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July 29, 2008 SEC News Digest
Issue 2008-146
COMMISSION ANNOUNCEMENTS
SEC Announces August 4 Roundtable on Performance of IFRS and U.S. GAAP during Subprime Crisis
On July 28, the Securities and Exchange Commission announced that it will host a roundtable on Monday, August 4 to analyze the performance of International Financial Reporting Standards (IFRS) and U.S. Generally Accepted Accounting Principles (U.S. GAAP) during the recent period of market turmoil.
"This roundtable will provide the Commission with valuable insights from investors, issuers, auditors, and others about the way that both IFRS and U.S. GAAP performed in the context of the current pressures on the marketplace," said SEC Chairman Christopher Cox. "We are particularly interested in how the two sets of standards dealt with the key accounting issues in the subprime crisis, including off-balance sheet entities and fair value."
The SEC's roundtable will take place from 1 p.m. to 5 p.m. and consist of two panels that will include investors, issuers, auditors, and various other parties with experience in financial reporting. Additionally, representatives from the Financial Accounting Standards Board and the International Accounting Standards Board will be present as observers.
The roundtable will be held in the auditorium at the SEC's headquarters at 100 F Street, N.E., Washington, D.C. The agenda, including a list of participants and moderators, will be issued shortly. The roundtable will be open to the public with seating on a first-come, first-served basis, and also will be webcast on the SEC Web site.
The Commission welcomes feedback regarding any of the topics to be addressed at the roundtable. The information that is submitted will become part of the public record of the roundtable.
Submissions to the Commission may be provided by any of the following methods:
Electronic submission options:
Use the Commission's Internet Submission Form.
Send an e-mail to rule-comments@sec.gov.
Paper submissions:
Send paper submissions in triplicate to Florence E. Harmon, Acting Secretary of the Securities and Exchange Commission, 100 F Street, N.E., Washington, D.C. 20549-1090. All submissions should refer to File Number 4-564. This file number should be included on the subject line if e-mail is used. To help process and review submissions more efficiently, please use only one method. The Commission will post all submissions on its Web site at www.sec.gov.
Please note that all submissions received will be posted without change. The SEC does not edit personal identifying information from submissions. Only information desired to be shared publicly should be submitted. (Press Rel. 2008-150)
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Jonathan Burks, Director of Legislative and Intergovernmental Affairs, to Complete SEC Service and Pursue Graduate Studies
The Securities and Exchange Commission announced today that Jonathan W. Burks, Director of the Office of Legislative and Intergovernmental Affairs, will leave the SEC on Aug. 1, 2008, to pursue graduate studies. Mr. Burks, who holds a bachelor's degree from the Georgetown University School of Foreign Service, has enrolled in the Paul H. Nitze School of Advanced International Studies at Johns Hopkins University.
"The members and staff of the Commission will greatly miss Jon's expertise, sound advice, and careful judgment," said SEC Chairman Christopher Cox. "He leaves behind many friends and colleagues at the SEC and on the Hill, and throughout the federal and state governments with whom he has worked. We are all indebted to Jon for his professionalism and commitment to America's investors."
Mr. Burks said, "It has been a privilege to play a role in the important work of this agency. And it has been an honor to work with a staff that is so talented and so dedicated to our critical mission - protecting investors and sustaining confidence in the markets."
Mr. Burks's responsibilities at the SEC included maintaining a vibrant dialogue with Congress and other governmental agencies, including the Department of the Treasury, the Federal Reserve, and the Commodity Futures Trading Commission.
Prior to joining the SEC staff in early 2007, Mr. Burks served in a number of top positions in the White House, the Department of the Treasury, and on Capitol Hill. He served as chief of staff for the 185-person Office of International Affairs at the Department of the Treasury and as Senior Advisor to the Under Secretary for International Affairs. He also served as a Policy Advisor during the creation of the Office of the Director of National Intelligence. From 2001 to 2005, he held various senior staff positions in the White House, including Special Assistant to the President for Policy. During the 1990s, Mr. Burks served as a Policy Analyst in the U.S. House of Representatives. (Press Rel. 2008-152)
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William Schulz Named Director of Legislative and Intergovernmental Affairs
Securities and Exchange Commission Chairman Christopher Cox today announced the appointment of William M. Schulz as Director of the agency's Office of Legislative and Intergovernmental Affairs.
Mr. Schulz replaces Jonathan Burks, who is leaving the SEC on Aug. 1, 2008 to pursue graduate studies at the Paul H. Nitze School of Advanced International Studies at Johns Hopkins University.
For the past three years, Mr. Schulz has served as a Counsel and Senior Advisor to the Chairman. Prior to joining the SEC, he served as Chief Counsel of the House Policy Committee and in a variety of senior legislative positions in the U.S. House of Representatives. From 1998 to 2002, Mr. Schulz served as Special Master at the Court of Federal Claims, where he oversaw the management and resolution of multi-billion dollar banking litigation spawned by the collapse of the savings and loan industry and the passage of FIRREA.
"The SEC is extraordinarily fortunate to have Bill Schulz play this key role at such an important time for our nation's investors and markets," Chairman Cox said. "Bill's extensive experience at the SEC and in the halls of Congress, as well as his unique background as a Special Master handling complex financial issues, will serve him well in this role. Bill will be an outstanding diplomat for the SEC in ensuring that the Commission continues to enjoy the outstanding relationship it does with the Congress and other government agencies."
Mr. Schulz said, "I am honored that Chairman Cox has asked me to serve in this new role. Since arriving at the Commission, I have never ceased to be impressed by the quality of the staff and their dedication to the agency's core mission to protect investors. It will be a pleasure to represent the Commission in its dealings with the Congress and other federal and state agencies."
Mr. Schulz graduated from Duke University in 1988 and received his J.D. from William and Mary's Marshall-Wythe School of Law in 1995. (Press Rel. 2008-153)
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SEC, Labor Department Enhance Efforts to Protect Retirement Savings and Investments
Securities and Exchange Commission Chairman Christopher Cox and U.S. Secretary of Labor Elaine L. Chao today agreed to make permanent their agencies' longstanding relationship of sharing information on retirement and investments to protect the $5.8 trillion in retirement assets of American workers, retirees and their families held in employee benefit plans by signing a Memorandum of Understanding (MOU) during a public ceremony in Washington.
The increasing intersection of regulatory responsibilities in today's financial world presents new challenges in protecting the retirement assets of investors nationwide. The MOU between the two agencies will formalize and strengthen cooperation to share information relating to retirement and investments, and provide investors, benefit plan participants, and plan administrators with better access to more understandable information that they can use to make informed investment decisions.
"This Memorandum of Understanding with the Securities and Exchange Commission will better protect the 117 million Americans who depend on private sector retirement plans," said Secretary Chao. "This further boosts the department's record-setting enforcement program that has won $11 billion in monetary results and more than 800 criminal indictments since 2001 on behalf of protecting workers' retirement savings."
Chairman Cox said, "With a growing number of seniors focused on managing their own 401(k) plans, it's important to improve disclosure to give them the information they need and in a form they can use. To accomplish this, the Department of Labor and the SEC are committed to coordinating closely on their behalf. This enhanced coordination of the SEC's investor protection efforts and the Department of Labor's regulatory responsibility for pensions and 401(k)s will greatly benefit the millions of hardworking Americans who are saving and investing for their retirement as well as those who have already retired."
The MOU establishes a process for the department's Employee Benefits Security Administration and SEC staffs to share information and meet regularly to discuss matters of mutual interest. These include examination findings and trends, enforcement cases and regulatory requirements that impact the missions of both agencies. The department has oversight over 401(k) and other retirement plans as well as plan participants, while the SEC oversees, among other areas, brokerages, investment advisers and mutual funds.
Both agencies will designate points of contact in their regional offices to facilitate communications among staff on enforcement and examination matters. The agreement also will expedite the sharing of non-public information regarding investment advisers and other subjects of mutual interest between the two agencies. Additionally, the Labor Department and SEC will cross-train staff under the agreement with the goal of enhancing each agency's understanding of the other's mission and investigative jurisdiction. (Press Rel. 2008-154)
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ENFORCEMENT PROCEEDINGS
In the Matter of Stephen H. Roebuck
On July 29, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions (Order) against Stephen Roebuck. The Order finds that on July 14, 2008, a final judgment was entered against Stephen H. Roebuck, permanently enjoining him from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, in the civil action entitled Securities and Exchange Commission v. Daniel Kaiser, et al., Civil Action Number 2:08-cv-00888-JCM-LRL, in the United States District Court, District of Nevada.
The Order further finds that the Commission's complaint alleged that Roebuck engaged in a "pump-and-dump" scheme in VMT Scientific, Inc. stock by purportedly merging a private company with VMT Scientific, a public company with no operations, and issuing VMT Scientific shares to accounts controlled by Roebuck. The complaint further alleged that Roebuck sold unregistered securities of VMT Scientific and also caused VMT Scientific to issue false and misleading press releases.
Based on the above, the Order bars Roebuck from association with any broker or dealer. Roebuck consented to the issuance of the Order without admitting or denying any of the findings in the Order except as to the Commission's jurisdiction over him, the subject matter of these proceedings, and the entering of the judgment in the civil injunctive action. (Rel. 34-58238; File No. 3-13104)
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In the Matter of Choi Dow Ian Hong & Lee Accountancy Corporation and Ernest E. Dow, CPA
On July 29, the Commission issued an Order Making Findings and Imposing Remedial Sanctions Pursuant to Section 4C of the Securities Exchange Act of 1934 and Rule 102(e) of the Commission's Rules of Practice (Order) against Choi Dow Ian Hong & Lee Accountancy Corporation (Choi Dow) and Ernest E. Dow, CPA (Dow). The Order finds that the respondents conducted an audit of, and issued an audit report for, a public company in 2004, which audit report the company included in a periodic report filed with the Commission, and that Choi Dow was not registered with the Public Company Accounting Oversight Board as required by Section 102(a) of the Sarbanes-Oxley Act of 2002.
Based on the above, the Order censured Dow and denied Choi Dow the privilege of appearing or practicing before the Commission as an accountant with the right to apply for reinstatement after one year, and ordered them, as long as they practice before the Commission, to comply with all requirements of the Commission and the Public Company Accounting Oversight Board, including, but not limited to, all requirements relating to registration, inspections, concurring partner reviews, and quality control standards. Respondents consented to the issuance of the Order without admitting or denying any of the findings in the Order. (Rel. 34-58239; AAE Rel. 2849; File No. 3-12790)
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In the Matter of Michael Deutchman, CPA
On July 29, the Commission issued an Order Making Findings and Imposing Remedial Sanctions Pursuant to Sections 4C and 21C of the Securities Exchange Act of 1934 and Rule 102(e) of the Commission's Rules of Practice (Order) against Michael Deutchman, CPA (Deutchman). The Order finds that Deutchman conducted an audit of, and issued an audit report for, a public company in 2004, which the company included in a periodic report filed with the Commission, and that Deutchman was not registered with the Public Company Accounting Oversight Board as required by Section 102(a) of the Sarbanes-Oxley Act of 2002.
Based on the above, the Order censured Deutchman, ordered him to cease and desist from committing or causing any violations and any future violations of Section 102(a) of the Sarbanes-Oxley Act of 2002, and ordered him, as long as he practices before the Commission, to comply with all requirements of the Commission and the Public Company Accounting Oversight Board, including, but not limited to, all requirements relating to registration, inspections, concurring partner reviews, and quality control standards. Respondent consented to the issuance of the Order without admitting or denying any of the findings in the Order. (Rel. 34-58240; AAE Rel. 2850; File No. 3-12794)
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In the Matter of Banker & Co. and Jitendra S. Banker
On July 29, the Commission issued an Order Making Findings and Imposing Remedial Sanctions Pursuant to Section 4C of the Securities Exchange Act of 1934 and Rule 102(e) of the Commission's Rules of Practice (Order) against Banker & Co. and Jitendra S. Banker (Banker). The Order finds that the respondents conducted audits of, and issued audit reports for, three public companies in 2004, which audit reports the companies included in their periodic reports filed with the Commission, and that Banker & Co. was not registered with the Public Company Accounting Oversight Board as required by Section 102(a) of the Sarbanes-Oxley Act of 2002.
Based on the above, the Order censured Banker and denied Banker & Co. the privilege of appearing or practicing before the Commission as an accountant with the right to apply for reinstatement after one year, and ordered them, as long as they practice before the Commission, to comply with all requirements of the Commission and the Public Company Accounting Oversight Board, including, but not limited to, all requirements relating to registration, inspections, concurring partner reviews, and quality control standards. Respondents consented to the issuance of the Order without admitting or denying any of the findings in the Order. (Rel. 34-58241; AAE Rel. 2851; File No. 3-12788)
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In the Matter of Jay J. Shapiro, CPA P.C. and Jay J. Shapiro, CPA
On July 29, the Commission issued an Order Making Findings and Imposing Remedial Sanctions Pursuant to Sections 4C and 21C of the Securities Exchange Act of 1934 and Rule 102(e) of the Commission's Rules of Practice (Order) against Jay J. Shapiro, CPA, P.C. (Shapiro P.C.) and Jay J. Shapiro, CPA (Shapiro). The Order finds that the respondents conducted an audit of, and issued an audit report for, a public company in 2004, which the company included in a periodic report filed with the Commission, and that Shapiro P.C. was not registered with the Public Company Accounting Oversight Board as required by Section 102(a) of the Sarbanes-Oxley Act of 2002.
Based on the above, the Order censured Shapiro, ordered respondents to cease and desist from committing or causing any violations and any future violations of Section 102(a) of the Sarbanes-Oxley Act of 2002, denied Shapiro P.C. the privilege of appearing or practicing before the Commission as an accountant with the right to apply for reinstatement after one year, and ordered them, as long as they practice before the Commission, to comply with all requirements of the Commission and the Public Company Accounting Oversight Board, including, but not limited to, all requirements relating to registration, inspections, concurring partner reviews, and quality control standards. Respondents consented to the issuance of the Order without admitting or denying any of the findings in the Order. (Rel. 34-58242; AAE Rel. 2852; File No. 3-12793)
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Former Mining Manager Settles Charges with SEC for Trading on Inside Information
The Commission today announced that it has filed a complaint in the United States District Court for the Southern District of New York against George J. Simchuk (Simchuk) alleging that he engaged in unlawful trading on the basis of material, nonpublic information in the securities of Western Silver Corp. (Western Silver). Without admitting or denying the allegations in the Commission's complaint, Simchuk has agreed to settle this matter by consenting to the entry of a final judgment against him which imposes injunctive and monetary relief.
The complaint alleges that in late November 2005, Simchuk, former General Director of Glamis de Mexico, a wholly-owned subsidiary of Glamis Gold, Inc. ("Glamis," now Goldcorp, Inc.), learned material, nonpublic information concerning Glamis' plan to acquire publicly traded Western Silver. The complaint further alleges that Simchuk learned of the potential acquisition in connection with his official duties assisting in the due diligence process on behalf of Glamis. A few days later, on December 1, 2005, Simchuk began purchasing Western Silver stock. From December 2005 through February 2006, during which time he remained privy to material, nonpublic information concerning Glamis' potential acquisition of Western Silver, Simchuk intermittently purchased a total of 6,000 shares of Western Silver stock. According to the complaint, one of the purchases occurred while Simchuk was in attendance at a Glamis Board meeting at which he and others presented the due diligence findings with respect to Western Silver. On February 24, 2006, Glamis announced that it had signed a binding letter agreement to acquire Western Silver. By market close on February 24, news of the deal pushed the share price of Western Silver to $21.60, up 27% from its closing price the previous day.
Based on the facts alleged, the Commission charged Simchuk with violating Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. Without admitting or denying the allegations in the complaint, Simchuk has consented to the entry of a final judgment that: (i) permanently enjoins him from future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; (ii) requires him to disgorge $58,206, plus prejudgment interest thereon in the amount of $10,270, and (iii) orders him to pay a civil penalty of $58,206.
The Commission acknowledges the assistance of the Financial Industry Regulatory Authority in the investigation of this matter. [SEC v. George J. Simchuk, Civil Action No. 08-cv-6728 (DLC) (S.D.N.Y.)] (LR-20656)
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In the Matter of CFO-5, LLC (D-02885) and In the Matter of Prime Bank Securities (HO-2820)
On July 28, the Commission filed an injunctive action in the United States District Court for the District of Colorado relating to the fraudulent and unregistered offer and sale of over $5 million of prime bank securities. The Commission charged Stanley W. Anderson of Arvada, Colorado and Edwin A. Smith of Denver, Colorado with orchestrating the fraudulent scheme through Trinity International Enterprises, Inc. (Trinity) and CFO-5, LLC, Colorado corporations controlled by Anderson and Smith. The Commission also charged Michael D. Norton of Denver, Colorado, Nicholas R. Fair of Ft. Collins, Colorado, and Charles L. Kennedy, a pastor from Tampa, Florida, with participating in the fraudulent scheme by soliciting investors.
