==========================================START OF PAGE 1====== UNITED STATES SECURITIES AND EXCHANGE COMMISSION LITIGATION RELEASE NO. 15067 / September 25, 1996 SECURITIES AND EXCHANGE COMMISSION v. THOMAS J. FOX (United States District Court for the Eastern District of Virginia, Civil Action No. 96-1364-A) On September 24, 1996, the Securities and Exchange Commission ("Commission") filed a civil action in U.S. District Court for the Eastern District of Virginia seeking a permanent injunction, disgorgement, civil penalties and other relief against Thomas J. Fox ("Fox"), a former registered representative of Moors & Cabot, Inc. ("Moors & Cabot"), a brokerage firm registered with the Commission. The Commission's complaint charges Fox with violations of Section 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a)(1) of the Securities Exchange Act of 1934 and Rule 10b-5, thereunder. According to the Commission's complaint, from at least April 1991 through July 1993, Fox engaged in a fraudulent scheme wherein he misappropriated over $1.3 million from 19 different customer brokerage accounts at Moors & Cabot. During the period of the scheme, Fox was employed at the Washington, D.C. office of Moors & Cabot. Through a series of fraudulent, unauthorized wire transfers, he directed money from Moors & Cabot customer accounts to bank accounts that he, either directly or indirectly, controlled. Most of the money was channelled to bank accounts maintained for the benefit of various companies in which Fox maintained a personal financial interest. He also directed some of the money to his personal bank account and used it to pay his personal living expenses. According to the complaint, in implementing the scheme, Fox falsified certain Moors & Cabot records. In addition, in order to avoid detection, he directed over half of the money to an escrow account over which he maintained undisclosed control. The complaint also alleges that, in furtherance of the scheme, Fox made materially false and misleading statements to his customers. Among other things, he falsely led them to believe that the funds transferred from their accounts had been, or would be, used to purchase various securities, including investments in his affiliated companies. In April 1993, the scheme was discovered by Moors & Cabot and the firm subsequently terminated Fox's employment. The Commission also alleges that Fox engaged in unregistered broker-dealer activities by selling investments to the customers of another brokerage firm without the firm's knowledge or authorization.