In re ELIZABETH PAGLIARINI

 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
                                                 UNITED                                                 STATES OF AMERICA 

                                                                     Before                                                                     the                                                                     

                                    SECURITIES                                    AND                                    EXCHANGE COMMISSION 

SECURITIES EXCHANGE ACT OF 1934 
Release No. 63964 / February 24, 2011 
ADMINISTRATIVE PROCEEDING 
File No. 3-14273 
In the Matter of 
ELIZABETH PAGLIARINI, 
Respondent. 
ORDER INSTITUTING ADMINISTRATIVE 
AND CEASE-AND-DESIST PROCEEDINGS 
PURSUANT TO SECTIONS 15(b) AND 21C 
OF THE SECURITIES EXCHANGE ACT OF 
1934, MAKING FINDINGS, AND IMPOSING 
REMEDIAL SANCTIONS AND A CEASE-
AND-DESIST ORDER 
I. 
The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
public interest that public administrative and cease-and-desist proceedings be, and hereby are, 
instituted pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 (“Exchange 
Act”) against Elizabeth Pagliarini (“Pagliarini” or “Respondent”).  
II. 
In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the findings 
herein, except as to the Commission’s jurisdiction over her and the subject matter of these 
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting 
Administrative and Cease-and-Desist Proceedings Pursuant to Sections 15(b) and 21C of the 
Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions and a 
Cease-and-Desist Order (“Order”), as set forth below.   

 
 
 
 
 
 
   
 
 
 
 
   
 
 
 
 
 
 
  
 
 
 
 
 
                                                
 
 
  
   
  
 
 
III. 
On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that: 
Summary 
These proceedings arise out of Pagliarini’s failure to supervise Tony Ahn, a registered 
representative who, between September 2005 and September 2007 (the “relevant period”), helped 
manipulate the prices of several microcap issuers’ stocks.  During this time, Ahn was associated 
with Hunter World Markets, Inc. (“HWM”), a registered broker-dealer for which Pagliarini was the 
designated compliance officer, as well as Ahn’s direct supervisor.  Ahn directly violated Section 
10(b) of the Exchange Act and Rule 10b-5 thereunder, and aided and abetted and caused HWM’s 
violations of Section 15(c)(1) of the Exchange Act, by executing a number of trades, including 
wash trades, the apparent purposes of which were to manipulate the prices of microcap companies 
stocks and to generate over $600,000 in sales credits to HWM, which the firm considered to be the 
equivalent of commissions.  Pagliarini failed reasonably to supervise Ahn because she failed to 
follow HWM’s procedures that required her to follow up on suspicious transactions, such as the 
wash trades, that lacked business sense or exhibited a lack of concern regarding risks, commissions, 
or other transaction costs.
            Pagliarini            also            willfully aided and abetted and caused HWM’s violation of Section 17(a) of 
the Exchange Act and Rule 17a-8 thereunder.  Rule 17a-8 requires brokers and dealers to comply 
with the recordkeeping, retention, and reporting obligations imposed by the Currency and Financial 
Transactions Reporting Act of 1970 (commonly referred to as the Bank Secrecy Act (“BSA”)), 12 
U.S.C. § 1829b, 12 U.S.C. §§ 1951-1959, and 31 U.S.C. §§ 5311-5330.  HWM violated that rule 
when it failed to file any suspicious activity reports (“SARs”) with respect to several large money 
transfers into and out of the brokerage account of Florian Homm (“Homm”), one of HWM’s co-
owners at the time, a large transfer of funds to a third party account at a Canadian bank by Colin 
Heatherington (“Heatherington”), as well as with respect to the wash trades described above.  As 
HWM’s compliance officer and the firm’s anti-money laundering (“AML”) compliance officer, 
Pagliarini was directly responsible for causing the firm to file SARs, yet she failed to do so with 
respect to any of Homm’s suspect money transfers, the Heatherington transfer, or the wash trades. 
Respondent 
1. Pagliarini was the chief compliance officer and AML compliance officer of HWM 
from October 2004 through May 2008 and Ahn’s supervisor during the relevant period.  Ahn was a 
1 
The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding 
on any other person or entity in this or any other proceeding. 
2 


 
 