The Commission's complaint alleges that, from approximately April 2005 through July 2007, the defendants raised at least $5.1 million from investors. They solicited investors by misrepresenting that they would use the invested funds to purchase and sell foreign medium term notes (MTNs). However, because these MTNs did not exist, investor funds were not used to buy and sell these securities. According to the Complaint, Anderson and Smith instead used investor money for their personal expenses and paid unrelated civil judgments and loans, Ponzi payments to other investors, and compensation to salespeople, among other things. The Commission also alleges that Kennedy, Norton, and Fair acted as salespeople for the scheme and, with Anderson and Smith, continued to solicit and lull investors through at least July 2007. Additionally, the Complaint alleges that Kennedy did not forward any of the funds he raised from other pastors who shared his religious affiliation, rather he spent all of these funds for his personal use. The Complaint also alleges that all of the defendants participated in unregistered offers and sales of securities, and that Anderson, Smith, Kennedy, Norton, and Fair acted as unregistered broker-dealers.
The Commission's complaint alleges that all of the defendants violated the antifraud provisions of the securities laws in Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 (Exchange Act), and Section 17(a) of the Securities Act of 1933 (Securities Act). The complaint also alleges that all of the defendants violated the registration provisions in Sections 5(a) and 5(c) of the Securities Act. Finally, the complaint alleges that Anderson, Smith, Kennedy, Norton, and Fair violated Section 15(a) of the Exchange Act by acting as unregistered broker-dealers. The Commission seeks disgorgement, plus prejudgment interest, and civil penalties against all of the defendants.
For further information, please see Litigation Rel. No. 20657 (July 29, 2008) for SEC v. Trinity International Enterprises, Inc. et al, Civ. No. 08-CV-01594 LTB MEH (D. Colo.). [SEC v. Trinity International Enterprises, Inc., CFO-5, LLC, Stanley W. Anderson, Edwin A. Smith, Charles L. Kennedy, Michael D. Norton, and Nicholas R. Fair, Civil Action No. 08-CV-01594 LTB MEH (D. Colo.)] (LR-20657)
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SEC Charges Former Chairman and Chief Executive Officer of Enron Energy Services with Insider Trading
Lou Pai Agrees to Pay $31.5 Million in Disgorgement, Prejudgment Interest, and Civil Money Penalties, and is Barred From Serving as an Officer or Director of a Public Company for Five Years
The Commission today filed a civil action against Lou L. Pai, the former Chairman and Chief Executive Officer of Enron Energy Services (EES), a division of Enron Corp. (Enron). The Commission's complaint, filed in the United States District Court for the Southern District of Texas, alleges that Pai sold Enron stock in May and June 2001 on the basis of material, nonpublic information concerning Enron. Pai simultaneously settled the action without admitting or denying the allegations in the Commission's complaint.
According to the Commission's complaint, shortly before his departure from Enron, between May 18, 2001 and June 7, 2001, Pai sold 338,897 shares of Enron stock and exercised stock options that resulted in the sale of 572,818 shares to the open market - yielding millions of dollars in proceeds. Before making these sales, Pai learned from EES successor management that it had identified certain financial and operational problems and substantial contract-related losses at EES. Had Enron reported EES's contract-related losses in its Retail Energy Services segment, that segment would have shown a quarterly loss of at least $60 million, rather than a profit of $40 million as falsely reported in Enron's Form 10-Q for the first quarter of 2001. Pai knew or should have known that he could not sell Enron stock without first disclosing such material, nonpublic information. By selling Enron stock without disclosing this information, Pai breached his fiduciary duty to Enron shareholders.
The Commission's complaint further alleges that Pai avoided substantial losses from these sales when the price of Enron stock collapsed in the fall of 2001. Enron's stock price averaged approximately $53.78 per share during the time of Pai's sales, but closed at $0.40 on Dec. 3, 2001 - the day after Enron filed for Chapter 11 bankruptcy protection. By selling his shares in May and June 2001 before the collapse of Enron's share price, Pai avoided millions of dollars of losses.
Pai has consented to the entry of a final judgment that permanently enjoins him from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and bars him from acting as an officer or director of a public company for five years. Pai also agreed to pay $30 million in disgorgement and prejudgment interest (subject to a $6 million offset based on his prior waiver of insurance coverage for the benefit of Enron investors), plus a $1.5 million civil money penalty. [SEC v. Lou L. Pai, Civil Action No. H-08-2338 (SDTX)] (LR-20658)
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Former CEO and President of Broker-Dealer Settle SEC Charges Related to their Involvement in a Fraudulent Short Selling Scheme
The Commission today announced that on July 24, 2008, the Honorable Berle M. Schiller, United States District Judge for the Eastern District of Pennsylvania, entered a final judgment against David S. Davidson, former chairman and chief executive officer of D.L. Cromwell Investments, Inc., a defunct broker-dealer, and Lloyd S. Beirne, its former president, for their involvement in a fraudulent short selling scheme involving the stock of Expedia, Inc., in SEC v. Davidson, et al., C.A. No. 05-CV-742.
The Commission's complaint, filed on Feb. 17, 2005, alleged that, from late October 2002 through March 2003, Davidson and Beirne used Cromwell's online access to its clearing broker's system to fraudulently enter and then cancel fictitious Expedia buy orders. The complaint further alleged that Davidson and Beirne caused to be entered and then cancelled these fictitious buy orders almost daily for five months, concealing the size of Cromwell's short position and its margin problems from the clearing broker. When the fraud was discovered, after the announcement of a tender offer for Expedia that greatly increased its share price, the clearing broker was required to pay $18 million to cover the short position.
Davidson and Beirne were criminally charged with fraudulent conduct relating to the short selling scheme described in the Commission's complaint and, on Oct. 25, 2007, after pleading guilty before the United States District Court for the Eastern District of New York in United States v. David S. Davidson and Lloyd S. Beirne, 02-CR-681 (S-1) and 04-CR-583, each was sentenced to five years of probation, and ordered to pay, among other things, $6.9 million in restitution.
Without admitting or denying the allegations in the Commission's complaint, Davidson and Beirne consented to the entry of a final judgment that permanently enjoins them from violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. Based on the sanctions imposed in the criminal proceedings, the defendants were not ordered to pay disgorgement or a civil penalty. Davidson and Beirne also consented to the entry of Commission orders barring them from association with any broker or dealer.
For further information, please see Litigation Rel. No. 19090 (Feb. 17, 2005). [SEC v. David S. Davidson, et al., Civil Action No. 05-CV-742 (E.D. Pa.)] (LR-20659)
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INVESTMENT COMPANY ACT RELEASES
Cohen & Steers Advantage Income Realty Fund, Inc., et al.
A notice has been issued giving interested persons until Aug. 18, 2008, to request a hearing on an application filed by Cohen & Steers Advantage Income Realty Fund, Inc., et al., under Section 6(c) of the Investment Company Act for an exemption from Section 19(b) of the Act, and Rule 19b-1 under the Act. The order would permit certain registered closed-end management investment companies to make periodic distributions of long-term capital gains (i)with respect to their common stock as part of a managed distribution plan as frequently as twelve times each year, and (ii) with respect to their preferred stock as frequently as required by the terms of such preferred stock. (Rel. IC-28341 - July 24)
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Notices of Deregistration under the Investment Company Act
For the month of July, 2008, a notice has been issued giving interested persons until Aug. 19, 2008, to request a hearing on any of the following applications for an order under Section 8(f) of the Investment Company Act declaring that the applicant has ceased to be an investment company:
Legg Mason Partners Investment Funds, Inc. [File No. 811-3275]
Delaware Investments Municipal Trust [File No. 811-6411]
C Funds Group, Inc. [File No. 811-4246]
SEI Insurance Products Trust [File No. 811-9183]
Genworth Life of New York VL Separate Account 1 [File No. 811-9861]
(Rel. IC-28343 - July 25)
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SELF-REGULATORY ORGANIZATIONS
Proposed Rule Change
A proposed rule change filed by the Financial Industry Regulatory Authority to adopt FINRA Rule 4560 (Short-Interest Reporting) in the Consolidated FINRA Rulebook has been filed with the Commission pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 and Rule 19b-4 thereunder. Publication is expected in the Federal Register during the week of July 28. (Rel. 34-58227)
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SECURITIES ACT REGISTRATIONS
Latest Securities Act registrations (TXT)
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RECENT 8K FILINGS
Latest 8-K filings (TXT)
http://www.sec.gov/news/digest/2008/dig072908.htm
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Home | Previous Page Modified: 07/29/2008
July 28, 2008 SEC News Digest
Issue 2008-145
COMMISSION ANNOUNCEMENTS
Roundtable on International Financial Reporting Standards
The Commission will hold a Roundtable on International Financial Reporting Standards on Monday, Aug. 4, 2008, at 1:00 p.m.
The Roundtable will take place in the Auditorium of the Commission's headquarters at 100 F Street, N.E., Washington D.C. The Roundtable will be open to the public with seating on a first-come, first-served basis. Doors will open at 12:30 p.m. Visitors will be subject to security checks.
The roundtable will consist of an open discussion on International Financial Reporting Standards (IFRS) and an update on IFRS developments, including the experience with use of IFRS during the recent period of market turmoil. The roundtable will be organized as two panels, each consisting of investors, issuers, auditors and other parties with experience in IFRS reporting.
For further information, please contact: John Heine, Office of Public Affairs, at (202) 551-4120 .
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ENFORCEMENT PROCEEDINGS
In the Matter of Viragen, Inc. and Viragen International, Inc.
On July 25, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 12(j) of the Securities Exchange Act of 1934 (Order) against Viragen, Inc. (Viragen) and Viragen International, Inc. (Viragen Int'l) to determine whether the registrations of their securities should be suspended for a period not exceeding twelve months or revoked for failure to file required periodic reports pursuant to Section 12(j) of the Securities Exchange Act of 1934 (Exchange Act). In the Order, the Division of Enforcement (Division) alleges that Viragen and Viragen Int'l failed to comply with Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder by failing to file periodic reports required by these provisions. A hearing will be scheduled before an Administrative Law Judge to provide Viragen and Viragen Int'l an opportunity to respond to the allegations of the Division contained in the Order, to determine whether those allegations are true, and to determine whether it is necessary and appropriate for the protection of investors to suspend for a period not exceeding twelve months or to revoke the registrations of Viragen's and Viragen Int'l's securities. The Commission ordered that the Administrative Law Judge in these proceedings issue an initial decision not later than 120 days from the date of service of the Order. (Rel. 34-58231; File No. 3-13101)
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In the Matter of Frances M. Jewels
On July 25, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Rule 102(e) of the Commission's Rules of Practice, Making Findings, and Imposing Remedial Sanctions (Order) against Frances M. Jewels. The Order finds that Jewels, age 43, is and has been an attorney licensed to practice in the Commonwealth of Massachusetts, and has been a certified public accountant licensed to practice in the State of New York. Jewels served as Chief Financial Officer, Vice President of Finance and Administration, Secretary and Treasurer of Sycamore Networks, Inc. (Sycamore) from approximately mid-1999 until October 2004. Sycamore at all relevant times was a Delaware corporation based in Chelmsford, Massachusetts engaged in the business of developing and marketing optical networking products whose stock traded on the Nasdaq National Market System.
The Order finds that on July 10, 2008, a final judgment was entered by consent against Jewels, permanently enjoining her from future violations of Section 17(a) of the Securities Act of 1933 and Sections 10(b), 13(b)(5), 14(a) and 16(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5, 13b2-1, 13b2-2, 13a-14, 14a-9 and 16a-3 thereunder, and aiding and abetting violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11 and 13a-13 thereunder, in the civil action entitled Securities and Exchange Commission v. Sycamore Networks, Inc., et al., Civil Action Number 08-CA-11166(DPW), in the United States District Court for the District of Massachusetts. Jewels was also ordered to pay $30,000 in disgorgement, together with prejudgment interest thereon in the amount of $4,980.04; to reimburse Sycamore in the amount of $190,000, consisting of certain cash bonuses she received; to pay a $230,000 civil money penalty; and was barred from serving as an officer or director of a public company for five years.
The Order finds that the Commission's complaint alleged, among other things, that Jewels, in connection with the granting of "in-the-money" stock options and resulting underreporting of expenses, made materially false and misleading statements in various Form 10-K annual reports, Form 10-Q quarterly reports, Form 8-K current reports, and proxy statements during periods including fiscal years 2000 through 2004. The complaint further alleged that Jewels made "in-the-money" options grants to employees in connection with company-wide grants which were issued on dates on which the market price of Sycamore's stock was at or near the low for the period, but failed to record associated stock-based compensation expenses, and backdated other grants, such as new hire and promotional grants, which had significant options expense implications that she disregarded. The complaint further alleged that Jewels was the recipient of at least two grants of "in-the-money" stock options to Company officers issued as of the same dates as company-wide grants and, although Jewels did not directly authorize the grants to herself and other officers, she knew that the favorable grant dates that she selected for the company wide grants would be applied to her options as well, and failed to record compensation expenses related to the officer grants.
Based on the above, the Order suspends Jewels from appearing or practicing before the Commission as an attorney or an accountant for a period of five years. After five years from the date of the Order, Jewels has the right to request reinstatement to appear or practice before the Commission as an attorney or accountant. Jewels consented to the issuance of the Order without admitting or denying any of the findings therein except as to the final judgment entered against her, which she admits. (Rel. 34-58232; AAE Rel. 2848; File No. 3-13102)
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In the Matter of Robin A. Friedman, Esq.
On July 25, the Commission issued an Order Instituting Public Administrative Proceedings Pursuant to Rule 102(e) of the Commission's Rules of Practice, Making Findings, and Imposing Remedial Sanctions (Order) against Robin A. Friedman, Esq. The Order finds that Friedman, age 44, is and has been an attorney licensed to practice in the Commonwealth of Massachusetts. Friedman was employed by Sycamore Networks, Inc. (Sycamore) from approximately mid-2000 through December 2003 where, in or about January 2001, she served as Senior Director of Employment Affairs. Sycamore at all relevant times was a Delaware corporation based in Chelmsford, Massachusetts engaged in the business of developing and marketing optical networking products whose stock traded on the Nasdaq National Market System.
The Order finds that on July 10, 2008, a final judgment was entered by consent against Friedman, permanently enjoining her from future violations of Section 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 13b2-1 and 13b2-2 thereunder, and aiding and abetting violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, in the civil action entitled Securities and Exchange Commission v. Sycamore Networks, Inc., et al., Civil Action Number 08-CA-11166(DPW), in the United States District Court for the District of Massachusetts. Friedman was also ordered to pay a $40,000 civil money penalty.
The Order finds that the Commission's complaint alleged, among other things, that Sycamore, in connection with the underreporting of expenses related to stock option grants, filed materially false and misleading financial statements in various Form 10-K annual reports and Form 10-Q quarterly reports for fiscal years 2000 through 2005. The complaint further alleged that, in or around January 2001, Friedman substantially participated in carrying out a plan, devised by others, to grant in-the-money stock options to a group of approximately five employees at the lowest closing price of the quarter. The complaint further alleged that, in connection with the plan, Friedman altered or created, or caused to be altered or created, personnel and payroll-related documents, all in an effort to create the impression that the employees had started at Sycamore on dates they had not. The complaint further alleged that Friedman knew, or was reckless in not knowing, that the actions she undertook would prevent Sycamore's auditors from detecting the true start dates of the employees and the in-the-money nature of the option grants.
Based on the above, the Order suspends Friedman from appearing or practicing before the Commission as an attorney for a period of two years. After two years from the date of the Order, Friedman has the right to reapply for reinstatement to appear or practice before the Commission as an attorney. Friedman consented to the issuance of the Order without admitting or denying any of the findings therein except as to the final judgment entered against her, which she admits. (Rel. 34-58233; File No. 3-13103)
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Commission Sustains FINRA's Findings of Violation Against and Imposition of a Bar on John D. Audifferen
The Commission has sustained FINRA's findings that John D. Audifferen, formerly a registered representative with FINRA member firm May Davis Group, Inc., violated prohibitions against the improper extension of credit to the account of one of his customers, engaged in "free riding" in the customer's account, received the beneficial use of improper extensions of credit to the customer account, and improperly shared in the profits of his customer's account. The Commission also sustained FINRA's findings that, by submitting insufficient funds checks as payment for securities purchases in his personal brokerage accounts, Audifferen caused May Davis to extend credit to him improperly and enjoyed the beneficial use of these improper credit extensions. The Commission found that FINRA's imposition of a bar on Audifferen for these violations was appropriate. The Commission also sustained FINRA's finding that Audifferen had violated FINRA's rules by failing to disclose a customer complaint on a Form U4 he submitted in connection with his association with FINRA member firm J.P. Turner & Company, LLC. (Rel. 34-58230; File No. 3-12892)
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In the Matter of Guy P. Riordan
An Administrative Law Judge has issued an Initial Decision in the matter of Guy P. Riordan finding that Guy P. Riordan (Riordan) has violated the antifraud provisions of the federal securities statutes by giving cash kickbacks to the State Treasurer of New Mexico for securities transactions by the Treasurer's Office, and by participating in what he knew to be a non-competitive bidding process in the period 1996 through 2002. Based on the findings of illegal conduct and public interest factors, Chief Administrative Law Judge Brenda P. Murray has:
barred Riordan from association with any broker or dealer;
ordered him to cease and desist from committing or causing any violations, or any future violations, of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder;
ordered him to disgorge $1,017,278.78, and prejudgment interest in the amount of $699,804.18; and
ordered him to pay a civil money penalty in the amount of $500,000. The amount of disgorgement and civil money penalties shall be collected and placed in a Fair Fund and used for the benefit of the Treasurer's Office of the State of New Mexico that was harmed by the violations found in this decision.
