U.S. Securities and Exchange Commission
Investment Advisers Act of 1940
Release No. 2207 / December 29, 2003
File No. 3-11365
In the Matter of Paul Joseph Sheehan dba Paul J. Sheehan & Associates
SEC Institutes Administrative Proceeding Against Investment Adviser Charged with "Cherry Picking" Millions of Dollars of Profitable Trades for His Own Accounts
The United States Securities and Exchange Commission (Commission) announced the issuance of an Order Instituting Administrative Proceeding Pursuant To Section 203(f) Of The Investment Advisers Act Of 1940 (Order) against Paul Joseph Sheehan dba Paul J. Sheehan & Associates (Sheehan). The Division of Enforcement alleges that (1) Sheehan, a resident of West Hollywood, California, did business as Paul J. Sheehan & Associates and was registered with the Commission from 1989 through 2003; (2) on October 14, 2003, a judgment was entered against Sheehan, pursuant to his consent, permanently enjoining him from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1), 206(2) and 207 of the Investment Advisers Act of 1940; and (3) the Commission's complaint in that civil action alleged that, in his capacity as an investment adviser, and in connection with the purchase and sale of securities, Sheehan engaged in a fraudulent cherry-picking scheme whereby he improperly allocated profitable trades to his personal accounts at the expense of his client's accounts, falsely stated that he would give absolute priority to client accounts, and otherwise engaged in conduct which operated as a fraud and deceit upon his clients.
A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide Sheehan with an opportunity to dispute these allegations, and to determine what, if any, remedial action is appropriate in the public interest against Sheehan pursuant to Section 203(f) of the Advisers Act. 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.