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
registered representative with HWM, a now defunct broker-dealer that had been registered with the 
Commission during the relevant period.  Pagliarini, 39 years old, is a resident of Mission Viejo, 
California. 
Other Relevant Individuals and Entities 
2. Hunter World Markets, Inc. is a California corporation formerly based in Beverly 
Hills, California.  During the relevant period, HWM conducted both a brokerage and investment 
banking business.  HWM was registered as a broker-dealer with the Commission from March 1996 
through November 30, 2009, when HWM’s Form BDW, withdrawing its registration from the 
Commission as a broker-dealer, became effective.  
3.            Tony Ahn was associated with HWM as a registered representative and was its 
primary trader during the relevant period.   
4. Florian Wilhelm Jurgen Homm was a co-owner and director of HWM during the 
relevant period.  Homm was also the co-founder, the original chief investment officer and later the 
co-chief investment officer of Absolute Capital Management Holdings Limited (“ACMH”), a 
London-based hedge fund management company.       
5. ACMH was organized under the laws of the Cayman Islands.  It was quoted on the 
London Alternative Investment Market and was registered with the Commission as an investment 
adviser until September 10, 2007.  During the relevant period, ACMH managed eight Cayman 
Islands-domiciled hedge funds (the “Absolute funds”) that have subsequently either been 
liquidated or are now managed by a different fund management company.  ACMH has no 
securities registered under the Exchange Act.    
Background 
6. During the relevant period, HWM and several individuals associated with the firm, 
including Ahn, manipulated upward the prices of several thinly traded microcap issuer stocks or 
maintained the prices of those stocks at artificially high levels. A variety of techniques were 
employed to manipulate the issuers’ stock prices, including matched orders, marking the close, 
wash trades and purchases at artificially increasing prices.  As a result of the manipulation, 
HWM’s co-owners, as well as other individuals, reaped over $65.5 million.  During the course of 
the manipulation, Pagliarini served as HWM’s chief compliance officer, with the responsibility to 
file SARs on HWM’s behalf. 
Pagliarini Failed Reasonably to Supervise Ahn 
7. Pagliarini was directly responsible for supervising Ahn, HWM’s primary trader.   
As part of her supervisory duties, Pagliarini reviewed and approved all order tickets generated 
from Ahn’s trading activity.  The firm’s procedures required Pagliarini to follow up on suspicious 
3 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
transactions, such as those where the customer engages in transactions that lack business sense, or 
exhibits a lack of concern regarding risks, commissions, or other transaction costs.   
8. Pagliarini failed to follow up on the red flags presented by the wash transactions 
Ahn executed while at HWM.  Specifically, Pagliarini never followed up on the wash transactions 
by obtaining any information on why they were being placed.  The wash transactions, which 
effectively moved issuer stock between accounts held by the same Absolute fund, had no 
ostensible business purpose other than to either manipulate the price of the stock or to generate 
sales credits to HWM.  By failing to follow-up on these suspect wash transactions, Pagliarini failed 
to prevent Ahn’s securities law violations.  Accordingly, Pagliarini failed reasonably to supervise 
Ahn. 
HWM’s Failure to File Suspicious Activity Reports 
9. In April 2002, Congress passed the Uniting and Strengthening America by 
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) 
Act of 2001.  The Patriot Act amended provisions of the BSA and substantially expanded a broker-
dealer’s obligations to detect and prevent money laundering.  The regulations implementing the 
BSA mandate that, effective December 31, 2002, broker-dealers report suspicious transactions by 
filing a SAR with the Financial Crimes Enforcement Network (“FinCEN”) to report any 
transaction (or a pattern of transactions of which the transaction is a part) involving or aggregating 
to at least $5,000 that it “knows, suspects, or has reason to suspect”: (1) involves funds derived 
from illegal activity or is conducted to disguise funds derived from illegal activities; (2) is designed 
to evade any requirements of the BSA; (3) has no business or apparent lawful purpose and the 
broker-dealer knows of no reasonable explanation for the transaction after examining the available 
facts; or (4) involves use of the broker-dealer to facilitate criminal activity.  31 C.F.R. § 
103.19(a)(2). 
10. Rule 17a-8 of the Exchange Act requires broker-dealers to comply with the 
recordkeeping, retention, and reporting obligations of the regulation under the BSA.  The failure to 
file a SAR as required by the SAR Rule is a violation of Section 17(a) of the Exchange Act and 
Rule 17a-8 thereunder.  Pagliarini was responsible for filing SARs on behalf of HWM.   
11. The information available to HWM and Pagliarini should have indicated that the 
wash transactions executed by Ahn were suspicious and involved the type of conduct that should 
have caused Pagliarini to file SARs on behalf of HWM.  However, HWM did not, and Pagliarini 
did not cause HWM to, file a SAR with respect to any of these wash transactions.   
12. HWM also failed to file SARs with respect to certain suspicious cash transfers 
made into and out of Homm’s brokerage account.  Although Homm conducted only minimal 
securities trading in the account, large amounts of cash were routinely transferred into this account 
from HWM’s operations account, and soon thereafter transferred to various bank accounts in 
Switzerland and overseas.  In fact, HWM’s clearing agent became concerned over certain transfers, 
4 


