The adviser to the Monetta Family of Mutual Funds and the company's top executive will appeal a recent Securities and Exchange Commission ruling that the firm and executives associated with the funds committed fraud.
Monetta Financial Services of Wheaton, Ill., Richard Barcarella, the company's president and CEO, and former fund director Richard D. Russo will appeal a March 27 decision from Brenda P. Murray, the SEC's chief administrative law judge. Murray ruled in March that Monetta Financial, Barcarella and Russo violated federal securities laws in handling hot initial public offerings.
The Monetta Fund disclosed the appeal in an SEC filing April 25. Barcarella declined to comment on the appeal, as did a spokesperson for the SEC. Another executive, fund director Paul W. Henry, has decided not to appeal Murray's decision, according to the Monetta Fund SEC filing. Murray ordered Henry to pay about $22,000 and suspended him from associating with any mutual fund for 30 days.
Murray ordered Monetta Financial, Barcarella and Russo to pay penalties of $200,000, $100,000 and $25,000, respectively. Murray also found that one fund director the SEC had charged, William Valiant, did not violate federal securities laws. The SEC will not appeal that decision, a spokesperson said.
The SEC case centered on 1993 transactions in which broker/dealers issued hot IPOs to Monetta Financial. Barcarella then reallocated some of the IPOs to the fund directors, an arrangement that was not disclosed to fund shareholders. Murray found that, except in the case of Valiant, the conduct violated the responsibilities that Barcarella and the directors had to shareholders.