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Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Tuesday, March 24, 2009

Former Managing Director at San Francisco Brokerage Firm Consents to SEC Fraud Charges

The SEC filed today a civil injunctive action in federal district court in San Francisco against David "Scott" Cacchione, a former Managing Director at San Francisco-based brokerage firm Merriman Curhan Ford & Co. ("Merriman"), alleging that he helped a friend bilk banks and private lenders out of approximately $45 million in 2007 and 2008. The SEC alleges that Cacchione provided Silicon Valley venture capitalist William J. "Boots" Del Biaggio III with Merriman customer account statements, which Del Biaggio doctored and used as collateral to obtain fraudulent loans. In the action, the SEC also charged Cacchione with defrauding his own customers by purchasing risky penny stocks in their accounts without their permission.

Cacchione, without admitting or denying the complaint's allegations, has agreed to a permanent injunction from violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. In addition, Cacchione has consented to the institution of public administrative proceedings against him in which he will be barred permanently, pursuant to Section 15(b) of the Exchange Act, from working as a registered representative at a brokerage firm. Finally, Cacchione also has agreed that, at a later date, the court in this matter shall determine the amount of ill-gotten gains (disgorgement) and civil monetary penalties that Cacchione will be required to pay.

The SEC sued Del Biaggio in December 2008 in an action titled Securities & Exchange Commission v. Del Biaggio, CV-08-5450 CRB (N.D. Cal. Dec. 4, 2008). A final judgment, by consent, was entered where Del Biaggio was permanently enjoined from further violations of the antifraud provisions of the federal securities laws. In a separate settled administrative proceeding, the SEC permanently barred Del Biaggio from serving as an investment adviser. Also in December 2008, the U.S. Attorney's Office filed criminal charges against Del Biaggio. Del Biaggio pled guilty to the criminal charges in February 2009 and is expected to be sentenced on June 10, 2009.

Separately today, the U.S. Attorney's Office for the Northern District of California (USAO) also filed criminal charges against Cacchione arising from some of the same conduct that is alleged in the Commission's complaint.

http://lawprofessors.typepad.com/securities/2009/03/former-managing-director-at-san-francisco-brokerage-firm-consents-to-sec-fraud-charges.html

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