U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16661 / August 24, 2000
SEC v. JEREMIAH J. HEGARTY AND MICHAEL J. HEGARTY, Civil Action No.
96-12367-RCL (D. MA)
COURT ORDERS INJUNCTIONS, FINE AND DISGORGEMENT AGAINST MICHAEL AND
JEREMIAH HEGARTY FOR DEFRAUDING CLIENTS
The Commission announced on August 22, 2000, that the Honorable
Reginald W. Lindsay, United States District Court Judge for the
District of Massachusetts, entered a final judgment against Jeremiah
J. Hegarty and Michael P. Hegarty of Osterville and North Easton,
Massachusetts, respectively, for violations of the antifraud and other
provisions of the federal securities laws. The Court ordered M.
Hegarty to disgorge $92,998 and J. Hegarty to pay a penalty of
$125,000. It also entered injunctions against future violations of the
antifraud provisions.
J. Hegarty was the principal of Hyannis Trading Advisors, Inc., a
registered investment adviser. He specialized in trading stock index
options. He worked closely with his brother, M. Hegarty, who was a
registered representative at a brokerage firm. M. Hegarty attracted
clients with advertisements and brochures, entered trades, and served
as the primary client contact. J. Hegarty made all investment
decisions.
At the height of Hyannis Trading's popularity in 1992, it had over one
hundred clients and about $6.5 million under management. In the fall
of 1992, it lost almost all of this money, leaving many clients in
deficit positions.
The Commission filed the action against J. Hegarty, M. Hegarty and
Hyannis Trading on November 25, 1996, alleging that the defendants
defrauded Hyannis Trading's clients by failing to disclose important
facts concerning their investments, including the type of account
information available to the Hegartys and the trading techniques they
would employ. The Commission also alleged that the Hegartys collected
illegal performance fees. The case went to trial before Judge Lindsay
in November and December, 1999, and Judge Lindsay issued his decision
on August 22, 2000.
The Court found that the Hegartys defrauded Hyannis Trading's clients.
It found that the Hegartys lost the ability to calculate account
balances in the fall of 1992, which handicapped their ability to
employ risk limiting trading techniques. They violated the antifraud
provisions by continuing to trade in the accounts without disclosing
SNIPPETS:
U.S. SECURITIES AND EXCHANGE COMMISSION
SEC v. JEREMIAH J. HEGARTY AND MICHAEL J. HEGARTY,
COURT ORDERS INJUNCTIONS, FINE AND DISGORGEMENT AGAINST MICHAEL AND JEREMIAH HEGARTY FOR
The Commission announced on August 22, 2000, that the Honorable Reginald W. Lindsay, United
It also entered injunctions against future violations of the antifraud provisions.
He specialized in trading stock index options.
M. Hegarty attracted clients with advertisements and brochures, entered trades, and served as
At the height of Hyannis Trading's popularity in 1992, it had over one hundred clients and
The Commission filed the action against J. Hegarty, M. Hegarty and Hyannis Trading on
The Commission also alleged that the Hegartys collected illegal performance fees.
The case went to trial before Judge Lindsay in November and December, 1999, and Judge Lindsay
The Court found that the Hegartys defrauded Hyannis Trading's clients.
It found that the Hegartys lost the ability to calculate account balances in the fall of
They violated the antifraud provisions by continuing to trade in the accounts without
The Court also found that J. Hegarty changed his trading strategy in the fall of 1992 by
Finally, the Court found that Hyannis Trading, aided and abetted by J. Hegarty, violated the
The final judgment against J. Hegarty permanently enjoins him from violating Section 10of the
The final judgment against M. Hegarty permanently enjoins him from violating Section 10of the
The Court also ordered him to disgorge commissions he obtained during the period of the
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