(Initial Decision No. 353; File No. 3-12829)
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SEC Obtains Emergency Asset Freeze Against Unknown Call Options Purchaser
The Commission today filed an emergency action in the United States District Court for the Southern District of New York against one or more unknown purchasers of the call options for the common stock of DRS Technologies, Inc. and American Power Conversion Corp. (Unknown Purchaser). The Commission's complaint alleges that the Unknown Purchaser reaped more than $3 million in profits by engaging in illegal insider trading, prior to announcements related to the acquisitions of DRS and APCC, through an account with UBS AG.
The Commission also filed an application for a temporary restraining order in order to freeze the Unknown Purchaser's assets. The Honorable Alvin K. Hellerstein, United States District Judge in the Southern District of New York, issued a temporary restraining order freezing the Unknown Purchaser's assets.
The Commission's complaint alleges that while in possession of material, nonpublic information regarding merger talks between DRS and Finmeccanica S.p.A, the Unknown Purchaser acquired DRS call options. According to the complaint, between April 29, 2008 and May 7, 2008, the Unknown Purchaser bought 1,820 DRS call options that were out-of-the-money and set to expire in the near term for slightly more than $456,200. The complaint alleges these purchases constituted a very significant percentage of the series volume for DRS call options on the days in question.
The Commission's complaint further alleges that immediately following a May 8th Wall Street Journal article reporting the advanced merger negotiations between Finmeccanica and DRS, and after confirmation by DRS that it was engaged in talks regarding a potential strategic transaction, the Unknown Purchaser liquidated all DRS call options and made an ill-gotten profit of approximately $1.6 million. Finmeccanica later announced on May 12, 2008 that it would acquire DRS for $5.2 billion, or $81 a share.
Additionally, the Commission's complaint alleges that, while in possession of material, nonpublic information regarding Schneider Electric SA's plans to acquire APCC, the Unknown Purchaser acquired APCC call options. According to the complaint, between September 21 and Oct. 20, 2006, the Unknown Purchaser bought 2,830 APCC call options at a cost of approximately $343,000. The complaint alleges these purchases constituted a very significant percentage of the series volume for APCC call options on the days in question.
The Commission's complaint further alleges that following Schneider's announcement on October 30, 2006, that it would acquire all of APCC's outstanding shares for $31 a share, the Unknown Purchaser liquidated all APCC call options and made an ill-gotten profit of approximately $1.7 million.
By virtue of the conduct described above, the Commission alleges in its complaint that the Unknown Purchaser violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks a permanent injunction, disgorgement of ill-gotten gains with prejudgment interest, and civil money penalties.
The Commission previously filed a complaint alleging that an Italian citizen engaged in insider trading in DRS securities ahead of the same May 8th disclosure of the merger negotiations between DRS and Finmeccanica. For more information see SEC v. Cristian De Colli, 08 Civ. 4520 (PAC) (S.D.N.Y. May 16, 2008); Litigation Release No. 20581.
The Commission's investigation is continuing. [SEC v. One or More Unknown Purchasers of the Call Options for the Common Stock of DRS Technologies, Inc. and American Power Conversion Corp., United States District Court for the Southern District of New York, Civil Action No. 08-cv-6609 (UA) (S.D.N.Y.)] (LR-20654)
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SEC Brings Emergency Action to Halt an Ongoing Offering Fraud and Obtains Temporary Restraining Order and Asset Freeze
The Commission announced today that on July 23, 2008, it filed an emergency action to halt an alleged ongoing fraud involving the sale of stock by Florida-based Aerokinetic Energy Corporation (Aerokinetic), and its president, Randolph E. Bridwell, a resident of Sarasota, Florida. Acting on the Commission's request for emergency relief, on July 24, 2008, Judge James David Whittemore of the United States District Court for the Middle District of Florida issued a temporary restraining order, an asset freeze over Aerokinetic's bank account, and other relief against the defendants.
The Commission's complaint alleges that, from at least September 2006 through the present, the defendants raised at least $535,000 from 24 investors nationwide (and are currently seeking to raise an additional $575,000) by conducting a fraudulent offering of unregistered securities in the form of common stock. Aerokinetic, a Sarasota company, is purportedly in the business of researching, developing, and marketing alternative power technologies and other innovative products. According to the complaint, the defendants claimed to have developed new energy technologies, including a power generation station that is capable of creating electrical energy at a fraction of the cost of conventional or nuclear means, without generating any pollution. They further claim to have built an operating power generation station and to hold patents on these new technologies, as well as to have standing purchase orders for the finished product. In addition, the defendants have told investors and potential investors that they project millions of dollars of sales revenue within Aerokinetic's first years of operations and billions of dollars shortly thereafter.
The Commission's complaint alleges that the defendants' claims are patently false. In contrast to its claims, Aerokinetic has no patents, license agreements, contracts, suppliers, customers, sales, revenue, or market share. In addition, Aerokinetic's purported energy technologies and products are, at best, in the early development stage and, therefore, its predictions of imminent financial success and financial projections lack any reasonable basis in fact. Moreover, contrary to the defendants' assurances that they would use investor funds to research and develop Aerokinetic's products, the complaint alleges that Bridwell has misappropriated investors' funds to pay his personal expenses, with approximately $230,000 in investor funds unaccounted for.
The Commission's complaint alleges that Aerokinetic and Bridwell violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Court's July 24 Order provides that the temporary restraining order and asset freeze would remain in effect until Aug. 4, 2008. The Court further scheduled a hearing on the Commission's motion for a preliminary injunction on Aug. 1, 2008. In addition to the interim relief already granted by the Court, the Commission seeks a final judgment against the defendants enjoining them from future violations of the foregoing antifraud and securities registration laws, ordering them to disgorge all ill-gotten gains, and assessing civil penalties. [SEC v. Aerokinetic Energy Corporation and Randolph E. Bridwell, Civil Action No. 8:08-CV-1409-T27MSS (M.D. Fla.)] (LR-20655)
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INVESTMENT COMPANY ACT RELEASES
The Penn Mutual Life Insurance Company, et al.
An order has been issued approving an application filed by The Penn Mutual Life Insurance Company, The Penn Insurance and Annuity Company, Penn Mutual Variable Annuity Account III, Penn Mutual Variable Life Account I, PIA Variable Annuity Account I (collectively, the Section 26 Applicants), and Penn Series Funds, Inc. (collectively with the Section 26 Applicants, the Section 17 Applicants). The Section 26 Applicants have been authorized under Section 26(c) of the Investment Company Act to substitute securities issued by certain registered investment companies for shares of certain other registered investment companies. The Section 17 Applicants have also been granted an exemption from Section 17(a) of the Act in order to engage in certain in-kind transactions in connection with the substitutions. (Rel. IC-28342 - July 25)
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SELF-REGULATORY ORGANIZATIONS
Accelerated Approval of Proposed Rule Changes
The Commission granted accelerated approval to a proposed rule change (SR-BSE-2008-29) filed by the Boston Stock Exchange relating to doing business with the public. Publication is expected in the Federal Register during the week of July 28. (Rel. 34-58221)
The Commission granted accelerated approval to a proposed rule change, as modified by Amendments No. 1 and 3 thereto, submitted by the International Securities Exchange (SR-ISE-2007-94) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 relating to reduction of certain order handling and exposure periods from three seconds to one second. Publication is expected in the Federal Register during the week of July 28. (Rel. 34-58224)
The Commission approved on an accelerated basis a proposed rule change, as modified by Amendment No. 1, filed by the Nasdaq Stock Market (SR-NASDAQ-2008-013) to adopt additional initial listing standards to list securities of special purpose acquisition companies, pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 28. (Rel. 34-58228)
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Immediate Effectiveness of Proposed Rule Change
A proposed rule change filed by Financial Industry Regulatory Authority relating to amendments to NASD Rule 11890 (Clearly Erroneous Transactions) (SR-FINRA-2008-037) has become immediately effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 28. (Rel. 34-58226)
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Home | Previous Page Modified: 07/28/2008
July 25, 2008 SEC News Digest
Issue 2008-144
COMMISSION ANNOUNCEMENTS
Commission Meetings
Following is a schedule of Commission meetings, which will be conducted under provisions of the Government in the Sunshine Act. Meetings will be scheduled according to the requirements of agenda items under consideration.
Open meetings will be held in the Auditorium, Room L-002 at the Commission's headquarters building, 100 F Street, N.E., Washington, D.C. Visitors are welcome at all open meetings, insofar as space is available. Persons wishing to photograph or videotape Commission meetings must obtain permission in advance from the Secretary of the Commission. Persons wishing to tape record a Commission meeting should notify the Secretary's office 48 hours in advance of the meeting.
Any member of the public who requires auxiliary aids such as a sign language interpreter or material on tape to attend a public meeting should contact SECInterpreter@SEC.gov at least three business days in advance. For any other reasonable accommodation related disability contact DisabilityProgramOfficer or call 202-551-4158 .
Open Meeting - Wednesday, July 30, 2008 - 10:00 a.m.
The subject matter of the open meeting will be:
The Commission will consider whether to publish an interpretive release to provide guidance regarding the use of company web sites under the Securities Exchange Act of 1934 and the antifraud provisions of the federal securities laws.
The Commission will consider whether to publish for comment a proposed rule change by the Municipal Securities Rulemaking Board to establish the continuing disclosure service of the MSRB's Electronic Municipal Market Access (EMMA) system. The Commission will also consider whether to propose amendments to Rule 15c2-12 under the Securities Exchange Act of 1934 to enhance the disclosure of information regarding municipal securities.
The Commission will consider whether to issue proposed guidance to investment company boards of directors to assist them in fulfilling their oversight responsibilities with respect to an investment adviser's trading of fund portfolio securities, including the use of fund brokerage commissions to purchase brokerage and research services.
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Closed Meeting - Thursday, July 31, 2008 - 2:00 p.m.
The subject matter of the closed meeting scheduled for July 31, 2008, will be: formal orders of investigation; institution and settlement of injunctive actions; institution and settlement of administrative proceedings of an enforcement nature; resolution of litigation claims; and other matters related to enforcement proceedings.
At times, changes in Commission priorities require alterations in the scheduling of meeting items. For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact: The Office of the Secretary at (202) 551-5400 .
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ENFORCEMENT PROCEEDINGS
Unregistered Investment Adviser Sanctioned
Diversified Financial Corporation (Diversified), an unregistered investment adviser, incorporated in the Cayman Islands by Dominique S. Alvieri (Alvieri), has been censured for the fraudulent conduct of its investment adviser business. The sanction was ordered in an administrative proceeding before an administrative law judge, following a court-ordered injunction against it. In March 2008, Diversified was enjoined from violating the antifraud provisions of the federal securities laws based on misconduct in its investment adviser business.
The misconduct that underlay the injunction included Diversified and Alvieri's fraudulently inducing advisory clients to invest at least $555,800 in shares of fictitious funds. To conceal the fraud, Diversified provided the clients with monthly account statements that falsely reported that the fictitious funds were generating steady returns. Further, Alvieri misrepresented to the clients that he was the adviser to the fictitious funds and that, through them, would invest the clients' assets in publicly traded securities, when, in fact, Alvieri misappropriated the clients' monies. (Rel. IA-2758; File No. 3-13026)
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Commission Revokes Registration of Securities of Warpradio.Com, Inc. for Failure to Make Required Periodic Filings
On July 25, the Commission revoked the registration of each class of registered securities of WarpRadio.com, Inc. (WarpRadio.com) for failure to make required periodic filings with the Commission.
Without admitting or denying the findings in the order, except as to jurisdiction, which it admitted, WarpRadio.com consented to the entry of an Order Making Findings and Revoking Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of 1934 as to WarpRadio.com, Inc. finding that it had failed to comply with Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 13a-1 and 13a-13 thereunder and revoking the registration of each class of WarpRadio.com's securities pursuant to Section 12(j) of the Exchange Act. This order settled the charges brought against WarpRadio.com in the Matter of WarpRadio.com, Inc., et al., Administrative Proceeding File No. 3-13086.
Brokers and dealers should be alert to the fact that Exchange Act Section 12(j) provides, in pertinent part, as follows:
No member of a national securities exchange, broker, or dealer shall make use of the mails or any means or instrumentality of interstate commerce to effect any transaction in, or to induce the purchase or sale of, any security the registration of which has been and is suspended or revoked . . . .
For further information see Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934, In the Matter of WarpRadio.com, Inc., et al., Administrative Proceeding File No. 3-13086, Exchange Act Release No. 58077 (July 2, 2008). (Rel. 34-58222; File No. 3-13086)
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In the Matter of Brian Fabrizzi
On July 24, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings and Imposing Remedial Sanction (Order) against Brian Fabrizzi, age 63 and a resident of Monroe Township, New Jersey. The Order finds that from 1997 to 2005, Fabrizzi was a securities lending representative associated with Van der Moolen Specialists USA, LLC (VDM), a broker-dealer registered with the Commission. The Order further finds that on Dec. 14, 2007, Fabrizzi pled guilty to one count of conspiracy to commit securities fraud and wire fraud in violation of Title 18 United States Code, Section 1349 before the United States District Court for the Eastern District of New York, in U.S. v. Brian Fabrizzi, Crim. Information No. 07-CR-710. The count of the criminal information to which Fabrizzi pled guilty alleged, inter alia, that Fabrizzi did knowingly and intentionally conspire to execute a scheme and artifice to defraud VDM of money and property in connection with securities of issuers with a class of securities registered under Section 12 of the Securities Exchange Act of 1934.
Based on the above, the Order bars Fabrizzi from association with any broker or dealer. Fabrizzi consented to the issuance of the Order without admitting or denying any of the Commission's findings, except he admits to the Commission's jurisdiction over him and the subject matter of the proceedings and his guilty plea on Dec. 14, 2007. (Rel. 34-58219; File No. 3-13095)
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Insider Trader Jennifer Xujia Wang Barred from Association with any Broker, Dealer or Investment Adviser
On July 24, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Section 203(f) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions against Jennifer Xujia Wang, a former employee of Morgan Stanley & Co., Inc. The Order finds that on July 3, 2008, the District Court for the Southern District of New York entered a final judgment by consent against Wang permanently enjoining her from violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
The Commission's Amended Complaint alleged that Wang and her husband, Rubin Chen a/k/a Ruben Chen a/k/a Ruopian Chen, obtained illegal profits of $727,733 by trading on the basis of material nonpublic information concerning various proposed corporate acquisition transactions. The Amended Complaint further alleged that Wang, in her position as a Vice President of Morgan Stanley & Co., Inc., was privy to material nonpublic information concerning each of the pending acquisitions, which she unlawfully disclosed to Chen.
On Sept. 5, 2007, Wang pled guilty to four felony counts, including one count of conspiracy to commit securities fraud, in violation of Title 18, United States Code, Section 371, and three counts of insider trading, in violation of Title 15, United States Code, Sections 78j(b) and 78ff, Title 17, Code of Federal Regulations, Sections 240.10b-5 and 240.10b5-2, and Title 18, United States Code, Section 2, before the United States District Court for the Southern District of New York, in U.S. v. Xujia Wang, et al., 07-CR-730. The counts of the criminal information to which Wang pled guilty are based largely on conduct included as part of the allegations in the Commission's Amended Complaint.
Based on the above, the Order bars Wang from association with any broker, dealer or investment adviser. Wang consented to the issuance of the Order without admitting or denying the findings in the Order, except as to the Commission's jurisdiction over her and the subject matter of these proceedings, and the findings contained in Section III.2 and III.4 of the Order, which are admitted.
For further information, please see Litigation Rel. Nos. 20112 (May 10, 2007) and 20636 (July 3, 2008). (Rels. 34-58220; IA-2759; File No. 3-13097)
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Insider Trader Rubin Chen a/k/a Ruben Chen a/k/a Ruopian Chen Barred from Association with any Investment Adviser
On July 24, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 203(f) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions against Rubin Chen a/k/a Ruben Chen a/k/a Ruopian Chen, a former employee of ING Investment Management Services, LLC. The Order finds that on July 3, 2008, the District Court for the Southern District of New York entered a final judgment by consent against Chen permanently enjoining him from violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
The Commission's Amended Complaint alleged Chen and his wife, Jennifer Xujia Wang, obtained illegal profits of $727,733 by trading on the basis of material nonpublic information concerning various proposed corporate acquisition transactions. The Amended Complaint further alleged that Wang, in her position as a Vice President of Morgan Stanley & Co., Inc., was privy to material nonpublic information concerning each of the pending acquisitions, which she unlawfully disclosed to Chen.
On Sept. 5, 2007, Chen pled guilty to four felony counts, including one count of conspiracy to commit securities fraud, in violation of Title 18, United States Code, Section 371, and three counts of insider trading, in violation of Title 15, United States Code, Sections 78j(b) and 78ff, Title 17, Code of Federal Regulations, Sections 240.10b-5 and 240.10b5-2, and Title 18, United States Code, Section 2, before the United States District Court for the Southern District of New York, in U.S. v. Xujia Wang, et al., 07-CR-730. The counts of the criminal information to which Chen pled guilty are based largely on conduct included as part of the allegations in the Commission's Amended Complaint.
Based on the above, the Order bars Chen from association with any investment adviser. Chen consented to the issuance of the Order without admitting or denying the findings in the Order except as to the Commission's jurisdiction over him and the subject matter of these proceedings, and the findings contained in Section III.2 and III.4 of the Order, which are admitted.