 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
  
 
 
 
 
 
 
 
and sent HWM an anti-money laundering inquiry in May 2006 regarding the source of the funds in 
Homm’s account.  The clearing agent also inquired about the nature and purpose of the account.  
Pagliarini responded that HWM was comfortable with the source of the funds and business 
purpose of the account, even though the account conducted few actual trades.    
13. HWM also failed to file a SAR with respect to a $4 million wire transfer by Ficeto 
from Heatherington’s CIC Global Capital, Ltd. account at HWM to a Canadian bank account in the 
name of a different company.  This transfer was against HWM’s policy to disallow wires from 
customer accounts to third parties.  Although Pagliarini’s concerns over the transfer were 
evidenced when she did not sign off on this transaction and required that the funds be returned, she 
did not file a SAR.  
14. In light of these red flags, and given the potential that Homm was, in fact, 
laundering money through his account, these cash transfers were suspicious and Pagliarini should 
have caused HWM to have filed a SAR with respect to these transfers.  Pagliarini knew of her 
obligation to assist HWM in fulfilling its requirements to file SARs, and knew, or was reckless in 
not knowing, that significant suspicious activity was not being reported by HWM as a result of her 
actions. 
Violations 
15. As a result of the conduct described above, Pagliarini failed reasonably to supervise 
Ahn with a view to preventing Ahn’s violations of Section 10(b) of the Exchange Act and Rule 
10b-5 thereunder, and aiding and abetting violations of Section 15(c)(1) of the Exchange Act 
through the execution of the wash transactions.  
16. As a result of the conduct described above, Pagliarini willfully aided and abetted 
and caused HWM’s violations of Section 17(a) of the Exchange Act and Rule 17a-8 thereunder 
through the failure to file SARs.    
IV. 
In view of the foregoing, the Commission deems it appropriate, in the public interest, to 
impose the sanctions agreed to in Respondent Pagliarini’s Offer. 
Accordingly, pursuant to Sections 15(b) and 21C of the Exchange Act, it is hereby 
ORDERED that:
            A.            Respondent            Pagliarini            shall cease and desist from committing or causing any 
violations and any future violations of Section 17(a) of the Exchange Act and Rule 17a-8 
thereunder; 
5 


 
 
 
 
  
  
 
 
 
            
 
 
 
 
     
 
 
 
 
 
 
 
 
   
   
 
