This month, we discuss SEC v. O’Meally,1 in which the U.S. Court of Appeals for the Second Circuit overturned a jury verdict in favor of the Securities and Exchange Commission against a mutual fund broker for using an allegedly deceptive market timing strategy. The court’s opinion, written by Judge Dennis Jacobs and joined by Judge Guido Calabresi and Judge Rosemary S. Pooler, focused on the sufficiency of the evidence to support a negligence finding under Sections 17(a)(2) and (a)(3) of the Securities Act of 1933. The court held that the evidence presented by the SEC was insufficient to support a finding of negligence, and reversed the judgment.
Background
From 1994 to 2003, Frederick O’Meally worked as a licensed broker for Prudential Securities. On behalf of his clients, mainly money managers at hedge funds, O’Meally traded shares of mutual funds using a strategy known as market timing. This tactic, a form of arbitrage, involved numerous short-term trades in a fund’s shares to exploit perceived inefficiencies in pricing.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.
For questions call 1-877-256-2472 or contact us at [email protected]