For further information, please see Litigation Rel. Nos. 20112 (May 10, 2007) and 20636 (July 3, 2008). (Rel. IA-2760; File No. 3-13098)
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In the Matter of Newbridge Securities Corp., Guy S. Amico, Scott H. Goldstein, Eric M. Vallejo, and Daniel M. Kantrowitz
On July 25, the Commission issued an Order Instituting Public Administrative and Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933, and Sections 15(b) and 21C of the Securities Exchange Act of 1934 (Order) against Newbridge Securities Corp., Guy S. Amico, Scott H. Goldstein, Eric M. Vallejo, and Daniel M. Kantrowitz. The Division of Enforcement alleges in the Order that in 2003 and 2004, while associated as a registered representative with Newbridge, Kantrowitz used Newbridge's market making capacity to manipulate the shares of Roanoke Technology Corp. and Concorde America, Inc., respectively. The Order further alleges that Newbridge and Kantrowitz participated in the unregistered distribution of Roanoke securities.
The Order alleges that in October 2002 and December 2003, Newbridge was advised by the Commission's examination staff of supervisory failures at Newbridge's trading desk. The Order also alleges that, despite these warnings, Newbridge failed to develop and implement policies, procedures, and systems reasonably designed to prevent and detect Kantrowitz's manipulation of Roanoke and Concorde securities and his and Newbridge's participation in the Roanoke unregistered distribution. The Order further alleges that Newbridge, and Amico and Goldstein, Newbridge's president and chief executive officer, respectively, failed reasonably to supervise Kantrowitz in connection with his activities in Roanoke and Concorde. In addition, the Order alleges that Vallejo, Newbridge's head trader, failed reasonably to supervise Kantrowitz in connection with his manipulation of Roanoke and Concorde securities.
The Order also alleges that Newbridge violated the federal securities laws in connection with two initial public offerings when its registered representatives sent detailed emails concerning the offerings to customers during the "waiting period," the period after a registration statement is filed with the Commission but before the Commission declares it effective.
A hearing before an administrative law judge will be scheduled to determine whether the allegations in the Order are true, to provide respondents an opportunity to establish any defenses to these allegations, and to determine what, if any, remedial action is appropriate in the public interest. The Order directed the Administrative Law Judge to issue an initial decision within 300 days from the date of service of the Order. (Rels. 33-8946; 34-58223; File No. 3-13099)
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Securities and Exchange Commission Orders Hearing on Registration Revocation Against Seven Public Companies for Failure to Make Required Periodic Filings
On July 25, the Commission instituted public administrative proceedings to determine whether to revoke or suspend for a period not exceeding twelve months the registrations of each class of the securities of seven companies for failure to make required periodic filings with the Commission:
The National Capital Companies, Inc. (NATC)
National Environmental Controls, Inc. (NECT)
National Real Estate Limited Partnership Income Properties
National Real Estate Limited Partnership Income Properties II
Navarone, Inc.
NBG Radio Network, Inc. (NSBD)
Net-Matrix Limited
In this Order, the Division of Enforcement (Division) alleges that the seven issuers are delinquent in their required periodic filings with the Commission.
In this proceeding, instituted pursuant to Exchange Act Section 12(j), a hearing will be scheduled before an Administrative Law Judge. At the hearing, the judge will hear evidence from the Division and the respondents to determine whether the allegations of the Division contained in the Order, which the Division alleges constitute failures to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 or 13a-16 thereunder, are true. The judge in the proceeding will then determine whether the registrations pursuant to Exchange Act Section 12 of each class of the securities of these respondents should be revoked or suspended for a period not exceeding twelve months. The Commission ordered that the Administrative Law Judge in this proceeding issue an initial decision not later than 120 days from the date of service of the order instituting proceedings. (Rel. 34-58229; File No. 3-13100)
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SELF-REGULATORY ORGANIZATIONS
Accelerated Approval of Proposed Rule Change
The Commission granted accelerated approval to a proposed rule change submitted by the Financial Industry Regulatory Authority (SR-FINRA-2008-035), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 and Rule 19b-4 thereunder, relating to the addition of fees imposed for the Series 14 and Series 16 examinations to FINRA's fee schedule. Publication is expected in the Federal Register during the week of July 28. (Rel. 34-58215)
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Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed by International Securities Exchange (SR-ISE-2008-57) relating to fee waivers has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 28. (Rel. 34-58216)
A proposed rule change filed by National Stock Exchange (SR-NSX-2008-12) to provide for a Post Intermarket Sweep Order has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 28. (Rel. 34-58217)
A proposed rule change filed by the Philadelphia Stock Exchange (SR-Phlx-2008-57) relating to technical amendments to its Certificate of Incorporation and By-Laws has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 28. (Rel. 34-58218)
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July 24, 2008 SEC News Digest
Issue 2008-143
ENFORCEMENT PROCEEDINGS
SEC Action Stops Hillsborough, California Investment Adviser Defrauding Millions of Dollars from Clients
The Commission today filed fraud charges against a Hillsborough, California investment adviser, and his sole proprietorship Trebor Company, alleging that Robert C. Brown, Jr. misappropriated more than $20 million from investors who Brown falsely promised that their money would be invested in the stock market. At the SEC's request, the federal court for the Northern District of California issued an order freezing Brown's assets and prohibiting him from, among other things, further transferring or dissipating his clients' assets.
According to the Commission's complaint, Brown promised clients that he would invest their money risk-free in stock or options, but instead helped himself to millions of dollars of client money to pay for lavish personal expenses, such as upkeep on his Ferrari, limousine services and shopping trips. The Commission's complaint also alleges that, in a classic Ponzi scheme tactic, Brown often transferred money from new investors to favored clients to create the illusion of profitable trading.
The Commission's complaint further alleges that since at least 2000 and continuing to the present, Brown (previously of Vallejo, Calif.) offered a variety of investment programs that falsely promised astronomical returns. One program promised, for example, to double investor money in eight months. The SEC alleges that Brown raised more than $20 million, but transferred millions of dollars to himself and his family members for personal use. Only approximately $4 million went to any brokerage account, however it was a personal brokerage account that Brown treated as his own piggy bank. In order to perpetuate the scheme, the Commission alleges that Brown transferred newly-raised funds to older investors as purported profits on securities trading. The SEC's complaint likewise alleges that Brown provided false account statements to investors that showed their investments were earning the returns he had promised. When Brown failed to repay his clients, he concocted elaborate excuses, blaming delays on "the Patriot Act" while representing that the SEC had "cleared" him of wrongdoing.
The Commission's complaint charges Brown and Trebor with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. Eddings, CDC Global, Inc. and Wise Investors Simply Excel, LLC are charged solely as relief defendants. The Commission is seeking injunctive relief, disgorgement of ill-gotten gains, and monetary penalties, as well as preliminary and emergency relief. The Commission further seeks disgorgement of all investors funds disbursed to relief defendants Eddings, CDC Global, Inc. and Wise Investors Simply Excel, LLC, and an order freezing their assets. [SEC v. Robert C. Brown, Jr. and Trebor Company, Case No. CV-08-3517-CW (N.D. Cal. filed July 23, 2008)] (LR-20653)
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INVESTMENT COMPANY ACT RELEASES
Minnesota Life Insurance Company, et al.
An order has been issued pursuant to Section 6(c) of the Investment Company Act of 1940 (Act) to Minnesota Life Insurance Company (Minnesota Life), Variable Annuity Account (Separate Account), and Securian Financial Services, Inc. (collectively, Applicants), granting exemptions from the provisions of Sections 2(a)(32) and 27(i)(2)(A) of the Act and Rule 22c-1 thereunder, to the extent necessary to permit recapture of certain credit enhancements applied to cumulative net purchase payments that reach certain aggregate amounts in accordance with the formula described in the application, made under (i) new deferred variable annuity contracts and certificates, including data pages, riders and endorsements, described in the application (the New Contracts) and under (ii) any deferred variable annuity contracts and certificates, including data pages, riders and endorsements, that Minnesota Life may issue in the future (the Future Contracts) through the Separate Account and any other separate accounts of Minnesota Life and its successors in interest, provided that any such Future Contracts are substantially similar in all material respects to the New Contracts (New Contracts and Future Contracts referred to collectively as the Contracts). The exemptive relief extends to any Financial Industry Regulatory Authority member broker-dealer controlling, controlled by, or under common control with any Applicant, whether existing or created in the future, that in the future, may act as principal underwriter for the Contracts. (Rel. IC-28334 - July 22)
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Orders of Deregistration Under the Investment Company Act of 1940
Orders have been issued under Section 8(f) of the Investment Company Act of 1940 declaring that each of the following has ceased to be an investment company:
OFI Tremont Market Neutral Hedge Fund [File No. 811-21109]
[Rel. No. IC-28335]
UBS Sequoia Fund, L.L.C. [File No. 811-10075]
[Rel. No. IC-28336]
Tremont Oppenheimer Absolute Return Fund [File No. 811-21541]
[Rel. No. IC-28337]
Citizens Funds [File No. 811-3626]
[Rel. No. IC-28338]
CCMA Select Investment Trust [File No. 811-10441]
[Rel. No. IC-28339]
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COVA Variable Annuity Account Four
An order has been issued on an application filed by COVA Variable Annuity Account Four declaring that it has ceased to be an investment company. (Rel. IC-28340 - July 23)
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JOINT INDUSTRY PLANS
Order Approving on a Permanent Basis a Proposed Amendment to the Plan for the Purpose of Developing and Implementing Procedures Designed to Facilitate the Listing and Trading of Standardized Options
The Commission granted permanent approval to Amendment No. 1 to the Plan for the Purpose of Developing and Implementing Procedures Designed to Facilitate the Listing and Trading of Standardized Options (File No. 4-443) submitted pursuant to Section 11A of the Securities Exchange Act of 1934 and Rule 608 thereunder by the American Stock Exchange, the Boston Stock Exchange, Chicago Board Options Exchange, the International Securities Exchange, the NASDAQ Stock Market, NYSE Arca, the Philadelphia Stock Exchange, and the Options Clearing Corporation. Publication is expected in the Federal Register during the week of July 28. (Rel. 34-58205)
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SELF-REGULATORY ORGANIZATIONS
Approval of Proposed Rule Changes
The Commission approved a proposed rule change (SR-OCC-2007-20) filed by the Options Clearing Corporation under Section 19(b)(1) of the Securities Exchange Act of 1934 to permit the incorporation of certain forms of collateral into the System for Theoretical Analysis and Numerical Simulations risk management methodology. Publication is expected in the Federal Register during the week of July 28. (Rel. 34-58158)
The Commission approved a proposed rule change submitted by the American Stock Exchange (SR-Amex-2008-44) under Rule 19b-4 of the Securities Exchange Act of 1934 modifying the provisions governing contacts between specialists and issuers. Publication is expected in the Federal Register during the week of July 28. (Rel. 34-58199)
The Commission granted approval to a proposed rule change, as modified by Amendment No. 1, submitted by the NASDAQ Stock Market (SR-NASDAQ-2008-043) under Section 19(b)(1) of the Securities Exchange Act of 1934 to amend the definition of "Non-Industry Director" in the By-Laws of The NASDAQ OMX Group, Inc. and The NASDAQ Stock Market LLC. Publication is expected in the Federal Register during the week of July 28. (Rel. 34-58201)
The Commission granted approval to a proposed rule change (SR-NYSEArca-2008-57) submitted by NYSE Arca, pursuant to Rule 19b-4 under the Securities Exchange Act of 1934, amending NYSE Arca Rule 5.3 and Rule 5.4 to enable the listing and trading of options on index-linked securities. Publication is expected in the Federal Register during the week of July 28. (Rel. 34-58203)
The Commission granted approval to a proposed rule change (SR-CBOE-2008-26) submitted by the Chicago Board Options Exchange to list and trade options on the BXM Index (1/10th Value). Publication is expected in the Federal Register during the week of July 28. (Rel. 34-58207)
The Commission granted approval to a proposed rule change, as modified by Amendment No. 1 thereto, filed by NYSE Arca (SR-NYSEArca-2008-56) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 to amend the pilot program expiring on November 30, 2008 for listing standards to provide that currently traded issuers will be required to meet each of the $5 per share closing price requirement and the $150 million market value of listed securities requirement on the basis of a 90 trading day average of the closing price of the issuer's common stock prior to applying for initial listing. Publication is expected in the Federal Register during the week of July 28. (Rel. 34-58212)
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Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed by the Boston Stock Exchange (SR-BSE-2008-39) to extend a pilot program that allows no minimum size order requirement and certain premature terminations under the price improvement period process on the Boston Options Exchange Facility until November 18, 2008 has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 28. (Rel. 34-58195)
A proposed rule change filed by the Chicago Board Options Exchange (SR-CBOE-2008-76) to extend two pilot programs related to the exchange's automated improvement mechanism until July 18, 2009 has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 28. (Rel. 34-58196)
A proposed rule change (SR-ISE-2008-60) filed by the International Securities Exchange relating to the extension of the Price Improvement Mechanism pilot program has become effective under Section 19(b)(3)(A) under the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 28. (Rel. 34-58197)
A proposed rule change (SR-CBOE-2008-77) filed by the Chicago Board Options Exchange relating to the Interim Trading Permit access fee has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 28. (Rel. 34-58200)
A proposed rule change filed by the NASDAQ Stock Market (SR-NASDAQ-2008-064) to permit the NASDAQ Options Market to participate in the Quarterly Options Series Pilot Program has become immediately effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 28. (Rel. 34-58209)
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Accelerated Approval of Proposed Rule Change
The Commission granted accelerated approval to a proposed rule change, as modified by Amendment No. 1 thereto (SR-CBOE-2008-64), submitted by the Chicago Board Options Exchange pursuant to Rule 19b-4 under the Securities Exchange Act of 1934, amending CBOE Rule 5.3 and Rule 5.4 to enable the listing and trading of options on index-linked securities. Publication is expected in the Federal Register during the week of July 28. (Rel. 34-58204)
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Proposed Rule Changes
The Financial Industry Regulatory Authority has filed a proposed rule change (SR-FINRA-2008-022) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 and Rule 19b-4 thereunder, relating to the membership waive-in process for certain New York Stock Exchange Members. Publication is expected in the Federal Register during the week of July 28. (Rel. 34-58206)
The Commission issued notice of filing of a proposed rule change (SR-NYSEArca-2008-77) filed by NYSE Arca through its wholly owned subsidiary, NYSE Arca Equities, Inc., pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 to list and trade the Barclays Middle East Equities (MSCI GCC) Non Exchange Traded Notes due 2038. Publication is expected in the Federal Register during the week of July 28. (Rel. 34-58208)
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July 23, 2008 SEC News Digest
Issue 2008-142
COMMISSION ANNOUNCEMENTS
SEC Suspends Trading in the Stock of SwedishVegas, Inc.
The Commission announced the temporary suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934 (the Exchange Act), of trading in the securities of SwedishVegas, Inc. (SwedishVegas), of Arcadia, California, at 9:30 a.m. EDT on July 23, 2008, and terminating at 11:59 p.m. EDT on Aug. 5, 2008.
The Commission temporarily suspended trading in the securities of SwedishVegas because there is a lack of current and accurate information concerning the securities of the company.
The Commission cautions brokers, dealers, shareholders, and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by the company.
Further, brokers and dealers should be alert to the fact that, pursuant to Rule 15c2-11 under the Exchange Act, at the termination of the trading suspension, no quotation may be entered unless and until they have strictly complied with all of the provisions of the rule. If any broker or dealer has any questions as to whether or not it has complied with the rule, it should not enter any quotation but immediately contact the staff in the Division of Trading and Markets, Office of Interpretation and Guidance, at (202) 551-5777 . If any broker or dealer is uncertain as to what is required by Rule 15c2-11, it should refrain from entering quotations relating to the SwedishVegas' securities until such time as it has familiarized itself with the rule and is certain that all of its provisions have been met. If any broker or dealer enters any quotation that is in violation of the rule, the Commission will consider the need for prompt enforcement action. (Rel. 34-58211)
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Chairman Cox to Testify
Chairman Christopher Cox will testify before the House Financial Services Committee on Thursday, July 24, 2008, at 10:00 a.m. The hearing, which is concerning "Systemic Risk and Financial Markets", will be held in Room 2128 of the Rayburn House Office Building.
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ENFORCEMENT PROCEEDINGS
Commission Revokes Registration of Securities of 21st Century Technologies, Inc. for Failure to Make Required Periodic Filings
On July 23, 2008, the Commission revoked the registration of each class of registered securities of 21st Century Technologies, Inc. (21st Century) for failure to make required periodic filings with the Commission.
Without admitting or denying the findings in the order, except as to jurisdiction, which it admitted, 21st Century consented to the entry of an Order Making Findings and Revoking Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of 1934 finding that it had failed to comply with Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 13a-1 and 13a-13 thereunder and revoking the registration of each class of 21st Century's securities pursuant to Section 12(j) of the Exchange Act. This order settled the charges brought against 21st Century in In the Matter of 21st Century Technologies, Inc., Administrative Proceeding File No. 3-13005.
Brokers and dealers should be alert to the fact that Exchange Act Section 12(j) provides, in pertinent part, as follows:
No member of a national securities exchange, broker, or dealer shall make use of the mails or any means or instrumentality of interstate commerce to effect any transaction in, or to induce the purchase or sale of, any security the registration of which has been and is suspended or revoked . . . .