B. Respondent Pagliarini be, and hereby is suspended from acting in a supervisory 
capacity with any broker or dealer for a period of twelve months, effective on the second Monday 
following the entry of the Order.   
C. Respondent shall pay a civil money penalty in the amount of Twenty Thousand 
Dollars ($20,000) to the United States Treasury.  Payment shall be made in the following four 
installments: (a) Five Thousand Dollars ($5,000) to be paid within twenty-one days of the entry of 
this Order; (b) Five Thousand Dollars ($5,000) to be paid within six (6) months of the entry of this 
Order; (c) Five Thousand Dollars ($5,000) to be paid within nine (9) months of the entry of this 
Order; and (d) a final payment of Five Thousand Dollars ($5,000) to be paid within one year of the 
entry of this Order.  If any payment is not made by the date the payment is required by this Order, 
the entire outstanding balance of civil penalties, plus any additional interest accrued pursuant to 31 
U.S.C. 3717, shall be due and payable immediately, without further application.  Payments shall 
be: (A) made by wire transfer, United States postal money order, certified check, bank cashier's 
check or bank money order; (B) made payable to the Securities and Exchange Commission; (C) 
hand-delivered or mailed to the Office of Financial Management, Securities and Exchange 
Commission, Operations Center, 6432 General Green Way, Stop 0-3, Alexandria, VA 22312; and 
(D) submitted under cover letter that identifies Elizabeth Pagliarini as a Respondent in these 
proceedings, the file number of these proceedings, a copy of which cover letter and money order or 
check shall be sent to Michele Layne, Associate Regional Director, 5670 Wilshire Boulevard, 11
th 
Floor, Los Angeles, California 90036.   
            By            the            Commission.
       Elizabeth M. Murphy
       Secretary 
Service List 
Rule 141 of the Commission's Rules of Practice provides that the Secretary, or another duly 
authorized officer of the Commission, shall serve a copy of the Order Instituting Administrative 
and Cease-and-Desist Proceedings Pursuant to Sections 15(b) and 21C of the Securities Exchange 
Act of 1934, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order 
("Order"), on the Respondent and her legal agent. 
The attached Order has been sent to the following parties and other persons entitled to 
notice: 
Honorable Brenda P. Murray 
Chief Administrative Law Judge 
Securities and Exchange Commission 
6 


 
 
 
 
   
     
 
  
 
         
  
 
 
 
 
100 F Street, N.E 
Washington, DC 20549-2557 
Lucee S. Kirka, Esq.  
Los Angeles Regional Office 
Securities and Exchange Commission 
5670 Wilshire Boulevard, 11
th
 Floor 
Los Angeles, CA 90036 
Ms. Elizabeth Pagliarini 
c/o Richard M. Steingard, Esq. 
Lightfoot Steingard & Sandowsky LLP 
800 Wilshire Boulevard, Suite 1050 
Los Angeles, CA 90017 
Richard M. Steingard, Esq. 
Lightfoot Steingard & Sandowsky LLP 
800 Wilshire Boulevard, Suite 1050 
Los Angeles, CA 90017 
(Counsel for Elizabeth Pagliarini) 
7 

UNITED STATES OF AMERICA 

 Before the 

 SECURITIES AND EXCHANGE COMMISSION 


SECURITIES EXCHANGE ACT OF 1934 
Release No. 63964 / February 24, 2011 

ADMINISTRATIVE PROCEEDING 
File No. 3-14273 

In the Matter of 

ELIZABETH PAGLIARINI, 

Respondent. 

ORDER INSTITUTING ADMINISTRATIVE 
AND CEASE-AND-DESIST PROCEEDINGS 
PURSUANT TO SECTIONS 15(b) AND 21C 
OF THE SECURITIES EXCHANGE ACT OF 
1934, MAKING FINDINGS, AND IMPOSING 
REMEDIAL SANCTIONS AND A CEASE-
AND-DESIST ORDER 

I. 

The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
public interest that public administrative and cease-and-desist proceedings be, and hereby are, 
instituted pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 (“Exchange 
Act”) against Elizabeth Pagliarini (“Pagliarini” or “Respondent”).  

II. 

In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the findings 
herein, except as to the Commission’s jurisdiction over her and the subject matter of these 
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting 
Administrative and Cease-and-Desist Proceedings Pursuant to Sections 15(b) and 21C of the 
Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions and a 
Cease-and-Desist Order (“Order”), as set forth below.   



 

 

 
 
 

 
   

 

 

 

 
   

 
 

 
 

 

 

  
 

 
 

 
 

                                                 
   

     

 

 

III. 

On the basis of this Order and Respondent’s Offer, the Commission finds1 that: 

Summary 

These proceedings arise out of Pagliarini’s failure to supervise Tony Ahn, a registered 
representative who, between September 2005 and September 2007 (the “relevant period”), helped 
manipulate the prices of several microcap issuers’ stocks.  During this time, Ahn was associated 
with Hunter World Markets, Inc. (“HWM”), a registered broker-dealer for which Pagliarini was the 
designated compliance officer, as well as Ahn’s direct supervisor.  Ahn directly violated Section 
10(b) of the Exchange Act and Rule 10b-5 thereunder, and aided and abetted and caused HWM’s 
violations of Section 15(c)(1) of the Exchange Act, by executing a number of trades, including 
wash trades, the apparent purposes of which were to manipulate the prices of microcap companies 
stocks and to generate over $600,000 in sales credits to HWM, which the firm considered to be the 
equivalent of commissions.  Pagliarini failed reasonably to supervise Ahn because she failed to 
follow HWM’s procedures that required her to follow up on suspicious transactions, such as the 
wash trades, that lacked business sense or exhibited a lack of concern regarding risks, commissions, 
or other transaction costs.

