate Section 11(a) of the Exchange Act and Rule 11a-1 thereunder in U.S. v. Oakford Corporation, 98 Cr. 144 (S.D.N.Y).
C. On March 15, 2002, Cavallino and Oakwood were permanently enjoined, on consent, by the United States District Court for the Southern District of New York in SEC v. Oakford Corp., et al., 00 Civ. 2426 (the "Injunctive Action"), from violating Section 17(a) of the Securities Act of 1933 and Sections 10(b), 11(a) and 17(a) of the Exchange Act and Rules 10b-5, 11a-1 and 17a-3 thereunder.
D. The Commission's Complaint in the Injunctive Action alleged, in part, as follows: Cavallino entered into illegal profit sharing arrangements with Oakford Corp., a broker-dealer that was not a member of the NYSE, to engage in illegal trading on the floor of the NYSE. Pursuant to the arrangement, an account was opened at Oakford and falsely identified as an Oakford firm proprietary account, when, in fact, the account was controlled by Cavallino. From 1994 through 1997, Cavallino executed transactions for his Oakford account and split the profits from the activity in those accounts with Oakford. In addition, as Cavallino learned of potentially advantageous trading opportunities from his unique position on the floor of the NYSE, Cavallino initiated and executed transactions for the account that he controlled at the non-NYSE member broker-dealer. On some occasions, Cavallino executed transactions for this account while he or Oakwood 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. Various books and records, including order tickets, were falsified to conceal the true nature of the transactions.
Based upon the foregoing, it is appropriate and in the public interest to impose the sanctions specified in the Offer. Accordingly,
IT IS HEREBY ORDERED, effective immediately, that:
(i) Cavallino be, and hereby is, barred from association with any broker or dealer; and
(ii) Oakwood's registration as a broker-dealer is revoked.
By the Commission.
Jonathan G. Katz
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