UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Securities Exchange Act of 1934
Release No. 50580 / October 21, 2004
File No. 3-11716
ADMINISTRATIVE PROCEEDINGS INSTITUTED AGAINST THOMAS DONOVAN
The United States Securities and Exchange Commission announced today that it instituted public administrative proceedings against Thomas J. Donovan pursuant to Section 15(b) of the Securities Exchange Act of 1934. The Order Instituting Administrative Proceedings (“Order”) alleges that Donovan was an equities trader at Knight Securities, L.P. (“Knight”) from 1996 through September 2001.
On September 27, 2004, the United States District Court for the District of New Jersey entered a default judgment against Donovan in a civil injunctive proceeding entitled SEC v. Brian P. Delaney, et al., No.2:03 CV 4206. The Court’s judgment permanently enjoined Donovan from violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5 and imposed a $90,000.00 civil penalty against him. The Commission’s complaint alleged that from approximately September 2001 through March 2002, Donovan and two other defendants, Brian Delaney and Nicole Shkedi, all former equities traders at Knight Securities, L.P., engaged in a fraudulent trading scheme in which they knowingly and intentionally executed stock trades from Knight proprietary accounts they controlled at prices guaranteed to generate profits in private brokerage accounts that they also controlled, thereby defrauding Knight of approximately $1.4 million.
A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide Donovan an opportunity to dispute these allegations and to determine what, if any, remedial sanctions should be imposed against Donovan. The Commission directed that an administrative law judge shall issue an initial decision in this matter within 210 days from the date of service of the Order.
See also the Order in this matter