A former US Securities and Exchange Commission compliance examiner was criminally charged on Friday for making false statements regarding her and her husband's prohibited stock holdings. Eugenia Cantiello, 46, was charged in a criminal complaint filed in Manhattan federal court. Prosecutors have agreed to resolve the case through a deferred prosecution agreement in which she admitted wrongdoing.
The case marked the second time in two years that federal prosecutors in New York had brought criminal charges against a former SEC staffer over false statements made about stock holdings. SEC ethics rules prohibit employees from buying or holding stocks in entities regulated by the SEC, such as banks or brokerage firms. In recent years, the SEC Office of Inspector General (OIG) has investigated several employees for conducting securities transactions that violate the commission's rules, according a December report.
John Nester, an SEC spokesman, in a statement called the case "disappointing." A lawyer for Cantiello did not respond to a request for comment. Cantiello, a resident of New Rochelle, New York, had been a SEC compliance examiner from 1991 to 1999, and then again from 2004 until her resignation in November 2014, the complaint said. From 2007 to 2008, Cantiello's husband bought shares in an unnamed broker-dealer for $44,500, the complaint said.
Cantiello did not clear the purchase with SEC ethics officials, the complaint said, and retained about $4,000 worth of stock during her break from working at the SEC from 1999 to 2004. In 2012, Cantiello sold her holdings at the direction of an SEC official who called the stock prohibited, but her husband continued to hold shares in the company, according to the complaint.
During an April 2013 interview with OIG, Cantiello claimed she did not know holding the stock was prohibited. In fact, the complaint said, a colleague later told an investigator that Cantiello knew in 2010 when new ethics rules went into effect. The colleague said Cantiello had been upset because she "did not want to take a loss."
As part of the deferred prosecution agreement, Cantiello agreed to admit that she made false statements regarding the stock holdings during the April 2013 interview. Prosecutors also agreed not to pursue the case further if she remained in compliance with various terms over the next three months, court documents state. Prosecutors similarly used a deferred prosecution agreement to resolve a case last year against another former SEC compliance examiner, Steven Gilchrist, for allegedly making false statements about prohibited stock holdings.