 Pagliarini also willfully aided and abetted and caused HWM’s violation of Section 17(a) of 
the Exchange Act and Rule 17a-8 thereunder.  Rule 17a-8 requires brokers and dealers to comply 
with the recordkeeping, retention, and reporting obligations imposed by the Currency and Financial 
Transactions Reporting Act of 1970 (commonly referred to as the Bank Secrecy Act (“BSA”)), 12 
U.S.C. § 1829b, 12 U.S.C. §§ 1951-1959, and 31 U.S.C. §§ 5311-5330.  HWM violated that rule 
when it failed to file any suspicious activity reports (“SARs”) with respect to several large money 
transfers into and out of the brokerage account of Florian Homm (“Homm”), one of HWM’s co-
owners at the time, a large transfer of funds to a third party account at a Canadian bank by Colin 
Heatherington (“Heatherington”), as well as with respect to the wash trades described above.  As 
HWM’s compliance officer and the firm’s anti-money laundering (“AML”) compliance officer, 
Pagliarini was directly responsible for causing the firm to file SARs, yet she failed to do so with 
respect to any of Homm’s suspect money transfers, the Heatherington transfer, or the wash trades. 

Respondent 

1. Pagliarini was the chief compliance officer and AML compliance officer of HWM 
from October 2004 through May 2008 and Ahn’s supervisor during the relevant period.  Ahn was a 

1 The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding 
on any other person or entity in this or any other proceeding. 

2 




 

 

 

 
 
  

 
 

 
  

 
 

 

 
 

 
 

 
 

 
 

registered representative with HWM, a now defunct broker-dealer that had been registered with the 
Commission during the relevant period.  Pagliarini, 39 years old, is a resident of Mission Viejo, 
California. 

Other Relevant Individuals and Entities 

2. Hunter World Markets, Inc. is a California corporation formerly based in Beverly 
Hills, California.  During the relevant period, HWM conducted both a brokerage and investment 
banking business.  HWM was registered as a broker-dealer with the Commission from March 1996 
through November 30, 2009, when HWM’s Form BDW, withdrawing its registration from the 
Commission as a broker-dealer, became effective.  

3. Tony Ahn was associated with HWM as a registered representative and was its 
primary trader during the relevant period.   

4. Florian Wilhelm Jurgen Homm was a co-owner and director of HWM during the 
relevant period.  Homm was also the co-founder, the original chief investment officer and later the 
co-chief investment officer of Absolute Capital Management Holdings Limited (“ACMH”), a 
London-based hedge fund management company.       

5. ACMH was organized under the laws of the Cayman Islands.  It was quoted on the 
London Alternative Investment Market and was registered with the Commission as an investment 
adviser until September 10, 2007.  During the relevant period, ACMH managed eight Cayman 
Islands-domiciled hedge funds (the “Absolute funds”) that have subsequently either been 
liquidated or are now managed by a different fund management company.  ACMH has no 
securities registered under the Exchange Act.    

Background 

6. During the relevant period, HWM and several individuals associated with the firm, 
including Ahn, manipulated upward the prices of several thinly traded microcap issuer stocks or 
maintained the prices of those stocks at artificially high levels. A variety of techniques were 
employed to manipulate the issuers’ stock prices, including matched orders, marking the close, 
wash trades and purchases at artificially increasing prices.  As a result of the manipulation, 
HWM’s co-owners, as well as other individuals, reaped over $65.5 million.  During the course of 
the manipulation, Pagliarini served as HWM’s chief compliance officer, with the responsibility to 
file SARs on HWM’s behalf. 

