I swear I will not do it again.-Hagarty brothers said to SEC during SEXI investigation. Guess what!
COMMISSION SANCTIONS JEREMIAH AND MICHAEL HEGARTY
On March 20, the Commission issued an order settling previously
instituted administrative proceedings and imposing remedial sanctions
against brothers Jeremiah J. Hegarty and Michael P. Hegarty in
connection with their roles in a scheme that defrauded their clients of
more than $6.5 million. The Commission had instituted the proceedings
against the Hegartys based on the entry of a permanent injunction
against them by the U.S. District Court for the District of
Massachusetts on August 22, 2000. The Commission accepted Jeremiah
Hegarty's offer of settlement, in which he consented, without admitting
or denying the Commission's findings, to the entry of an order barring
him from association with any investment adviser and any broker or
dealer with a right to reapply after five years. The Commission also
accepted Michael Hegarty's offer of settlement, in which he consented,
without admitting or denying the Commission's findings, to the entry of
an order barring him from association with any broker or dealer with a
right to reapply after five years. According to the Commission's order,
the district court found that the Hegartys defrauded their clients
through now defunct Hyannis Trading Advisors Inc., a company operated by
Jeremiah Hegarty, when they lost nearly all of the client funds Hyannis
Trading managed. The court found, among other things, that the Hegartys
failed to disclose to their clients that (1) they had lost the ability
to calculate account balances and other fundamental account information;
and (2) contrary to representations to clients, they had abandoned
certain risk-limiting trading techniques by dramatically increasing the
frequency, size and risk of the options trades in client accounts. The
court further found that Hyannis Trading's marketing brochure, which
Michael Hegarty distributed to clients, contained materially misleading
statements regarding Jeremiah Hegarty's past trading performance, and
that Jeremiah Hegarty, through Hyannis Trading, collected illegal
performance fees. The court entered an order that, among other things,
permanently enjoined the Hegartys from violating the antifraud
provisions of the federal securities laws. For additional information,
see Exchange Act Rel. No. 44187; Adviser Act Rel. No. 1939. (Rels. 34-
45600; IA-2020; File No. 3-10455) |
