(September 8 – 15:50 ET) – Here’s one for the Friday file. Dana Giachetto, former broker to the stars, has consented to a permanent order against him by the Securities and Exchange Commission.
A partial judgment of permanent injunction by consent was entered against Giacchetto by Judge Lawrence McKenna in the Southern District of New York. The order permanently enjoins Giacchetto from violating the Securities Act, the Investment Advisers Act and orders that the any disgorgement of ill-gotten gains, prejudgment interest, and civil penalties owed by Giacchetto will be determined “through future stipulation of the parties, or by determination of the Court”.
Giacchetto consented to the judgment without admitting or denying the commission’s allegations in its complaint.
This order comes after the SEC entered charges in April against the former broker to the stars who counted Leonardo Di Caprio and Alanis Morrissette among his clientele. The SEC alleges that Giacchetto and investment advisory firm, The Cassandra Group Inc., diverted at least US$20 million in client funds including more than US$4 million to pay the firm’s operating expenses, his lavish lifestyle, and compensate other clients who had been defrauded earlier. The violations took place from September 1997 until late March 2000.
The SEC says Giacchetto stole money by directing Brown & Company, a registered broker-dealer, to issue checks payable to particular Cassandra clients, drawing on funds held in those clients’ Brown accounts, and to deliver the checks to Cassandra. Giacchetto then endorsed the checks himself, in his own name, and deposited the funds in Cassandra’s corporate bank accounts. As Giacchetto paid complaining clients with funds stolen from other clients, Cassandra became a giant “asset-kiting” scheme.
-IE Staff