Pagliarini Failed Reasonably to Supervise Ahn 

7. Pagliarini was directly responsible for supervising Ahn, HWM’s primary trader.   
As part of her supervisory duties, Pagliarini reviewed and approved all order tickets generated 
from Ahn’s trading activity.  The firm’s procedures required Pagliarini to follow up on suspicious 

3 




 

 

 

 

 

 
 

 
 

 
 

 

 
 
 

 

 
 

 
 

 

transactions, such as those where the customer engages in transactions that lack business sense, or 
exhibits a lack of concern regarding risks, commissions, or other transaction costs.   

8. Pagliarini failed to follow up on the red flags presented by the wash transactions 
Ahn executed while at HWM.  Specifically, Pagliarini never followed up on the wash transactions 
by obtaining any information on why they were being placed.  The wash transactions, which 
effectively moved issuer stock between accounts held by the same Absolute fund, had no 
ostensible business purpose other than to either manipulate the price of the stock or to generate 
sales credits to HWM.  By failing to follow-up on these suspect wash transactions, Pagliarini failed 
to prevent Ahn’s securities law violations. Accordingly, Pagliarini failed reasonably to supervise 
Ahn. 

HWM’s Failure to File Suspicious Activity Reports 

9. In April 2002, Congress passed the Uniting and Strengthening America by 
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) 
Act of 2001. The Patriot Act amended provisions of the BSA and substantially expanded a broker-
dealer’s obligations to detect and prevent money laundering.  The regulations implementing the 
BSA mandate that, effective December 31, 2002, broker-dealers report suspicious transactions by 
filing a SAR with the Financial Crimes Enforcement Network (“FinCEN”) to report any 
transaction (or a pattern of transactions of which the transaction is a part) involving or aggregating 
to at least $5,000 that it “knows, suspects, or has reason to suspect”: (1) involves funds derived 
from illegal activity or is conducted to disguise funds derived from illegal activities; (2) is designed 
to evade any requirements of the BSA; (3) has no business or apparent lawful purpose and the 
broker-dealer knows of no reasonable explanation for the transaction after examining the available 
facts; or (4) involves use of the broker-dealer to facilitate criminal activity.  31 C.F.R. § 
103.19(a)(2). 

10. Rule 17a-8 of the Exchange Act requires broker-dealers to comply with the 
recordkeeping, retention, and reporting obligations of the regulation under the BSA.  The failure to 
file a SAR as required by the SAR Rule is a violation of Section 17(a) of the Exchange Act and 
Rule 17a-8 thereunder. Pagliarini was responsible for filing SARs on behalf of HWM.   

11. The information available to HWM and Pagliarini should have indicated that the 
wash transactions executed by Ahn were suspicious and involved the type of conduct that should 
have caused Pagliarini to file SARs on behalf of HWM.  However, HWM did not, and Pagliarini 
did not cause HWM to, file a SAR with respect to any of these wash transactions.   

12. HWM also failed to file SARs with respect to certain suspicious cash transfers 
made into and out of Homm’s brokerage account.  Although Homm conducted only minimal 
securities trading in the account, large amounts of cash were routinely transferred into this account 
from HWM’s operations account, and soon thereafter transferred to various bank accounts in 
Switzerland and overseas.  In fact, HWM’s clearing agent became concerned over certain transfers, 

4 




 

 

 
 

 

 
 

 
 

   
 

 

 

 

 
  

 
 

 
 

 
 

 

and sent HWM an anti-money laundering inquiry in May 2006 regarding the source of the funds in 
Homm’s account.  The clearing agent also inquired about the nature and purpose of the account.  
Pagliarini responded that HWM was comfortable with the source of the funds and business 
purpose of the account, even though the account conducted few actual trades.    

13. HWM also failed to file a SAR with respect to a $4 million wire transfer by Ficeto 
from Heatherington’s CIC Global Capital, Ltd. account at HWM to a Canadian bank account in the 
name of a different company.  This transfer was against HWM’s policy to disallow wires from 
customer accounts to third parties.  Although Pagliarini’s concerns over the transfer were 
evidenced when she did not sign off on this transaction and required that the funds be returned, she 
did not file a SAR.  

14. In light of these red flags, and given the potential that Homm was, in fact, 
laundering money through his account, these cash transfers were suspicious and Pagliarini should 
have caused HWM to have filed a SAR with respect to these transfers.  Pagliarini knew of her 
obligation to assist HWM in fulfilling its requirements to file SARs, and knew, or was reckless in 
not knowing, that significant suspicious activity was not being reported by HWM as a result of her 
actions. 