For further information see Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934, In the Matter of 21st Century Technologies, Inc., Administrative Proceeding File No. 3-13005, Exchange Act Release No. 57657 (April 11, 2008). (Rel. 34-58210; File No. 3-13005)
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The SEC Charges Hedge Fund Adviser and Employee in Connection With Unauthorized Transfers Among Funds
The U.S. Securities and Exchange Commission today instituted a settled administrative proceeding charging Thomas C. Palmer, formerly of Aeneas Capital Management, L.P. (Aeneas), with violating Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 (Advisers Act). In the same settled proceeding, the Commission also charged Aeneas for failing reasonably to supervise Palmer within the meaning of Section 203(e)(6) of the Advisers Act.
The Commission found that Thomas C. Palmer, while serving as the director of operations for Aeneas, made five unauthorized transfers of cash totaling $13.4 million from Aeneas Evolution Portfolio, Ltd. (Evolution) and Aeneas Portfolio Company, L.P. ("Portfolio") to a third hedge fund, Priam Holdings Ltd. (Priam), to satisfy Priam's margin calls. Evolution, Portfolio and Priam are separate funds operated by Aeneas. The Commission also found that Aeneas failed reasonably to supervise Palmer, who was responsible for making the unauthorized transfers. Aeneas failed to have in place adequate policies and procedures designed to detect and prevent such unauthorized transfers of cash among funds.
According to the Commission's findings, Priam invested primarily in microcap foreign issuers that trade on the Malaysian securities exchanges. Beginning in Spring 2006 and continuing into the summer, Priam accumulated a significant trading position in Iris Corporation, a Malaysian microcap issuer that trades on the Malaysian Stock Exchange but that does not trade on U.S. markets. Priam's position in Iris Corporation, as well as its positions in other issuers, was highly leveraged by using funds borrowed from its prime broker to trade on margin. In early July 2006, the position sizes within the Priam portfolio were increased to the point where there were several margin calls.
In an attempt to satisfy the margin calls, Palmer made five separate transfers of cash, totaling $13.4 million, to Priam from Evolution and Portfolio, despite knowing that Evolution, Portfolio and Priam were separate funds. The cash transfers were reversed in early August 2006 and the funds were sent back to Evolution and Portfolio. As a result, no investor funds were lost and Aeneas subsequently paid investors for the interest earned on the funds for the period during which they were in Priam's account.
Under the terms of the settlement, Palmer, without admitting or denying the Commission's findings, consented to the issuance of an administrative order: (i) requiring him to cease and desist from committing or causing any violations and any future violations of Sections 206(1) and 206(2) of the Advisers Act; (ii) suspending him from association with any investment adviser for a period of 12 months; and (iii) requiring him to pay a $65,000 civil penalty. Aeneas, without admitting or denying the Commission's findings, consented to the issuance of an administrative order imposing a censure and requiring it to pay a $150,000 civil penalty. (Rel. IA-2757; File No. 3-13092)
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In the Matter of Richard McGill, William Sanders, Michael Tuchman, and Danny Rayburn
The United States Securities and Exchange Commission (Commission) announced the issuance of an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings and Imposing Remedial Sanctions (Order) against Richard McGill, William Sanders, Michael Tuchman, and Danny Rayburn. The Order finds that on June 10, 2008, final judgments were entered by consent against McGill, Sanders, Tuchman, and Rayburn, permanently enjoining each of them from future violations of Sections 5(a) and 5(c) of the Securities Act of 1933, and Section 15(b) of the Securities Exchange Act of 1934, in a civil action entitled Securities and Exchange Commission v. Real Estate Partners, Inc., et al., Civil Action Number SACV 07-1022 AG (RNBx), in the United States District Court for the Central District of California.
The Order further finds that the Commission's complaint alleged that McGill, Sanders, Tuchman, and Rayburn participated in the unregistered offer and sale of defendant Real Estate Partners, Inc.'s securities, and acted as unregistered broker-dealers.
Based on the above, the Order bars McGill, Sanders, Tuchman, and Rayburn from association with any broker or dealer, with the right to reapply for association after five years. McGill, Sanders, Tuchman, and Rayburn all consented to the issuance of the Order without admitting or denying any of the findings in the Order, except they admitted the final judgment entered in the civil action. (Rel. 34-58213; File No. 3-13093)
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In the Matter of Donald G. Ryan
The United States Securities and Exchange Commission (Commission) announced the issuance of an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings and Imposing Remedial Sanctions (Order) against Donald G. Ryan. The Order finds that on June 10, 2008, a final judgment was entered by consent against Ryan, permanently enjoining him from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, in a civil action entitled Securities and Exchange Commission v. Real Estate Partners, Inc., et al., Civil Action Number SACV 07-1022 AG (RNBx), in the United States District Court for the Central District of California.
The Order further finds that the Commission's complaint alleged that Ryan made fraudulent misrepresentations in the unregistered offer and sale of defendant Real Estate Partners, Inc.'s securities, and acted as an unregistered broker-dealer.
Based on the above, the Order bars Ryan from association with any broker or dealer. Ryan consented to the issuance of the Order without admitting or denying any of the findings in the Order, except he admitted the final judgment entered in the civil action. (Rel. 34-58214; File No. 3-13094)
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SEC Obtains Emergency Relief Against Stock Based Loan Operators; Judge Orders Asset Freeze, Preliminary Injunction, and Appointment of Receiver
The Securities and Exchange Commission today announced that on July 17, U.S. District Judge Edmund A. Sargus, Jr. entered an order freezing assets, preserving records and property, and preliminarily enjoining defendants Michael S. Spillan and Melissa K. Spillan of Gahanna, Ohio, from violating the antifraud provision of the federal securities laws [Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder]. Judge Sargus also ordered the appointment of attorney Frederick L. Ransier as Receiver over defendants One Equity Corporation, Triangle Equities Group, Inc., Victory Management Group, Inc. and Dafcan Finance, Inc. (the One Equity Companies), which are located in Westerville, Ohio. The Commission sued the defendants on July 10 alleging they were operating a fraudulent stock loan program.
The Commission's complaint alleges that, since at least 2004, the Spillans and the One Equity Companies raised approximately $70 million from 125 borrowers by holding themselves out as stock based lenders, underwriters, or administrators. According to the complaint, the defendants raised the money by inducing borrowers to transfer ownership of millions of shares of publicly traded stock to them as collateral for purported non-recourse loans. The defendants promised to return the shares to borrowers who repaid their loans. In fact, the defendants generally sold all of the stock received from borrowers in order to fund each loan. Unbeknownst to borrowers, after funding each loan, the Spillans did not set aside any cash reserves to repurchase and return shares to borrowers who repaid their loans. Instead, they used all of the money to pay expenses, including over $1 million in salaries and benefits to themselves.
Judge Sargus previously entered a temporary restraining order on July 10 prohibiting defendants from making any loans, making any disbursements from business accounts without prior Court approval, paying salaries to the Spillans, and destroying or discarding any relevant financial records. [SEC v. One Equity Corp., et al., Civil Action No. C2-08-667, USDC, S.D. Ohio] (LR-20652)
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INVESTMENT COMPANY ACT RELEASES
The Mexico Fund, et al.
A notice has been issued giving interested persons until August 11, 2008 to request a hearing on an application filed by The Mexico Fund, Inc., et al. ("Fund"), under Section 6(c) of the Investment Company Act of 1940 ("Act") for an exemption from Section 19 (b) of the Act, and Rule 19b-1 under the Act. The order would permit the Fund, a registered closed-end management investment company, to make periodic distributions of long-term capital gains with respect to its common stock as part of a managed distribution plan as frequently as twelve times each year. (Rel. IC-28332 - July 17)
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July 22, 2008 SEC News Digest
Issue 2008-141
COMMISSION ANNOUNCEMENTS
SEC Alerts Compliance Officers about Deficiencies and Weaknesses Found During Recent Compliance Examinations
The Securities and Exchange Commission staff today released a new ComplianceAlert letter identifying common deficiencies and weaknesses that SEC examiners have recently found during compliance examinations of firms that are registered with the SEC. The ComplianceAlert is intended to foster robust compliance in the securities industry by providing information about deficiencies and encouraging chief compliance officers to take steps to address any similar issues at their firms.
The SEC's Office of Compliance Inspections and Examinations conducts compliance examinations of investment advisers, investment companies, broker-dealers, transfer agents and other types of SEC-registered firms to determine whether they are in compliance with the federal securities laws and regulations. The SEC staff last year issued its first ComplianceAlert letter to describe compliance issues and deficiencies found in examinations and to encourage firms to review compliance in those identified areas and implement improvements as appropriate.
"Our June 2007 ComplianceAlert was very well-received by industry compliance and legal professionals," said Lori Richards, Director of the SEC's Office of Compliance Inspections and Examinations. "Many industry compliance staff told us that, after reading it, they reviewed their firms' practices in the areas we noted and took steps to ensure that their firms' practices were fully compliant. By highlighting our recent examination findings in this way, we expect that this second ComplianceAlert will be similarly helpful to industry firms that are seeking to be proactive in addressing compliance risks."
The new ComplianceAlert letter describes examination findings in several areas:
Personal trading by investment advisory employees.
Soft dollar practices by advisers.
Mutual funds' proxy voting practices.
Valuation and liquidity issues for high-yield municipal bond funds.
"Free lunch" sales seminars.
Broker-dealers' valuation and collateral management processes.
Issues identified at broker-dealers affiliated with insurance companies.
Supervision of solicitations for advisory services.
Use of mortgage financing as credit for the purchase of securities.
Broker-dealers' supervisory and compliance controls over offices of supervisory jurisdiction.
Transfer agents' practices regarding "lost securityholders"
(Press Rel. 2008-146)
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ENFORCEMENT PROCEEDINGS
Delinquent Filers' Stock Registrations Revoked
The registrations of the stock of Kafus Industries, Ltd., and Kingsfield Capital Corp. (n/k/a Kingsfield Environmental Corp.) have been revoked. Neither had filed any annual or quarterly reports with the Securities and Exchange Commission for more than seven years. Thus, each violated a crucial provision of the federal securities laws that requires public corporations to publicly disclose current, accurate financial information so that investors may make informed decisions. The revocations were ordered in an administrative proceeding before an administrative law judge. (Rel. 34-58202; File No. 13075)
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SEC Charges Scott Hirth and ProQuest Company In Connection With Accounting Fraud Scheme
The Commission today charged Scott Hirth of Carleton, Michigan and ProQuest Company, headquartered in Ann Arbor Michigan, in connection with a financial fraud scheme that occurred from 2001 through 2005. Hirth was the former Vice-President of Finance and Chief Financial Officer for ProQuest's Information and Learning Division.
The Commission's complaint, filed in federal court in Detroit, alleged that at the end of monthly and quarterly reporting periods, from at least 2001 through 2005, Hirth made fraudulent manual journal entries in order to favorably alter ProQuest's financial results. These manual journal entries were adjustments to the balances in certain ProQuest accounts and were designed to increase revenue and decrease expenses at ProQuest. Through these false accounting entries, Hirth materially inflated ProQuest's reported Earnings Before Interest and Taxes for 2001 though 2004 and the first three quarters of 2005. The Commission further alleged that Hirth created false documentation to purportedly support the balances in the manipulated accounts and used "hidden rows" and "white font" functions in spreadsheets to conceal his false accounting entries. After ProQuest disclosed the accounting scheme in its public filings, the Commission alleged that ProQuest lost over $437 million in market capitalization. ProQuest's stock price dropped from $29.41 to $12.31 per share between February and April 2006. Finally, the Commission alleged that ProQuest failed to devise and maintain a system of internal accounting controls that could have prevented Hirth's scheme and failed to properly apply other basic accounting principles during this period.
ProQuest and Hirth consented to the settlement of this action without admitting or denying the allegations of the Commission's complaint. Under the settlement, Hirth is permanently enjoined from committing future violations of the federal securities laws, and he will pay disgorgement of $233,676.00, prejudgment interest of $54,474.25 and a civil penalty of $130,000, and consent to be permanently barred from serving as an officer and director of a public company and from practicing as an accountant before the Commission. ProQuest is permanently enjoined from future violations of the internal controls, books and records, and reporting provisions of the federal securities laws. [SEC v. Scott Hirth et al., 08 cv 13139 (E.D. Mich.)] (LR-20650)
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Commission Files Lawsuit against HCC Insurance Holdings, Inc., Former HCC CEO, and Former HCC General Counsel for Stock Options Backdating Violations
The Commission filed a civil lawsuit on July 21 against HCC Insurance Holdings, Inc. (HCC), a Houston, Tex. insurance company; its former Chief Executive Officer, Stephen L. Way, 59, of Houston; and its former General Counsel, Christopher L. Martin, 41, of Houston, alleging violations related to stock-options backdating. Without admitting or denying the allegations, all three defendants agreed to settle the matter. The SEC filed its complaint in United States District Court in Houston.
The complaint alleges that, on at least 38 and as many as 58 occasions from 1997 through 2005, Way looked back at HCC's historical stock prices and, with the benefit of hindsight, chose grant dates for the options that coincided with the dates of low closing prices for the stock. At Way's direction or with his knowledge, Martin, among other things, prepared documents indicating that HCC's option grants had been made on earlier dates when HCC's stock price had closed lower whereas in fact no such grants had been made on those dates. These inaccurate and misleading documents included written actions of HCC's compensation committee, stock option agreements, and Forms 4 and 5 reporting the grants to the SEC. Among other things, the backdating of options caused the company to understate its compensation expense by approximately $26.6 million.
HCC consented to a permanent injunction from violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 12b-20, 13a-1, 13a-11 and 13a-13 thereunder. Way consented to a permanent injunction from violations of Section 17(a) of the Securities Act of 1933 (Securities Act), Sections 10(b), 13(b)(5), 14(a), and 16(a) of the Exchange Act, and Exchange Act Rules 10b-5, 13a-14, 13b2-1, 13b2-2, 14a-3, 14a-9, and 16a-3, and aiding and abetting violations of Exchange Act Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder. Way also agreed to pay a $200,000 penalty and to be barred from serving as an officer or director of a public reporting company for five years. Martin consented to a permanent injunction from violations of Securities Act Sections 17(a)(2) and 17(a)(3), Exchange Act Sections 13(b)(5) and 16(a), and Exchange Act Rules 13b2-1, 13b2-2, and 16a-3, and aiding and abetting violations of Exchange Act Sections 13(a), 13(b)(2)(A), 13(b)(2)(B), and 14(a) and Rules 12b-20, 13a-1, 13a-11, 13a-13, 14a-3, and 14a-9 thereunder. Martin agreed to pay a $50,000 penalty. Martin also settled a related administrative proceeding pursuant to Rule 102(e) of the Commission's Rules of Practice by consenting, without admitting or denying the Commission's findings, to the entry of an order suspending him from appearing or practicing before the Commission as an attorney for two years. Settlement of the civil action is pending final approval by the court. [SEC v. HCC Insurance Holdings, Inc.; Stephen L. Way; and Christopher L. Martin, Civil Action No. 4:08 cv 2270 (S.D. Tex.)] (LR-20651; AAE Rel. 2847)
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July 21, 2008 SEC News Digest
Issue 2008-140
ENFORCEMENT PROCEEDINGS
Commission Declines to Review Petition of Certain Participants under the Consolidated Tape Association and Consolidated Quotation Plans
The Commission dismissed a petition by the Boston Stock Exchange, the Chicago Board Options Exchange, the International Securities Exchange, the Nasdaq Stock Market, the National Stock Exchange, NYSE Arca, and the New York Stock Exchange to compel the American Stock Exchange, in its capacity as the Network B administrator under the Consolidated Tape Association Plan and the Consolidated Quotation Plan, to comply with directions that a majority of the participants in the Plans issued to the American Stock Exchange. Those directions called for the American Stock Exchange to reallocate certain settlement proceeds to the Plan participants "net" of the legal expenses incurred in connection with certain litigation under the Plans.
The Commission noted that its jurisdiction to consider an appeal from action taken in connection with the CTA and CQ Plans is discretionary pursuant to Rule 608(d) of Regulation NMS under the Exchange Act. The Commission found that the issues presented in this appeal pertained to an internal business dispute among the parties involving questions about the accounting characterization of the legal expenses and the applicable time period over which the settlement proceeds and expenses should be allocated and that, accordingly, this appeal did not implicate the broad objectives of the national market system - the public interest, the protection of investors, or the maintenance of fair and orderly markets. The Commission concluded that this business dispute should be left up to the courts, which have experience in adjudicating such state-law issues. The Commission also noted, however, that where the statutory objectives of the national market system are implicated, the Commission's oversight of the administration of the Plans gives it a compelling interest in ensuring that the Network B administrator carries out its duties equitably and commensurately with those statutory objectives. (Rel. 34-58191; File No. 3-12714)
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Commission Declares Initial Decision as to Next Financial Group, Inc. Final
The Commission has declared final an initial decision of an administrative law judge with respect to NEXT Financial Group, Inc. (NEXT). The initial decision found that NEXT, a registered broker-dealer, willingly violated Rules 4, 6, 10 and 30(a)(1) of Regulation S-P, 17 C.F.R. Part 248 when NEXT engaged in the practice of disclosing nonpublic personal information about its customers to other brokerage firms without prior notice or a reasonable opportunity for the customers to opt out of the disclosures. NEXT recruited its registered representatives from various brokerage firms and encouraged them to bring their customer accounts with them.
