Ex-Cantor Broker Barred From Invoking 9/11 in Defense to SEC

(Bloomberg) - A former Cantor Fitzgerald LP broker was barred from bringing up 9/11 as part of his defense against SEC charges that he illegally split commissions with another employee.

Adam Mattessich can’t question witnesses about the impact of the terrorist attacks on Cantor, a federal judge in Manhattan ruled Wednesday, because the issue has no bearing on the Securities and Exchange Commission’s case against him and could inflame the jury.

“I remain concerned about bringing 9/11 into a case where I don’t see its relevance,” said U.S. District Judge Katherine Polk Failla. Mattessich is tentatively scheduled to go on trial on Feb. 2.

The SEC sued Mattessich in 2018 for allegedly spitting commissions with Joseph Ludovico, another trader on the firm’s international equities desk, circumventing his supervisor’s 2002 decision on the matter. The scheme violated SEC rules requiring broker-dealers to make and keep accurate records of which securities transactions are attributable to which persons for compensation purposes, the suit alleged.

Cantor lost the majority of its New York staff in the World Trade Center, and Mattessich had argued that questioning witnesses about 9/11 would help jurors understand why he thought he was authorized to split commissions based on a conversation with then-Cantor Fitzgerald Chief Executive Officer Phil Marber.

‘Colored by 9/11’

“Everything that happened at Cantor was colored by the events of 9/11” for several years, Mattessich said in a court filing, adding that he expected Marber to testify that he “was stretched to his limits trying to save Cantor from collapse and had no time to discuss in any detail requests for changes in account coverage.”

The SEC argued that “no anticipated evidence links the impact of the attacks on the relevant Cantor commission-recording systems years later in 2004, when Mattessich first began receiving off-the-books commissions from Ludovico.”

Ludovico, who was sued at the same time as Mattessich, agreed to pay $25,000 in December 2019 to resolve the claims without admitting or denying the allegations. Cantor itself agreed to pay $1.25 million to resolve charges stemming from the case without admitting or denying the allegations.

According to the SEC complaint, Mattessich transferred accounts to Ludovico and a junior trader, who both transferred a portion of their commissions back to him. This scheme continued for several years even after Mattessich became their boss as desk head in 2004, the SEC said, with Ludovico paying him more than $58,000 in unrecorded commissions in 2013.

The case is Securities and Exchange Commission v Mattessich, 18-cv-5884, U.S. District Court, Southern District of New York.

By Chris Dolmetsch


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