Kevin P. Cassidy, 49, of Bedford Hills, New York, was arrested today on securities fraud charges in connection with his actions as CEO with Optionable, Inc., an oil derivatives trading company based in Valhalla, New York. The six-count indictment charges him with conspiracy, wire fraud, aiding and abetting the making of false statements, and securities fraud. The allegations involve a scheme to defraud the Bank of Montreal by overvaluing certain derivitive instruments, which reported a loss of CN$800 million as a result, according to published reports. Cassidy resigned as CEO of Optionable in May 2007 amid a controversy involving his prior criminal past. Cassidy was sentenced to 30 months for a felony conviction on credit card fraud in 1997 and six months for income tax evasion in 1993. The board of New York Mercantile Exchange (nymex), which purchased a 19 percent interest in Optionable, apparently forced Cassidy to resign when his past was revealed. Optionable's former president, Edward O'Connor and broker, Scott Connor, were also charged by the SEC in this case. David Lee, a former Managing Director of Bank of Montreal, plead guilty to separate charges and was ordered to pay forfeiture of $4.41 million for his role in the scheme.
Read the story here, here and here.
See the SEC complaint here.
This is a good example of failure to do one's due diligence. Nymex should have resolved the Cassidy criminal past before making their investment. See our article on Conducting Effective Due Diligence and the Top Ten Resume Lies.
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