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U.S. Securities and Exchange Commission

Before the

Release No. 50092 / July 27, 2004

File No. 3-11561

In the Matter of

JC Management, Inc.
and Joseph X. Crivelli,




The Securities and Exchange Commission ("Commission") deems it appropriate that cease-and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities Exchange Act of 1934 ("Exchange Act") against JC Management, Inc. ("JC Management") and Joseph X. Crivelli ("Crivelli").


In anticipation of the institution of these proceedings, JC Management and Crivelli (collectively, "Respondents") have submitted Offers of Settlement (the "Offers"), 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, and without admitting or denying the findings herein, except as to the Commission's jurisdiction over them and the subject matter of these proceedings, which are admitted, Respondents consent to the entry of this Order Instituting Cease-and-Desist Proceedings, Making Findings, and Imposing a Cease-and-Desist Order and Other Relief Pursuant to Section 21C of the Securities Exchange Act of 1934 ("the Order"), as set forth below.


On the basis of this Order and Respondents' Offers, the Commission finds that:


1. JC Management, a Pennsylvania corporation, is the investment manager of J.A.G. Funds, a Pennsylvania limited partnership. J.A.G. Funds is a private investment fund and the sole client of JC Management. JC Management is not required to register as an investment adviser under the Investment Advisers Act of 1940, or under the Pennsylvania Securities Act.1

2. Crivelli, the President and sole employee of JC Management, makes all investment decisions for the J.A.G. Funds. Crivelli holds no professional licenses and has not been affiliated with any registered investment adviser or broker dealer since he established J.A.G. Funds in April 2000, with investments of approximately $12 million from eight limited partners. Prior to that time, Crivelli worked for more than twelve years for registered investment advisory firms as a research analyst and portfolio manager.


3. Rule 105 of Regulation M, "Short Selling in Connection With a Public Offering," prohibits covering a short sale with securities obtained in a public offering if the short sale occurred within five business days before the pricing of the offering. 17 C.F.R. 242.105(a)(1). The Commission adopted Rule 105 of Regulation M (and its predecessor Rule 10b-21) in an effort to prevent manipulative short selling prior to a public offering by short sellers who cover their short position by purchasing securities in the offering, thus largely avoiding exposure to market risk. Anti-manipulation Rules Concerning Securities Offerings, Release Nos. 33-7375, 34-38067 (Dec. 20, 1996). "The Rule is prophylactic, and prohibits the conduct irrespective of the short seller's intent in effecting the short sale." Proposed Rule: Short Sales, Release No. 34-48709, File No. S7-23-03 (October 29, 2003).

4. At Crivelli's direction, JC Management, Inc. sold short 10,000 shares of Monarch Casino & Resorts, Inc. ("MCRI") within five business days prior to the pricing of a secondary offering by MCRI. JC Management subsequently obtained an allocation of 10,000 shares of MCRI in the secondary offering and Crivelli used the allocated shares to cover JC Management's outstanding short position in the stock. JC Management realized profits of $25,788 from the transaction. As a result, JC Management and Crivelli committed a violation of Rule 105 of Regulation M under the Exchange Act.

MCRI's Secondary Offering

5. On June 3, 2002, MCRI, a NASDAQ stock, announced that it filed a registration statement with the Commission for a secondary public offering of 2,000,000 shares of common stock offered by selling shareholders.2 Two underwriters acted as co-managers of the secondary offering, and priced the shares after the market closed on July 1, 2002. Accordingly, the Rule 105 five business day pricing period was June 25, 2002, through July 1, 2002.

The Violative Trade

6. Crivelli began monitoring MCRI after the company announced the secondary offering on June 3, 2002. On the day of the announcement, MCRI shares were trading between $14.46 and $15.35 per share, and closed at $14.99 per share. On June 5, 2002, MCRI issued a negative announcement that its quarterly earnings were lower than anticipated. Thereafter, the price of MCRI declined slightly for a few days, but then began to rise steadily and reached a June high of $15.85 on June 28, 2002. After watching the price of MCRI increase in a relatively short period of time, Crivelli determined that MCRI was "overbought" and believed that if the company was to go ahead with the secondary offering, the offering price likely would be lower than the current market price.

7. On Tuesday, June 25, 2002, JC Management, through Crivelli, placed an order to sell short 10,000 shares of MCRI at a value weighted average price of $15.0788 per share in one of J.A.G. Funds' brokerage accounts. Subsequent to placing the short sale, Crivelli gave one of the co-managing underwriters an "indication of interest" that J.A.G. Funds would participate in MCRI's secondary offering.

8. MCRI's secondary offering of 2,000,000 shares was priced at $12.50 per share after the close of the market on Monday, July 1, 2002. The following day, on July 2, 2002, J.A.G. Funds accepted an allocation of 10,000 shares of MCRI in the secondary offering at a price of $12.50 per share. Trading records confirm that JC Management/J.A.G. Funds used the allocated shares to cover its outstanding short position in MCRI and realized profits of $25,788.

9. As a result of the conduct described above, JC Management and Crivelli committed a violation of Rule 105 of Regulation M under the Exchange Act which makes it "unlawful for any person to cover a short sale with offered securities purchased from an underwriter or broker or dealer participating in the offering, if such short sale occurred during the period beginning five business days before the pricing of the offered securities and ending with the pricing."


In view of the foregoing, the Commission deems it appropriate to impose the sanctions agreed to in Respondents' Offers.

Accordingly it is hereby ORDERED that

A. Pursuant to Section 21C of the Exchange Act, Respondent JC Management shall cease and desist from committing or causing any violations, and any future violations, of Rule 105 of Regulation M under the Exchange Act; and

B. Pursuant to Section 21C of the Exchange Act, Respondent Crivelli shall cease and desist from committing or causing any violations, and any future violations, of Rule 105 of Regulation M under the Exchange Act.

C. That Respondents shall, jointly and severally, within thirty (30) days of the entry of this Order, pay disgorgement and prejudgment interest in the total amount of $27,991.94 to the United States Treasury. Such payment shall be: (A) made by United States postal money order, certified check, bank cashier's check or bank money order; (B) made payable to the Securities and Exchange Commission; (C) hand-delivered or mailed to the Office of Financial Management, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Stop 0-3, Alexandria, VA 22312; and (D) submitted under cover letter that identifies JC Management, Inc. and Joseph X. Crivelli as Respondents in these proceedings, the file number of these proceedings, a copy of which cover letter and money order or check shall be sent to Antonia Chion, Associate Director, Division of Enforcement, Securities and Exchange Commission, 450 5th Street N.W., Washington, D.C. 20549-0810.

By the Commission.

Jonathan G. Katz




Modified: 07/27/2004