The initial decision found that NEXT violated Rule 4 by not disclosing to customers that it allowed its departing registered representatives to divulge a customer's nonpublic information to nonaffiliated third parties. The initial decision also found that NEXT violated Rule 6 by not informing its customers that it allowed its departing registered representative to divulge all categories of customer nonpublic personal information to nonaffiliated third parties with which they intended to associate.
The initial decision further found that NEXT violated Rule 10 by allowing its departing registered representatives to take customer nonpublic personal information with them upon termination, and give the information to nonaffiliated third parties. And, once the representatives left NEXT's employ, they shared the customer's nonpublic personal information with their new brokerage firm before even joining the firm. NEXT's privacy policy did not inform customers of its practice of allowing representatives to keep their personal information, nor were they given the opportunity to opt out of the disclosure. The initial decision further found that NEXT violated Rule 30 by failing to have the appropriate safeguarding policies and procedures implemented to protect the customer's personal information.
The initial decision also found that NEXT willfully aided and abetted and was a cause of non-parties' violation of Rule 10.
The initial decision determined that the likelihood of future violations was quite high and issued a cease-and-desist order. The initial decision further found that a meaningful civil penalty would help deter future violations of Regulation S-P by others and ordered a civil penalty be paid in the amount of $125,000. (Rel. 34-58192; File No. 3-12738)
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In the Matter of Michael Sassano, Dogan Baruh, Robert Okin, and R. Scott Abry
On July 18, the Commission issued a settled order (Order) against Michael Sassano (Sassano) in a previously instituted administrative proceeding.
The Order finds that Sassano, a former registered representative (RR) at CIBC World Markets Corp. (CIBC) and Fahnestock & Co., Inc. (Fahnestock), engaged in a scheme to defraud mutual fund companies. Between 1998 and September 2003, Sassano and certain other registered representatives (the brokers), who acted under his direction, actively assisted market timing customers in deceiving mutual fund companies. CIBC, Fahnestock and the brokers received hundreds of letters and emails from mutual fund companies regarding their market timing trading activities. Sassano and the brokers repeatedly ignored these communications, and continued to work with their market timing customers to implement their market timing strategies in an attempt to deceive the mutual fund companies up until the point when the mutual fund companies threatened to terminate their dealer agreements with CIBC or Fahnestock. Among the deceptive practices that Sassano and the brokers engaged in on behalf of their customers were the following: (a) using new account numbers for blocked customer accounts; (b) creating new RR numbers to disguise themselves and their customers from the mutual funds; (c) trading in smaller amounts in order to avoid detection by the mutual funds, including using an in-house electronic trading platform to break up trades into small dollar volumes; (d) using annuities to avoid restrictions on market timing; (e) using the investment adviser trading platforms of two broker-dealers, Charles Schwab & Co., Inc. and FMR Corp., to continue market timing mutual funds that had previously blocked Sassano's customers' trading; and (f) on one instance, sending trades from a different branch to deceive the mutual funds about the origins of the trade. As a result of his conduct, Sassano willfully violated Section 17(a) of the Securities Act of 1933 (Securities Act), Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, willfully aided and abetted and caused his customers' violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and willfully aided and abetted and caused CIBC's violations of Section 15(c) of the Exchange Act and Rule 10b-3 thereunder.
Based on the above, the Order directs Sassano to cease and desist from committing or causing any violations and any future violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and from causing any violations and any future violations of Section 15(c) of the Exchange Act and Rule 10b-3 thereunder. The Order bars Sassano from association with any broker, dealer or investment adviser, and is prohibited from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter. Finally, the Order directs Sassano to pay disgorgement of $1 and a civil money penalty in the amount of $1,000,000. Sassano consented to the issuance of the Order without admitting or denying the Commission's findings, except as to the Commission's jurisdiction over him and the subject matter of the proceedings. See also: Rel. No. 33-8592 (July 20, 2005); Rel. No. 3-12554 (Jan. 31, 2007); Rel No. 55209 (Jan. 31, 2007); Rel. No. 34-57880 (May 28, 2008); Rel. No. 34-57879 (May 28, 2008). (Rels. 33-8945; 34-58193; IA-2756; IC-28333; File No. 3-12554)
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Commission Revokes Registration of Securities of National Properties Investment Trust for Failure to Make Required Periodic Filings
On July 21, the Commission revoked the registration of each class of registered securities of National Properties Investment Trust (National Properties) for failure to make required periodic filings with the Commission.
Without admitting or denying the findings in the order, except as to jurisdiction, which it admitted, National Properties consented to the entry of an Order Making Findings and Revoking Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of 1934 as to National Properties Investment Trust finding that it had failed to comply with Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 13a-1 and 13a-13 thereunder and revoking the registration of each class of National Properties's securities pursuant to Section 12(j) of the Exchange Act. This order settled the charges brought against National Properties in In the Matter of National Fruit and Vegetable Technology Corp., et al., Administrative Proceeding File No. 3-13080.
Brokers and dealers should be alert to the fact that Exchange Act Section 12(j) provides, in pertinent part, as follows:
No member of a national securities exchange, broker, or dealer shall make use of the mails or any means or instrumentality of interstate commerce to effect any transaction in, or to induce the purchase or sale of, any security the registration of which has been and is suspended or revoked . . . .
For further information see Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934, In the Matter of National Fruit and Vegetable Technology Corp., et al., Administrative Proceeding File No. 3-13080, Exchange Act Release No. 58009 (June 24, 2008). (Rel. 34-58198; File No. 3-13080)
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SEC Charges Biofuel Company and its CEO with Fraud
The Commission announced today that it filed a complaint in the United States District Court for the Southern District of Mississippi, Western Division, against U. S. Sustainable Energy Corp. (USSE) and John H. Rivera (Rivera), defendants, and Alice M. Price (Price) relief defendant. The complaint alleges that Rivera is USSE's Chairman and CEO and that USSE is a Nevada corporation, headquartered in Natchez, Mississippi.
The complaint further alleges that, between October 2006 and February 2007, Rivera caused USSE to issue false and misleading press releases regarding the company's business and technology to convert soybeans into biofuel. The Commission also alleges that during the same period, Rivera made false and misleading oral statements regarding USSE. Specifically, the Commission's complaint alleges that USSE and Rivera made material misrepresentations by claiming that USSE owned patents or pending patents; that USSE's cost to produce biofuel was $0.50 per gallon; that USSE had contracts for the sale of its product; that USSE had a fully operational plant; and that USSE's technology, when combined with the technology of another company with which it had agreed to merge, had an immediate market value of between 9 and 12 billion dollars. The complaint also alleges that after the press releases and false statements were issued, Price, who resided with Rivera at the time, sold USSE stock at artificially inflated prices, thereby profiting at least $721,000.
The complaint alleges that USSE and Rivera violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission seeks permanent injunctions against future violations; disgorgement of ill-gotten gains plus prejudgment interest; imposition of civil penalties against USSE and Rivera; and a penny stock bar and an officer and director bar against Rivera. The Commission's complaint also names Price as a relief defendant, and seeks disgorgement of her ill-gotten gains plus prejudgment interest. [SEC v. U.S. Sustainable Energy Corp. and John H. Rivera, et al.,Civil Action No. 5:08-CV-245 DCB-JMR] (LR-20648)
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Three Defendants Named in SEC Action Found Guilty by a Federal Jury
The Commission announced that on June 17, 2008, a federal jury in San Diego, California, convicted three defendants named in a prior enforcement action brought by the Commission for their participation in a fraudulent scheme to solicit money from the public, ostensibly for participation in high-yield "prime bank" trading programs and venture capital investments. The jury found Randall T. Treadwell, formerly of Savannah, Georgia, Ricky D. Sluder of Whitehouse, Texas, and Larry C. Saturday of Savannah, Georgia, guilty on felony counts of wire fraud and conspiracy. A fourth defendant, Arnulfo M. Acosta of Hidalgo County, Texas, pleaded guilty prior to trial to felony counts of conspiracy and making a false statement to a federal officer. Treadwell and Sluder are scheduled to be sentenced on Sept. 22, 2008, and Acosta and Saturday on Oct. 14, 2008.
The defendants were indicted in September 2005 by a federal grand jury in San Diego charging them with wire fraud and conspiracy. According to the indictment obtained by the United States Attorney's Office for the Southern District of California, the defendants, though Learn Waterhouse, Inc., a Texas corporation, Wealth Builders Club, Inc., and Qwest International, Inc., both Nevada corporations, fraudulently solicited over $50 million from investors. The indictment alleged that the defendants induced investors by falsely representing and causing others to represent that investors' money would be used for investments that would generate high yielding monthly returns. The indictment alleged that only a small fraction of the money raised was used to make investments and they generated almost no returns, money received from new investors was used to make payments to earlier investors, and millions of investors' funds were used for the defendants' own personal use.
In October 2004, the Commission filed a civil complaint against the defendants and Learn Waterhouse. The court issued a preliminary injunction prohibiting future violations of the antifraud and the securities registration provisions of the federal securities laws, freezing the defendants' assets, and appointing Thomas Lennon as the permanent receiver over Learn Waterhouse. The court thereafter issued orders finding Treadwell in civil contempt for violating the asset freeze and ultimately revoked his pretrial release pending the trial in the criminal action. The court also issued an order staying the Commission's action until the conclusion of the criminal action, which also provided that the receiver shall continue to perform all of his duties, however, the receiver cannot pay any investor claims until the stay is lifted or expires.
For more information about prime bank frauds, visit the SEC's "Prime Bank Information Center" at http://www.sec.gov/divisions/enforce/primebank.shtml. To report suspicious activity involving possible fraud, visit http://www.sec.gov/complaint.shtml. The website for Thomas Lennon, the receiver appointed in the case, is www.tflinc.com.
For further information, see Litigation Release Nos. 18932 (Oct. 14, 2004), 18959 (Nov. 4, 2004), 19059 (Feb. 1, 2005), 19142 (March 17, 2005), 19384 (Sept. 20, 2005), 19412 (Oct. 4, 2005), 19461 (Nov. 9, 2005), and 19540 (Jan. 24, 2006). [U.S. v. Randall T. Treadwell, Ricky D. Sluder, Larry C. Saturday, and Arnulfo M. Acosta, United States District Court, Southern District of California, Case No. 05 CR 1570 W] (LR-20649)
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INVESTMENT COMPANY ACT RELEASES
Pimco Funds, et al.
A notice has been issued giving interested persons until Aug. 11, 2008, to request a hearing on an application filed by PIMCO Funds, et al., for an order under Section 6(c) of the Investment Company Act of 1940 (Act) for an exemption from Rule 12d1-2(a) under the Act. The order would permit funds of funds relying on Rule 12d1-2 under the Act to invest in certain financial instruments. (Rel. IC-28331 - July 17)
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SELF-REGULATORY ORGANIZATIONS
Proposed Rule Changes
The Financial Industry Regulatory Authority filed a proposed rule change and Amendment No. 1 thereto (SR-FINRA-2008-021) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 relating to the adoption of NASD Rules 4000 through 10000 Series and the 12000 through 14000 Series as FINRA rules in the New Consolidated FINRA Rulebook. Publication is expected in the Federal Register during the week of July 21. (Rel. 34-58176)
The NASDAQ Stock Market filed a proposed rule change (SR-NASDAQ-2008-062) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 to clarify the application of Nasdaq rules when a listed company combines with a non-Nasdaq entity. Publication is expected in the Federal Register during the week of July 21. (Rel. 34-58182)
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Approval of Proposed Rule Changes
The Commission published notice of filing of Amendment No. 1 and granted accelerated approval to a proposed rule change (SR-SCCP-2008-01), as modified by Amendment No. 1 thereto, filed by Stock Clearing Corporation of Philadelphia under Section 19(b)(1) of the Exchange Act to amend and restate its Articles of Incorporation. Publication is expected in the Federal Register during the week of July 21. (Rel. 34-58180)
The Commission approved a proposed rule change (SR-NASDAQ-2008-035), as modified by Amendment No. 1 thereto, to amend the by-laws of the NASDAQ OMX Group, in connection with the acquisitions of Boston Stock Exchange, Incorporated and Philadelphia Stock Exchange, Inc. Publication is expected in the Federal Register during the week of July 21. (Rel. 34-58183)
The New York Stock Exchange filed a proposed rule change (SR-NYSE-2008-46), as modified by Amendment No. 1 thereto, pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 to create a new NYSE Market Model with certain components to operate as a one-year pilot that will provide market participants with additional abilities to post hidden liquidity, phase out specialists by creating a Designated Market Maker, and enhance the speed of execution through technological enhancements. Publication is expected in the Federal Register during the week of July 21. (Rel. 34-58184)
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Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed by Philadelphia Stock Exchange relating to participation guarantees for crossing and facilitation orders (SR-Phlx-2008-54) has become immediately effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 21. (Rel. 34-58185)
A proposed rule change filed by Chicago Board Options Exchange (SR-CBOE-2008-75) relating to sponsored user fees has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 21. (Rel. 34-58189)
A proposed rule change filed by the Philadelphia Stock Exchange relating to disclaimer of warranties (SR-Phlx-2008-47) has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 21. (Rel. 34-58194)
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SECURITIES ACT REGISTRATIONS
Latest Securities Act registrations (TXT)
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RECENT 8K FILINGS
Latest 8-K filings (TXT)
http://www.sec.gov/news/digest/2008/dig072108.htm
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Home | Previous Page Modified: 07/21/2008
SEC Action Stops Hillsborough, Calif. Investment Adviser Defrauding Millions of Dollars From Clients
FOR IMMEDIATE RELEASE
2008-148
Washington, D.C., July 23, 2008 — The Securities and Exchange Commission today filed fraud charges and obtained an emergency court order to stop a Hillsborough, Calif., investment adviser who is alleged to have misappropriated more than $20 million from investors who were falsely promised that their money would be invested in the stock market.
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Additional Materials
Litigation Release No. 20653
SEC Complaint
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According to the SEC's complaint, Robert C. Brown, Jr. promised more than 200 investors living primarily in the San Francisco Bay Area as well as in southern California and out of state that he would invest their money risk-free in stock or options. Instead, Brown helped himself to millions of dollars of client money to pay for lavish personal expenses such as upkeep on his Ferrari, limousine services and shopping trips. The SEC's complaint also alleges that, in a classic Ponzi scheme tactic, Brown often transferred money from new investors to favored clients to create the illusion of profitable trading.
At the SEC's request, the federal court for the Northern District of California issued an order freezing Brown's assets and prohibiting him from, among other things, further transferring or dissipating his clients' assets.
"As alleged in our complaint, Brown held himself out as a securities expert, when essentially all he did was steal money from his clients," said Marc Fagel, Director of the SEC's San Francisco Regional Office. "Today's action serves as a reminder that investors should exercise caution in dealing with supposed experts who claim they can invest in the markets risk-free."
According to the SEC's complaint, since at least 2000 and continuing to the present, Brown (previously of Vallejo, Calif.) offered a variety of investment programs that falsely promised astronomical returns. One program promised, for example, to double investor money in eight months. The SEC alleges that Brown raised more than $20 million, but transferred millions of dollars to himself and his family members for personal use. Only approximately $4 million went to any brokerage account. However, this account was a personal brokerage account that Brown treated as his own piggy bank.
The SEC alleges that in order to perpetuate the scheme, Brown transferred newly-raised funds to older investors as purported profits on securities trading. The SEC's complaint likewise alleges that Brown provided false account statements to investors that showed their investments were earning the returns he had promised. When Brown failed to repay his clients, he concocted elaborate excuses, blaming delays on "the Patriot Act" while representing that the SEC had "cleared" him of wrongdoing.
The SEC's complaint charges Brown with violating the antifraud and investment advisory provisions of the federal securities laws, and seeks preliminary and permanent injunctions, disgorgement, and civil penalties. The Commission further seeks disgorgement of all investor funds disbursed to relief defendants, Duane Eddings, CDC Global, Inc. and Wise Investors Simply Excel, LLC. Pursuant to the court's order, a hearing will be held on August 5, 2008 to determine whether the defendants' activities will continue to be restricted during the remainder of the litigation.
# # #
For more information, contact:
Marc J. Fagel
Regional Director
SEC's San Francisco Regional Office
(415) 705-2449
Cary Robnett
Assistant Regional Director
SEC's San Francisco Regional Office
(415) 705-2335
http://www.sec.gov/news/press/2008/2008-148.htm
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Home | Previous Page Modified: 07/23/2008
You will upgrade your iHub Membership today.
401(k) Debit Cards: What You Might Not Know
A number of companies are beginning to offer a “401(k) debit card” to employees who invest in 401(k) retirement programs. A 401(k) debit card allows you to borrow up to $50,000 or 50% of the value of your retirement plan, whichever is less, through use of a debit card. Unlike a debit card that deducts money from your checking or savings account, a 401(k) debit card withdrawal is a loan you make to yourself out of your retirement savings. More akin to a traditional credit card, you must repay the money you withdraw using the card, along with fees and interest –- or you may incur substantial penalties. There are a number of important factors you should consider before using a 401(k) debit card:
· You must pay fees and interest on amounts you borrow from your
401(k) plan.
