The U.S. Securities and Exchange Commission has banned a former Wall Street executive from associating with any brokerage firm following a final court judgment against him and the former British Columbia-based porn star to whom he allegedly passed insider tips.

The SEC reports that back in May the U.S. District Court for the Southern District of New York entered final judgments against James McDermott, Jr., the former chairman and chief executive officer of Wall Street firm Keefe, Bruyette & Woods Inc., and Kathryn Gannon (a.k.a. Marilyn Starr), a former porn actress, based upon charges of insider trading.

Without admitting or denying the allegations, McDermott and Gannon consented to the entry of the final judgment, which permanently enjoins them from violating securities rules. The court also ordered McDermott to pay $230,464.23, comprising full disgorgement of Gannon’s profits of $88,135.05, $54,194.13 in prejudgment interest and a civil penalty of $88,135.05. The court also held Gannon liable for $141,157.75 in disgorgement and prejudgment interest, but waived it due to her financial condition.

Today, based on the entry of the court’s injunction, the commission instituted settled administrative proceedings against McDermott. Again, without admitting or denying the SEC’s findings, McDermott consented to the order, which bars him from associating with any broker, dealer or investment adviser.

Back in 1999, the commission alleged that while he was chairman and CEO of Keefe, Bruyette & Woods, McDermott provided Gannon with material non-public information concerning several merger transactions. It alleged that Gannon made illegal profits of at least US$88,135 by trading in these securities based on that information.

McDermott was indicted by the U.S. Attorney, and on June 29, 2001, pled guilty to a single count of insider trading, and was sentenced to five months in prison. On June 12, 2002, Gannon pled guilty to two counts of conspiracy to commit securities fraud, and was sentenced to three months incarceration.