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U.S. Securities and Exchange Commission

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SECURITIES EXCHANGE ACT OF 1934
Release No. 48487/September 12, 2003

ADMINISTRATIVE PROCEEDING
File No. 3-11205


 
In the Matter of
 
RICHARD P. CALLIPARI and,
THOMAS J. CONNOLLY  

 


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ORDER MAKING FINDINGS AND IMPOSING SANCTION BY DEFAULT AGAINST THOMAS J. CONNOLLY

I. BACKGROUND

The Securities and Exchange Commission (Commission) issued its Order Instituting Proceedings (OIP) in this matter on August 5, 2003, pursuant to Section 15(b) of the Securities Exchange Act of 1934 (Exchange Act). The OIP alleges that Thomas J. Connolly was associated with a broker-dealer from 1993 through 1997 and has pleaded guilty to conspiracy to commit wire fraud, a charge that resulted from his wrongdoing at the broker-dealer. He was served with the OIP on August 22, 2003. He failed to file an Answer, due on September 11, twenty days after he was served. See § 201.220(b); OIP at 3. Additionally, he failed to appear at a September 11 prehearing conference of which he had been notified.

Connolly is in default. See 17 C.F.R. §§ 201.155(a)(1), .155(a)(2), .221(f). Accordingly, the undersigned finds that the allegations in the OIP are true as to him. The findings of fact and conclusions of law made in this Order as to Connolly are not binding on any other person in this proceeding.

II. FINDINGS OF FACT

Connolly was associated with National Financial Services, LLC (Fidelity), a registered broker-dealer and subsidiary of Fidelity Investments from January 1993 until he was terminated in 1997. Connolly and another individual devised a scheme to free-ride in options through an account at Fidelity that Connolly improperly opened in the name of the other individual's employer. At first the illegal scheme was profitable, but the trading turned negative in September 1997, eventually resulting in losses of $2.39 million. After the other individual disclaimed responsibility for the trades, Fidelity became responsible for the $2.39 million loss because the trades had been initiated by its employee, Connolly. Connolly pleaded guilty to conspiracy to commit wire fraud, following his indictment in 2001 on charges growing out of the scheme.

III. CONCLUSIONS OF LAW

Connolly 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.

IV. SANCTION

Connolly will be barred from association with any broker or dealer. This sanction will serve the public interest and the protection of investors, pursuant to Section 15(b) 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).

V. ORDER

IT IS ORDERED that THOMAS J. CONNOLLY IS BARRED from association with any broker or dealer.

____________________
Carol Fox Foelak
Administrative Law Judge

 

http://www.sec.gov/litigation/admin/34-48487.htm


Modified: 09/16/2003