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U.S. Securities and Exchange Commission

United States of America
before the
Securities and Exchange Commission

SECURITIES EXCHANGE ACT OF 1934
Release No. 48147 / July 9, 2003

ADMINISTRATIVE PROCEEDING
File No. 3-11173


In the Matter of

THOMAS J. DONAHUE,

Respondent.


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ORDER INSTITUTING PUBLIC PROCEEDINGS, MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONS PURSUANT TO SECTION 15(b)(6) OF THE SECURITIES EXCHANGE ACT OF 1934

I.

The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that proceedings pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934 ("Exchange Act") be, and they hereby are, instituted against Thomas J. Donahue ("Donahue" or "Respondent").

II.

In anticipation of the institution of these proceedings, Donahue has, pursuant to Rule 240(a) of the Commission's Rules of Practice [17 C.F.R. § 201.240(a)], 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, Donahue:

A. admits jurisdiction of the Commission over him and over the matters set forth in this Order; and

B. without admitting or denying the findings in this Order, except as to the entry of the injunction in Paragraph III.B. below, which is admitted, consents to the entry of this Order and the imposition of the remedial sanctions set forth below.

III.

On the basis of this Order and Respondent's Offer, the Commission finds:

A. That on August 2, 1999, the Commission filed its Complaint For Permanent Injunctive and Other Legal and Equitable Relief against Donahue, and others, in the United States District Court for the Northern District of California, Securities and Exchange Commission v. Edward A. Durante, et al., Civil Action No. C99-3690 SBA (MEJ) (N.D. Cal.)(the "Civil Action");

B. That on February 18, 2003, a Final Judgment of Permanent Injunction And Other Equitable and Statutory Relief ("Final Judgment") was entered against Donahue by the United States District Court for the Northern District of California in the Civil Action. The Final Judgment, which was entered pursuant to Donahue's consent, enjoins Donahue from violations of 5(a), 5(c) and 17(a) of the Securities Act of 1933 ("Securities Act"), Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder, Rule 101 of Regulation M, and from aiding and abetting violations of Section 15(g) of the Exchange Act and Rules 15g-2 through 15g-6 thereunder. Donahue consented to the entry of the Final Judgment without admitting or denying the allegations in the Commission's Complaint; and

C. That the Commission's Complaint alleged that at all relevant times, the common stock of PSA, Inc. was a penny stock, as defined in the Exchange Act and Rules thereunder. The Complaint further alleged that Donahue, from approximately January 1998 through August 1998, knowingly or recklessly: (a) participated in a massive and illegal unregistered distribution of restricted shares of PSA stock; (b) purchased, or directed others to purchase, PSA stock on the open market to raise the stock price artificially; (c) solicited small investors to purchase PSA stock through First New Haven Corporation and Investment Resources, Inc., two unregistered broker-dealers he controlled or partially controlled; (d) intentionally or recklessly lied to investors about material facts; (e) caused false and misleading statements to be issued to the market about PSA; and (f) violated the securities laws governing the offering and selling of penny stocks.

D. From approximately January 1998 to August 1998, Donahue was acting as an unregistered broker-dealer.

IV.

In view of the forgoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified in Donahue's Offer of Settlement.

ACCORDINGLY, IT IS HEREBY ORDERED that Thomas J. Donahue be, and he hereby is, barred from association with any broker or dealer and barred from participating in any offering of a penny stock, including: (a) acting as a promoter, finder, consultant, agent or other person who engages in activities with a broker, dealer or issuer for purposes of the issuance or trading in any penny stock; or (b) inducing or attempting to induce the purchase or sale of any penny stock.

By the Commission.

Jonathan G. Katz
Secretary

 

http://www.sec.gov/litigation/admin/34-48147.htm


Modified: 07/09/2003