SEC, Merriman execs settle over Del Biaggio case

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SEC, Merriman execs settle over Del Biaggio case

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Tuesday, 12 January 2010 07:53

The Securities and Exchange Commission on Tuesday said two executives of San Francisco-based brokerage firm Merriman Curham Ford & Co. settled charges in connection with a fraud case involving former Nashville Predators co-owner William "Boots" Del Biaggio III.

The SEC had earlier charged David "Scott" Cacchione, a former managing director at Merriman, with securities fraud. The action announced Tuesday finds that the firm's founder, Jonathan Merriman, and its former general counsel, Christopher Aguilar, unreasonably delegated their supervisory duties over Cacchione to others and "then ignored red flags signaling that Cacchione was engaging in fraud."

Merriman and Aguilar have settled the SEC's charges by paying financial penalties and agreeing to supervisory suspensions. The SEC said that all three parties consented to the order without admitting or denying finds.The order imposed a censure and a $100,000 penalty against the Merriman firm, a $75,000 penalty against Jon Merriman and a $40,000 penalty against Aguilar. Both Merriman and Aguilar are also suspended from acting in a supervisory capacity at a broker-dealer for 12 months.

According to the SEC, Caucasian used his Merriman firm e-mail account to transfer confidential account statements of Merriman customers to his customer and friend, Del Biaggio, so he could fraudulently pledge securities held in customers' accounts to obtain more than $45 million in personal loans.

Cacchione also engaged in fraudulent unauthorized trading in several customer accounts in which he purchased risky securities without permission.

The SEC said that at the time, Aguilar had placed Cacchione on "heightened supervision" which was to include a daily review of his e-mails and securities trading, but that was delegated to a lower-level compliance employee who failed to perform a thorough review.

Venture capitalist and former co-owner of the San Jose Sharks Del Biaggio was sentenced in September to eight years in prison and more than $67.4 million in restitution for misappropriating funds from individual investors he advised.

Del Biaggio was charged with cheating investors of about $100 million, and investigators said he falsified documents so it would look like he owned securities that belonged to others.

In February Del Biaggio pleaded guilty to charges that he used the money to pay off gambling debts and live lavishly, including buying a stake in the Predators team.

Del Biaggio, who with his father also co-founded San Jose's Heritage Bank of Commerce in the 1990s, agreed in December to a settlement over a separate civil suit filed by the Securities and Exchange Commission.

Last Updated on Tuesday, 12 January 2010 09:21

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