Violations 

15. As a result of the conduct described above, Pagliarini failed reasonably to supervise 
Ahn with a view to preventing Ahn’s violations of Section 10(b) of the Exchange Act and Rule 
10b-5 thereunder, and aiding and abetting violations of Section 15(c)(1) of the Exchange Act 
through the execution of the wash transactions.  

16. As a result of the conduct described above, Pagliarini willfully aided and abetted 
and caused HWM’s violations of Section 17(a) of the Exchange Act and Rule 17a-8 thereunder 
through the failure to file SARs.    

IV. 

In view of the foregoing, the Commission deems it appropriate, in the public interest, to 
impose the sanctions agreed to in Respondent Pagliarini’s Offer. 

Accordingly, pursuant to Sections 15(b) and 21C of the Exchange Act, it is hereby 
ORDERED that:

 A. Respondent Pagliarini shall cease and desist from committing or causing any 
violations and any future violations of Section 17(a) of the Exchange Act and Rule 17a-8 
thereunder; 

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B. Respondent Pagliarini be, and hereby is suspended from acting in a supervisory 
capacity with any broker or dealer for a period of twelve months, effective on the second Monday 
following the entry of the Order.   

C. Respondent shall pay a civil money penalty in the amount of Twenty Thousand 
Dollars ($20,000) to the United States Treasury.  Payment shall be made in the following four 
installments: (a) Five Thousand Dollars ($5,000) to be paid within twenty-one days of the entry of 
this Order; (b) Five Thousand Dollars ($5,000) to be paid within six (6) months of the entry of this 
Order; (c) Five Thousand Dollars ($5,000) to be paid within nine (9) months of the entry of this 
Order; and (d) a final payment of Five Thousand Dollars ($5,000) to be paid within one year of the 
entry of this Order.  If any payment is not made by the date the payment is required by this Order, 
the entire outstanding balance of civil penalties, plus any additional interest accrued pursuant to 31 
U.S.C. 3717, shall be due and payable immediately, without further application.  Payments shall 
be: (A) made by wire transfer, United States postal money order, certified check, bank cashier's 
check or bank money order; (B) made payable to the Securities and Exchange Commission; (C) 
hand-delivered or mailed to the Office of Financial Management, Securities and Exchange 
Commission, Operations Center, 6432 General Green Way, Stop 0-3, Alexandria, VA 22312; and 
(D) submitted under cover letter that identifies Elizabeth Pagliarini as a Respondent in these 
proceedings, the file number of these proceedings, a copy of which cover letter and money order or 
check shall be sent to Michele Layne, Associate Regional Director, 5670 Wilshire Boulevard, 11th 

Floor, Los Angeles, California 90036.   

 By the Commission.

       Elizabeth  M.  Murphy
       Secretary  

Service List 

Rule 141 of the Commission's Rules of Practice provides that the Secretary, or another duly 
authorized officer of the Commission, shall serve a copy of the Order Instituting Administrative 
and Cease-and-Desist Proceedings Pursuant to Sections 15(b) and 21C of the Securities Exchange 
Act of 1934, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order 
("Order"), on the Respondent and her legal agent. 

The attached Order has been sent to the following parties and other persons entitled to 
notice: 

Honorable Brenda P. Murray 
Chief Administrative Law Judge 
Securities and Exchange Commission 

6 




 

 

 
 

   
    

 
  

 
         

  

 

 

 

 

100 F Street, N.E 
Washington, DC 20549-2557 

Lucee S. Kirka, Esq.  
Los Angeles Regional Office 
Securities and Exchange Commission 
5670 Wilshire Boulevard, 11th Floor 
Los Angeles, CA 90036 

Ms. Elizabeth Pagliarini 
c/o Richard M. Steingard, Esq. 
Lightfoot Steingard & Sandowsky LLP 
800 Wilshire Boulevard, Suite 1050 
Los Angeles, CA 90017 

Richard M. Steingard, Esq. 
Lightfoot Steingard & Sandowsky LLP 
800 Wilshire Boulevard, Suite 1050 
Los Angeles, CA 90017 
(Counsel for Elizabeth Pagliarini) 

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