Securities and Exchange Commission
Litigation Release No. 17834 /November 12, 2002
Securities and Exchange Commission v. Russo Securities, Inc. and Kimberly Kent, Docket No. M 18-304 (S.D.N.Y.)
The Securities and Exchange Commission today filed an application in federal court in Manhattan for an order commanding a brokerage firm and a former financial principal of the firm to pay civil penalties that were imposed against them in an earlier administrative proceeding before the Commission. Section 21(e) of the Securities Exchange Act of 1934 gives federal courts the power to enforce administrative orders issued by the Commission.
Named in today's proceeding are Russo Securities, Inc., a registered broker-dealer located in Staten Island, New York, and Kimberly Kent, age 39 and a resident of New York, New York, Russo's former financial and operations principal.
On April 17, 2001, the Commission issued an order finding that Russo Securities violated the net capital rules applicable to broker-dealers by claiming to own securities that did not yet exist, and that Kent caused the firm to commit those violations. In that order, the Commission: (1) suspended Kent from association with any broker-dealer for one year; (2) ordered Russo and Kent to cease and desist from such violations; and (3) ordered Russo to pay a civil penalty of $75,000 and Kent to pay a civil penalty of $25,000. The Commission stayed the obligation to pay the civil penalties while Russo and Kent pursued an appeal in federal court. After Russo and Kent abandoned their appeal earlier this year, the Commission issued an order requiring both Russo and Kent to pay the civil penalties within ten business days. Neither Russo nor Kent complied with that order.
United States District Judge Milton Pollack of the Southern District of New York today issued an order directing Russo and Kent to appear at a hearing on the Commission's application on November 26, 2002 and show cause why the Commission's application should not be granted.