You will likely pay interest and incur fees if you use a 401(k) debit card to borrow money from your retirement savings. While some of the interest you pay will go back into your 401(k) account, a certain amount (called the “margin”) will be paid to the vendor of the card. In addition, the sorts of additional fees that may apply include: (i) an annual fee; (ii) a set up fee; (iii) a cash advance fee; and (iv) fees for other services, such as express delivery.
· If you do not pay the money back in the time period required by the plan, there may be significant penalties and tax consequences.
Under IRS rules, you typically must repay the amount you borrow in five years or less, and may not fail to make payments for three consecutive months. If you do not meet those conditions, you must pay taxes on your loan balance. In addition, if you are younger than 59 1/2 years old, you will have to pay a 10% penalty.
· The amounts set aside to borrow may earn a lower rate of return than the rest of your 401(k) assets.
The money you decide to borrow is set aside in a money market fund until you withdraw it. Money market funds may earn a lower rate of return than other investment options through a 401(k) account, such as investments in mutual funds or stocks.
· Unlike your 401(k) contributions, you must make repayments on your own, and not automatically through a payroll deduction.
Typically, 401(k) contributions are deducted directly from your payroll –- once you authorize the deductions, the money goes straight to your 401(k) automatically. Repayments of 401(k) debit card loans, however, are not deducted directly from your payroll -- you must pay the balance yourself.
In short, you should think carefully before taking money out of your retirement account under any circumstances, including with a 401(k) debit card, and weigh the above considerations carefully.
The Securities and Exchange Commission does not regulate or oversee retirement plans, such as pensions or 401(k) plans. If you have a question or complaint about your retirement plan, please contact:
U.S. Department of Labor
Employee Benefits Security Administration
200 Constitution Avenue, NW, Room N5623
Washington, D.C. 20210
Phone (toll-free): 1-866-444-EBSA (3272)
Online: www.askebsa.dol.gov
For general information about what you should know about your retirement plan, visit EBSA’s website, www.dol.gov/ebsa. If you have concerns about your plan’s administration or believe that your benefits have been inappropriately denied, you should contact an EBSA Benefits Advisor. For help in finding a lawyer who specializes in pension matters, you can visit the website of the National Pension Lawyers Network.
You can find information about pensions from the EBSA's home page. You can also learn how fees and expenses affect the total return you will receive for retirement from your 401(k) plan.
Related Items:
FINRA Alert: 401(k) Debit Cards—Think Before You Swipe
http://www.sec.gov/answers/401(k)debitcards.htm
We have provided this information as a service to investors. It is neither a legal interpretation nor a statement of SEC policy. If you have questions concerning the meaning or application of a particular law or rule, please consult with an attorney.
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Home | Previous Page Modified: 07/29/2008
would like to see some news out on the rgno-amgg scam reversal plan,,,
this *interview* .. says it all
the man is a disgrace .. going
to be real interesting .. to
see what actually is *done*
i won't be holding my breath
listen carefully ...
---
http://www.cnbc.com/id/15840232?video=795
---
4kids
all jmo
i just noticed this thing and read their PR's. Looks like a bunch of retards run that company. lol
ooops-- guess thier knowledge of the suspension before that PR isn't just my opinion lol...
Typhoon Responds to Trading Suspension by the SEC
Date : 07/18/2008 @ 6:49PM
Source : Business Wire
http://ih.advfn.com/p.php?pid=nmona&cb=1216486196&article=27401859&symbol=NB%5ETYTT
It'll be interesting to see if this shines a better/different light on the NSS situation...
Blue This one is going to be an interesting story of backroom squabbles that the SEC has an indirect hand in. You have to read the TYTT lawsuit against a Ca Prof who was shorting their stock. This PR has all the smells of creating an "appearance" as they knew their stock was halted IMO. The defendant Prof has connections to SEC....
Check out the board, looks like The Cap'm & others are going to track it...
#board-13053
How many legs does a dog have if you call the tail a leg? Four; calling a tail a leg doesn't make it a leg.
Abraham Lincoln
This TYTT PR came out after the bell: Typhoon Secures $20 Million Financing Commitment and Announces 30 to 1 Forward Split
Jul 18, 2008 6:55:00 PM
Copyright Business Wire 2008
SEATTLE--(BUSINESS WIRE)--
Typhoon Touch Technologies, Inc. (OTCBB:TYTT) (www.typhoontouchtech.com), announced today that it has secured a total of $20,000,000 in financing with First Strategy Finance Corp., a Panama-based institutional investor, to support its ongoing patent litigation, future mergers & acquisitions, working capital and general corporate use.
On signing the common stock purchase agreement (the "Purchase Agreement"), Typhoon received $500,000 from First Strategy Finance Corp. (the "Investor") as an initial purchase of 100,000 common stock under the $20 million commitment, at a price of $5.00 per share. Investor is required to purchase an additional 50,000 shares of common stock of Typhoon within 120 days of signing the Purchase Agreement and another 50,000 shares of common stock on filing a registration statement with the Securities and Exchange Commission in connection with the transaction.
After the SEC has declared effective a registration statement related to the transaction, Typhoon has the right, over a 25-month period, to sell its shares of common stock to Investor, from time to time, in amounts up to $100,000 per sale, depending on certain conditions as set forth in the Purchase Agreement, up to the full aggregate commitment of $20 million.
The purchase price of the shares related to the $19 million balance of future funding will be based on 90% of the prevailing market prices of Typhoon's shares at the time of sales as set out in the Purchase Agreement. Typhoon will control the timing and amount of any sales of shares to the Investor. There are no negative covenants, restrictions on future fundings, penalties or liquidated damages in the agreement. The Purchase Agreement may be terminated by Typhoon at any time at its discretion without any additional cost to Typhoon.
The Purchase Agreement requires the Registrant to complete a 30 for 1 forward split of its issued and outstanding share capital within 10 days of signing the Purchase Agreement.
Concurrently with entering into the Purchase Agreement, the Registrant entered into a registration rights agreement (the "Registration Agreement") with Investor. Under the Registration Agreement, the Registrant agreed to file a registration statement related to the transaction with the U.S. Securities & Exchange Commission ("SEC") covering the shares that have been issued or may be issued to Investor under the Agreement within 180 days of the date of the Registration Agreement.
A more detailed description of the Purchase Agreement and Registration Rights Agreement is set forth in Typhoon's Current Report on Form 8-K filed today with the SEC which the Company encourages be reviewed carefully.
Forward Split
As required in the Purchase Agreement, Typhoon has effected a thirty-for-one forward split in its common stock. This action means that each share of Typhoon's common stock outstanding at the time of the stock split will be converted into thirty shares of Typhoon's common stock. As this stock split is being undertaken pursuant to Nevada Revised Statutes 78.209, the number of authorized shares of common stock will be increased from 900,000,000 shares to 27,000,000,000 shares. Based on the number of shares currently outstanding prior to the stock split, the stock split will increase the number of outstanding shares of common stock from 14,650,000 shares to approximately 439,500,000 shares.
The legal effective date for the forward split transaction will be July 18, 2008. The market trading effective date of the forward split transaction is pending. A new OTCBB trading symbol for the common stock is expected to be assigned in due course once a market trading effective date has been determined by Corporate Data Operations - NASDAQ OMX.
Typhoon stockholders who hold their shares in "street name" with nominees or brokerages will not be required to take any action to receive additional shares to which they are entitled by the forward split. However, the forward split will require the surrender of shares held in certificate form. Stockholders holding Typhoon stock certificates will receive their additional shares only after the surrender of their current certificates to Typhoon's transfer agent:
Corporate Stock Transfer, Inc.
3200 Cherry Creek South Drive, Suite 430
Denver, Colorado 80209
Telephone: 303-282-4800
Fax: 303-282-5800
A transmittal letter will be mailed to registered shareholders as of the Effective Date to facilitate the receipt of new stock certificates. Registered holders will be required to provide this transmittal letter to Typhoon's transfer agent with each share certificate that is surrendered.
About Typhoon Touch Technologies
Typhoon Touch Technologies, Inc. (TYTT.OB), a Nevada corporation, is the owner of foundational intellectual property in the area of portable touch-screen computing. Please visit www.typhoontouchtech.com for more information.
This news release contains "forward-looking statements," as that term is defined in Section 27A of the United States Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Statements in this press release that are not purely historical are forward-looking statements and include any statements regarding beliefs, plans, expectations or intentions regarding the future. Such forward-looking statements include, among other things, that the Company licensing agreement with Nova Mobility will enhance product development or result in innovative products or applications, or the growth potential of touch technology and the ability of the companies to capitalize on this market.
Actual results could differ from those projected in any forward-looking statements due to numerous factors. Such factors include, among others, the inherent uncertainties associated with the development of an early stage technology company and its products and the entry into new markets for our products and services. These forward-looking statements are made as of the date of this news release, and the company assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Although we believe that the beliefs, plans, expectations and intentions contained in this press release are reasonable, there can be no assurance that such beliefs, plans, expectations or intentions will prove to be accurate. Investors should consult all of the information set forth herein and should also refer to the risk factors disclosure outlined in our recent current reports on Form 8-K, our annual report on Form 10-KSB, our quarterly reports on Form 10-QSB and other periodic and current reports filed from time-to-time with the Securities and Exchange Commission.
Source: Typhoon Touch Technologies, Inc.
----------------------------------------------
Typhoon Touch Technologies
Inc.
Media Contact:
Investor Relations
Charles Moskowitz
617-633-2259
hmmm-- I perused the comments fringe and don't see any from MMs lol...
http://www.sec.gov/comments/s7-19-07/s71907.shtml
IMO this is the we're gonna' still screw you part wrapped in sweet smelling word-fume
SEC Spokesman John Nester said the amendments "provide all of the new investor protections against naked short sales while assuring continuing liquidity and best execution in our markets.
Market makers stand ready to buy and sell stocks, stepping in where they must to match orders and maintain stable markets. The SEC said in an amended order Friday that it accommodated the market makers "to facilitate customer orders in a fast-moving market without possible delays associated with complying" with the new order.
SEC Retrenches On New Short-selling Rules
Liz Moyer, 07.18.08, 5:00 PM ET
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See: http://investorshub.advfn.com/boards/read_msg.aspx?message_id=30817402
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The Securities and Exchange Commission giveth--and then taketh away.
Late Friday the agency exempted "market makers" from having to comply with stricter short-selling rules that go into place Monday and are designed to protect shares in Fannie Mae, Freddie Mac and 17 of Wall Street's most powerful banks.
It seems the big firms didn't like being held to the stricter standards where it involved shorting shares of their rivals (Lehman Brothers (nyse: LEH - news - people ) comes to mind).
So they'll be able to carry out short sales as usual, while smaller broker dealers that are not market makers will have to meet the new standard: They must pre-borrow shares in those companies if they plan to short.
SEC Spokesman John Nester said the amendments "provide all of the new investor protections against naked short sales while assuring continuing liquidity and best execution in our markets.
Market makers stand ready to buy and sell stocks, stepping in where they must to match orders and maintain stable markets. The SEC said in an amended order Friday that it accommodated the market makers "to facilitate customer orders in a fast-moving market without possible delays associated with complying" with the new order.
So in other words, it's business as usual on trading desks. No doubt the firms spent the last few days whining about the costs of upgrading back office compliance systems to make way for the new requirements.
The SEC, concerned about confidence in the nation's financial system and the ever-sinking stocks of major financial institutions, announced the stricter standards earlier this week, just days after saying it was investigating whether traders were intentionally spreading false rumors to benefit from short positions in financial company stocks.
The markets had a wild ride. They started out the week sinking further into bear territory before rebounding sharply Wednesday when bank shares staged their biggest rally in years. Better than expected second-quarter earnings reports from Wells Fargo (nyse: WFC - news - people ), JPMorgan Chase (nyse: JPM - news - people ) and Citigroup (nyse: C - news - people ) helped make up for a poor showing by Merrill Lynch (nyse: MER - news - people ), Google (nasdaq: GOOG - news - people ) and Microsoft (nasdaq: MSFT - news - people ) and set the stage for a flurry of reports from regional banks next week that are expected to show more deterioration in consumer loans.
The biggest event of the week, of course, was the federal government's efforts to shore up Fannie Mae (nyse: FNM - news - people ) and Freddie Mac (nyse: FRE - news - people ), and the short-selling directive was just one part. The Federal Reserve and the U.S. Treasury want Congress to help them bail out the two mortgage financing giants, in part by giving them access to the Fed's discount lending window and extending new financing.
Under the new rule, the SEC will require short-sellers to secure borrowed shares before putting on their short sales, preventing "naked" short-selling, in which a trader doesn't properly locate shares to borrow. Naked short-selling can add extra downward momentum on a stock because without being forced to borrow the shares first, traders can short a limitless amount of stock.
But the emergency rule, which is in effect for 30 days, only applied to those 19 companies among Wall Street's biggest. They are companies whose shares are not typically hard to locate or scarce for shorting, a fact that angered many earlier in the week. The American Bankers Association wants the SEC to include shares of regional banks under the requirements, and no doubt hundreds of small company chief executives would also like to be covered.
Many hedge fund managers deny naked shorting occurs, but a growing number of company executives, from bigger and bigger companies no less, have complained that short-sellers have used manipulation to drive their shares down. The SEC has been criticized for not helping to blunt or prevent the credit crisis. On Sunday, July 13, it said it would immediately start probes into the spread of rumors on Wall Street to see if there were deliberate attempts to manipulate stocks.
Right now traders are merely required to locate shares they will borrow to short, a weaker standard that leaves plenty of room for interpretation. Pre-borrowing is a firmer commitment and eliminates the probability that a stock lender will lend out the same shares to several different traders.
Critics say the SEC has been dragging its feet on tighter rules on short-selling. Last year it controversially removed the rule that short sales could only be made on an uptick in a stock. The agency also recently extended a comment period on rules that would eliminate market makers' exemption from the locate requirement. Critics say the market makers' exemption, together with the SEC's elimination of the uptick rule last year, has exacerbated the downward pressure on heavily shorted stocks.
I am not an investment adviser and as such I expect that you, in our communications, will do your own DD and not act on message board banter of any kind.
July 18, 2008 SEC News Digest
Issue 2008-139
COMMISSION ANNOUNCEMENTS
SEC Suspends Trading in the Securities of Typhoon Touch Technologies, Inc.
The Commission today announced the temporary suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934 of trading in the securities of Typhoon Touch Technologies, Inc. (Typhoon Touch), at 9:30 a.m. EDT, July 18, 2008, through 11:59 p.m. EDT, on July 31, 2008.
The Commission temporarily suspended trading in the securities of Typhoon Touch because there is a lack of current and accurate information concerning its securities. Questions have arisen regarding a recent increase in the share price from $8 to $25 following a 100 for one forward split and during a period when no material information about the company would explain such a price increase. Also, questions have been raised about the accuracy and adequacy of publicly-disseminated information concerning, among other things, the availability of shares for trading and delivery, and the current shareholders of the company. Typhoon Touch is quoted on the Pink Sheets and the Over the Counter Bulletin Board under the ticker symbol TYTT. (Rel. 34-58187)
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Freddie Mac Now SEC Reporting Company
The Securities and Exchange Commission today announced that the Federal Home Loan Mortgage Corporation (Freddie Mac) has voluntarily registered its common stock under the Securities Exchange Act of 1934 and is now subject to the Act's periodic and current reporting requirements. By voluntarily becoming a reporting company, Freddie Mac has publicly disclosed, and will continue to disclose, key information about the company's finances and operations.
The Commission staff provided Freddie Mac the same regulatory relief given in 2004 to the Federal National Mortgage Association (Fannie Mae), which voluntarily registered its common stock in the year before. Under the relief, both companies agree to disclose direct financial obligations and off-balance sheet arrangements on the same basis as if they were public companies conducting registered offerings. (Press Rel. 2008-145)
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Commission Meetings
Closed Meeting - Thursday, July 24, 2008 - 2:00 p.m.
The subject matter of the closed meeting scheduled for July 24, 2008, will be: formal orders of investigation; institution and settlement of injunctive actions; institution and settlement of administrative proceedings of an enforcement nature; adjudicatory matters; a regulatory matter regarding a financial institution; a litigation matter; and other matters related to enforcement proceedings.
At times, changes in Commission priorities require alterations in the scheduling of meeting items. For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact: The Office of the Secretary at (202) 551-5400.
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ENFORCEMENT PROCEEDINGS
Commission Revokes Registration of Securities of American Ship Building Co. for Failure to Make Required Periodic Filings
On July 18, the Commission revoked the registration of each class of registered securities of American Ship Building Co. (American Ship) for failure to make required periodic filings with the Commission.
Without admitting or denying the findings in the order, except as to jurisdiction, which it admitted, American Ship consented to the entry of an Order Making Findings and Revoking Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of 1934 as to American Ship Building Co. finding that it had failed to comply with Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 13a-1 and 13a-13 thereunder and revoking the registration of each class of American Ship's securities pursuant to Section 12(j) of the Exchange Act. This order settled the charges brought against American Ship in the Matter of American Ship Building Co., et al., Administrative Proceeding File No. 3-13065.
Brokers and dealers should be alert to the fact that Exchange Act Section 12(j) provides, in pertinent part, as follows:
No member of a national securities exchange, broker, or dealer shall make use of the mails or any means or instrumentality of interstate commerce to effect any transaction in, or to induce the purchase or sale of, any security the registration of which has been and is suspended or revoked . . . .
