UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 15743 / May 18, 1998
SECURITIES AND EXCHANGE COMMISSION v. THE OAKFORD CORPORATION, EDWARD J.
MUEGER, INC., R.M. CARUCCI CORP., TOUCHDOWN SECURITIES, INC., MFS
SECURITIES CORP., OAKWOOD SECURITIES CORP., D ALESSIO SECURITIES, INC.,
WILLIAM S. KILLEEN, THOMAS W. BOCK, THOMAS J. CAVALLINO, EDWARD J. MUEGER,
ROBERT J. CARUCCI, CHRISTINE A. BEYER, MICHAEL A. FRAYLER, MARK R.
SAVARESE, JOHN J. SAVARESE and JOHN R. D ALESSIO, United States District
Court for the Southern District of New York, 98 Civ. 1366 (JSR) (S.D.N.Y.)
The Securities and Exchange Commission today filed an amended complaint in
its federal civil enforcement action against five of the eight New York
Stock Exchange ( NYSE ) floor brokers originally charged on February 25,
1998 with illegal trading on the floor of the NYSE. The amended complaint
adds charges of trading ahead of customer orders in violation of the
antifraud provisions against Thomas J. Cavallino ( Cavallino ), Robert J.
Carucci ( Carucci ), Christine A. Beyer ( Beyer ), Michael A. Frayler
( Frayler ), John J. Savarese ( J. Savarese ), and their firms, R.M.
Carucci, Inc., Touchdown Securities, Inc., MFS Securities Corp. and Oakwood
Securities Corp. The amended complaint also adds charges that each of
these five defendants, and Mark R. Savarese ( M. Savarese ), traded into
their customers orders in violation of a NYSE rule.
The amended complaint charges that Cavallino, Carucci, Beyer, Frayler, J.
Savarese, R.M. Carucci, Inc., Touchdown Securities, Inc., MFS Securities
Corp. and Oakwood Securities Corp., engaged in a pattern of initiating and
executing transactions for their own accounts while holding unexecuted
customer orders for the same securities, often receiving a better price for
themselves than they obtained for their customers. The amended complaint
also charges that these defendants and M. Savarese, a floor broker who was
charged in the original complaint, filled customer orders by purchasing
stock from, or selling stock to, their customers from their Oakford
accounts in violation of a NYSE rule.
As set forth in the amended complaint, floor brokers owe a duty to their
customers to act in the customers best interest. A floor broker breaches
this duty when he executes his own trade before the customer's trade. By
executing his own trade first, the floor broker runs the risk that the
price obtained for the customer's order may not be as favorable as it would
have been had the customer's order been executed first. Moreover, a large
customer order to buy or sell a security will often result in an increase
or decrease, respectively, in the price of that security following
execution of the order. With this knowledge, a floor broker could receive
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
The Securities and Exchange Commission today filed an amended complaint in its federal civil
The amended complaint also adds charges that each of these five defendants, and Mark R.
The amended complaint charges that Cavallino, Carucci, Beyer, Frayler, J. Savarese, R.M.
The amended complaint also charges that these defendants and M. Savarese, a floor broker who
As set forth in the amended complaint, floor brokers owe a duty to their customers to act in
A floor broker breaches this duty when he executes his own trade before the customer's trade.
By executing his own trade first, the floor broker runs the risk that the price obtained for
Moreover, a large customer order to buy or sell a security will often result in an increase
Floor brokers are also prohibited from filling a customer order by purchasing securities
The Commission s original complaint alleged that William S. Killeen and Thomas W. Bock,
The floor brokers and Bock and Killeen generally split the profits and losses in the Oakford
Between October 1993 and December 1996, the Floor Brokers netted illegal profits totaling at
The Commission s amended complaint adds charges that the five floor brokers noted above, and
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