For further information see Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934, In the Matter of American Ship Building Co., et al., Administrative Proceeding File No. 3-13065, Exchange Act Release No. 57956 (June 12, 2008). (Rel. 34-58188; File No. 3-13065)
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Former Senior Officers of iGo Corporation are Enjoined and Agree to Pay Civil Penalties
Between June 9, 2008 and July 15, 2008, the United States District Court for the District of Nevada entered final judgments in a financial fraud action brought by the Securities and Exchange Commission against Kenneth W. Hawk, the founder and former Chief Executive Officer, President, and Chairman of iGo Corporation; Michael J. Delargy, iGo's former Chief Financial Officer and Chief Operating Officer; and Thomas R. de Jong, iGo's former Senior Vice President of Sales, respectively. Hawk, Delargy, and de Jong each consented to a final judgment without admitting or denying the allegations in the Commission's complaint. These settlements conclude the Commission's enforcement action regarding iGo.
The Court permanently enjoined the three former iGo executives from violating the antifraud, books and records, and false statements to auditors provisions of the federal securities laws. The final judgments bar Hawk and de Jong from acting as officers and directors of any public company for five years and bar Delargy from acting as an officer or director for three years. In addition, Hawk will pay a $75,000 civil penalty, de Jong will pay a $55,000 civil penalty, and Delargy will pay a $50,000 civil penalty. As part of the settlement, Delargy also consented to the issuance of an administrative order suspending him from appearing or practicing before the Commission as an accountant, with a right to apply for reinstatement after three years.
iGo, a former Reno, Nevada manufacturer and distributor of parts and accessories for mobile technology, was acquired by Mobility Electronics, Inc. on September 4, 2002, and no longer is a public company. The Commission's March 24, 2005, complaint alleged that Hawk, Delargy, and de Jong knowingly or recklessly caused iGo to engage in fraudulent sales practices that resulted in the company materially overstating its revenue, and understating its losses, in fiscal years 1999 and 2000.
Specifically, in addition to the officer and director bars and the civil penalties, the judgments entered by the court enjoin Hawk, Delargy, and de Jong from violating Sections 10(b) and 13(b)(5) of the Exchange Act and Exchange Act Rules 10b-5, 13b2-1 and 13b2-2, as well as from aiding and abetting violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1 and 13a-13. Hawk's judgment also enjoins him from controlling any person who violates Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Exchange Act Rules 10b-5, 12b-20, 13a-1 and 13a-13.
In related proceedings, on July 17, 2008, the Commission instituted settled administrative proceedings against Delargy, suspending him from appearing as an accountant before the Commission, with a right to apply for reinstatement after three years. In the Matter of Michael J. Delargy, CPA - (Rel. 34-58186; AAE Rel. 2845; File No. 3-13091); [SEC v. Kenneth W. Hawk, Michael J. Delargy, and Thomas R. De Jong, Civil Action No. 3:05-CV-0172-LRH-VPC (D. Nev.)] (LR-20647; AAE Rel. 2846)
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SELF-REGULATORY ORGANIZATIONS
Approval of Proposed Rule Changes
The Commission has issued an order approving a proposed rule change filed by the Chicago Board Options Exchange to list and trade CBOE S&P 500 Three-Month Realized Variance and CBOE S&P 500 Three-Month Realized Volatility Options. Publication is expected in the Federal Register during the week of July 21. (Rel. 34-58171)
The Commission has approved a proposed rule change, as modified by Amendment No. 1 thereto, submitted by the Philadelphia Stock Exchange (SR-Phlx-2008-12) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 relating to an exemption from examination requirements for Off-Floor Traders. Publication is expected in the Federal Register during the week of July 21. (Rel. 34-58174)
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Accelerated Distribution of an Amended Options Disclosure Document
The Commission approved the distribution of the Canadian Derivatives Clearing Corporation's amended options disclosure document (SR-ODD-2008-03) prior to the 30th day after the date when definitive copies of the amended disclosure document were filed with the Commission. Publication is expected in the Federal Register during the week of July 21. (Rel. 34-58172)
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Accelerated Approval of Proposed Rule Change
The Commission published notice of filing of Amendment No. 2 and granted accelerated approval to a proposed rule change (SR-Phlx-2008-31), as modified by Amendment Nos. 1 and 2 thereto, filed by the Philadelphia Stock Exchange pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 relating to changes to Phlx's governing documents in connection with the acquisition of Phlx by The NASDAQ OMX Group, Inc. Publication is expected in the Federal Register during the week of July 21. (Rel. 34-58179)
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SECURITIES ACT REGISTRATIONS
Latest Securities Act registrations (TXT)
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RECENT 8K FILINGS
Latest 8-K filings (TXT)
http://www.sec.gov/news/digest/2008/dig071808.htm
July 17, 2008 SEC News Digest
Issue 2008-138
ENFORCEMENT PROCEEDINGS
In the Matter of David A. Finnerty, et. al
The United States Securities and Exchange Commission (Commission) announced the issuance of two separate Orders Making Findings, Imposing Remedial Sanctions, And Imposing A Cease-And-Desist Order Pursuant To Section 8A Of The Securities Act of 1933 And Sections 15(b)(6), 21C And 11(b) Of The Securities Exchange Act of 1934 And Rule 11b-1 Thereunder As To Gerard T. Hayes and Warren E. Turk (the Hayes and Turk Orders respectively).
The Hayes Order
The Hayes Order finds that during the period from at least 1999 to approximately June 30, 2003, Gerard T. Hayes (Hayes), a former specialist on the New York Stock Exchange at Van der Moolen Specialists USA, LLC (Van der Moolen), knowingly or recklessly engaged in approximately 2,145 instances of interpositioning, locking in a riskless profit of approximately $143,454 for his firm's proprietary account at the expense of customer orders, and approximately 5,350 instances of trading ahead, causing approximately $528,103 in customer harm, and, in doing so, violated various New York Stock Exchange rules prohibiting such conduct, and willfully violated Section 17(a) of the Securities Act of 1933 (Securities Act), Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, and Section 11(b) of the Exchange Act and Rule 11b-1 thereunder.
Based on the above, the Hayes Order orders Hayes to cease and desist from committing or causing any violations and any future violations of Section 17(a) of the Securities Act, and Sections 10(b) and 11(b) of the Exchange Act and Rules 10b-5 and 11b-1 thereunder, bars Hayes from association with any broker or dealer, and orders Hayes to pay a civil money penalty in the amount of $100,000. Hayes consented to the issuance of the Hayes Order without admitting or denying any of the findings therein.
The Turk Order
The Turk Order finds that during the period from at least 1999 through approximately June 30, 2003, Warren E. Turk (Turk), a former specialist on the New York Stock Exchange at Van der Moolen, engaged in approximately 697 instances of interpositioning, locking in a riskless profit of approximately $83,049 for his firm's proprietary account at the expense of customer orders, and approximately 4,199 instances of trading ahead, causing approximately $896,542 in customer harm, and, in doing so, violated various New York Stock Exchange rules prohibiting such conduct, and willfully violated Section 11(b) of the Exchange Act and Rule 11b-1 thereunder.
Based on the above, the Turk Order orders Turk to cease and desist from committing or causing any violations and any future violations of Section 11(b) of the Exchange Act and Rule 11b-1 thereunder, censures Turk pursuant to Section 15(b)(6) of the Exchange Act, and orders Turk to pay a civil money penalty in the amount of $75,000. Turk consented to the issuance of the Turk Order without admitting or denying any of the findings therein. (Rels. 33-8944; 34-58169; 34-58170; File No. 3-11893)
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Commission Revokes Registration of Securities of Benguet Corp. For Failure to Make Required Periodic Filings
On July 17, 2008, the Commission revoked the registration of each class of registered securities of Benguet Corp. (Benguet) for failure to make required periodic filings with the Commission.
Without admitting or denying the findings in the order, except as to jurisdiction, which it admitted, Benguet consented to the entry of an Order Making Findings and Revoking Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of 1934 as to Benguet Corp. finding that it had failed to comply with Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 13a-1 and 13a-13 thereunder and revoking the registration of each class of Benguet's securities pursuant to Section 12(j) of the Exchange Act. This order settled the charges brought against Benguet in In the Matter of Benguet Corp., et al., Administrative Proceeding File No. 3-13079.
Brokers and dealers should be alert to the fact that Exchange Act Section 12(j) provides, in pertinent part, as follows:
No member of a national securities exchange, broker, or dealer shall make use of the mails or any means or instrumentality of interstate commerce to effect any transaction in, or to induce the purchase or sale of, any security the registration of which has been and is suspended or revoked . . . .
For further information, see Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934, In the Matter of Benguet Corp., et al., Administrative Proceeding File No. 3-13079, Exchange Act Release No. 57999 (June 23, 2008). (Rel. 34-58177; File No. 3-13079)
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In the Matter of Francis J. Saldutti
The United States Securities and Exchange Commission (Commission) announced the issuance of an Order Instituting Administrative Proceedings Pursuant to Section 203(f) of the Investment Advisers Act of 1940, Making Findings and Imposing Remedial Sanctions (Order) against Francis J. Saldutti (Saldutti). The Order finds that on June 27, 2008, the United States District Court for the Southern District of New York entered a final judgment against Saldutti permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder in a matter entitled Securities and Exchange Commission v. Northshore Asset Management LLC, et al. 05 Civ. 2192.
Based on the above, the Order bars Saldutti from association with any investment adviser. Saldutti consented to the issuance of the Order without admitting or denying any of the findings in the Order. (Rel. IA-2755; File No. 3-13090)
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JOINT INDUSTRY PLANS
Notice of Filing of Proposed Amendment to the Plan for Reporting of Consolidated Options Last Sale Reports and Quotation Information
The Options Price Reporting Authority filed with the Securities and Exchange Commission a notice of filing of a proposed Plan amendment, as modified by Amendment No. 1 thereto, pursuant to Section 11A of the Securities Exchange Act of 1934 and Rule 608 thereunder (SR-OPRA-2008-02), to adopt amend OPRA's Vendor Agreement and Related Documents and Adopt a New Policy. Publication is expected in the Federal Register during the week of July 21. (Rel. 34-58173)
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SELF-REGULATORY ORGANIZATIONS
Accelerated Approval of Proposed Rule Change
The Commission has noticed and granted accelerated approval to a proposed rule change submitted by the Financial Industry Regulatory Authority (SR-FINRA-2008-034), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 and Rule 19b-4 thereunder, relating to the elimination of certain fee references in the Incorporated NYSE Rules. Publication is expected in the Federal Register during the week of July 21. (Rel. 34-58149)
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Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed by the NASDAQ Stock Market to modify fees for members using the NASDAQ Options Market (SR-NASDAQ-2008-059) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 21. (Rel. 34-58152)
A proposed rule change filed by the NYSE Arca to trade 14 Funds of the Commodities and Currency Trust pursuant to unlisted trading privileges (SR-NYSEArca-2008-73) has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 21. (Rel. 34-58162)
A proposed rule change filed by International Securities Exchange (SR-ISE-2008-56) relating fee waivers has become immediately effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 21. (Rel. 34-58164)
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Approval of Proposed Rule Changes
The Commission granted approval of proposed rule change File No. SR-FICC-2007-05 filed by the Fixed Income Clearing Corporation under Section 19(b)(1) of the Exchange Act that allows FICC to (i) restructure the Government Securities Division (GSD) and the Mortgage-Backed Securities Division (MBSD) rules related to fines, clearing fund consequences imposed on members for rule violations, and certain aspects of the internal watch list, and (ii) harmonize its rules with similar rules of FICC's affiliates, The Depository Trust Company (DTC) and the National Securities Clearing Corporation (NSCC). Publication is expected in the Federal Register during the week of July 21. (Rel. 34-58156)
The Commission granted approval to a proposed rule change, as modified by Amendment No. 1, filed by the Municipal Securities Rulemaking Board (SR-MSRB-2008-03) under Section 19(b)(2) of the Securities Exchange Act of 1934, relating to Rule G-11, on New Issue Syndicate Practices, and Rule G-12, on Uniform Practice. Publication is expected in the Federal Register during the week of July 21. (Rel. 34-58154)
The Commission approved a proposed rule change [File No. SR-DTC-2007-05] submitted under Rule 19b-4 by the Depository Trust Company that amends DTC's fine structure relating to participants not providing financial information and notice of significant corporate changes to DTC in a timely manner. Publication is expected in the Federal Register during the week of July 21. (Rel. 34-58157)
The Commission has approved a proposed rule change (SR-NSCC-2007-07) filed by the National Securities Clearing Corporation under Section 19(b)(1) of the Exchange Act that would restructure its rules relating to fines and harmonize them with similar rules of its affiliates. Publication is expected in the Federal Register during the week of July 21. (Rel. 34-58160)
The Commission granted approval to a proposed rule change (SR-Amex-2008-39), as modified by Amendment No. 1 thereto, submitted by the American Stock Exchange relating to the listing and trading of Trust Issued Receipts that directly hold investments in certain financial instruments and to permit the listing and trading of shares of fourteen funds of the Commodities and Currency Trust. Publication is expected in the Federal Register during the week of July 21. (Rel. 34-58161)
The Commission has approved a proposed rule change, as modified by Amendment No. 1 thereto, submitted by the Philadelphia Stock Exchange (SR-Phlx-2008-12) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 relating to an exemption from examination requirements for Off-Floor Traders. Publication is expected in the Federal Register during the week of July 21. (Rel. 34-58175)
A proposed rule change (SR-CBOE-2008-40), as Modified by Amendment No. 1 thereto, filed by the Chicago Board Options Exchange to provide for the issuance of ITPs has been approved pursuant to Section 19(b)(2) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 21. (Rel. 34-58178)
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Proposed Rule Changes
The Depository Trust Company filed a proposed rule change (File No. SR-DTC-2008-03) under Section 19(b)(1) of the Exchange Act that would establish a fee relating to DTC's settlement procedures for the maturity of Money Market Instruments with unknown rates. Publication is expected in the Federal Register during the week of July 21. (Rel. 34-58165)
A proposed rule change (SR-Phlx-2008-53) has been filed by the Philadelphia Stock Exchange regarding a proposal to amend Phlx Rules 1024 (Conduct of Accounts for Options Trading), 1025 (Supervision of Accounts), 1027 (Discretionary Accounts), and 1049 (Communications to Customers) that govern a Phlx member's conduct of doing business with the public. Publication is expected in the Federal Register during the week of July 21. (Rel. 34-58168)
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SECURITIES ACT REGISTRATIONS
Latest Securities Act registrations (TXT)
--------------------------------------------------------------------------------
RECENT 8K FILINGS
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http://www.sec.gov/news/digest/2008/dig071708.htm
July 16, 2008 SEC News Digest
Issue 2008-137
COMMISSION ANNOUNCEMENTS
SEC Enhances Investor Protections Against Naked Short Selling
On July 15, the Securities and Exchange Commission issued an emergency order to enhance investor protections against "naked" short selling in the securities of Fannie Mae, Freddie Mac, and primary dealers at commercial and investment banks.
The SEC's order will require that anyone effecting a short sale in these securities arrange beforehand to borrow the securities and deliver them at settlement. The order will take effect at 12:01 a.m. ET on Monday, July 21. In addition to this emergency order, the SEC will undertake a rulemaking to address these issues across the entire market.
"The SEC's mission to protect investors, maintain orderly markets, and promote capital formation is more important now than it has ever been," said SEC Chairman Christopher Cox. "Today's Commission action aims to stop unlawful manipulation through 'naked' short selling that threatens the stability of financial institutions. We will continue our vigorous commitment to investors by working within the SEC and in close cooperation with our regulatory counterparts to promote the continued health and vibrancy of our markets."
The Commission's emergency order, pursuant to its authority under Section 12(k)(2) of the Securities Exchange Act of 1934, will be effective at 12:01 a.m. ET on July 21, 2008 and will terminate at 11:59 p.m. ET on July 29, 2008. The Commission may extend the order to continue it in effect thereafter if the Commission determines that the continuation of the order is necessary in the public interest and for the protection of investors, but for no more than 30 calendar days in total duration.
The securities identified in the Commission's order:
Company Ticker Symbol(s)
BNP Paribas Securities Corp. BNPQF or BNPQY
Bank of America Corporation BAC
Barclays PLC BCS
Citigroup Inc. C
Credit Suisse Group CS
Daiwa Securities Group Inc. DSECY
Deutsche Bank Group AG DB
Allianz SE AZ
Goldman, Sachs Group Inc GS
Royal Bank ADS RBS
HSBC Holdings PLC ADS HBC and HSI
J. P. Morgan Chase & Co. JP
Lehman Brothers Holdings Inc. LEH
Merrill Lynch & Co., Inc. MER
Mizuho Financial Group, Inc. MFG
Morgan Stanley MS
UBS AG UBS
Freddie Mac FRE
Fannie Mae FNM
(Press Rel. 2008-143)
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ENFORCEMENT PROCEEDINGS
Delinquent Filers' Stock Registrations Revoked
The registrations of the stock of Kakkimon Acquisitions Corp. and Kevco, Inc., have been revoked. Neither had filed any annual or quarterly reports with the Securities and Exchange Commission for six or more years. Thus, each violated a crucial provision of the federal securities laws that requires public corporations to publicly disclose current, accurate financial information so that investors may make informed decisions. The revocations were ordered in an administrative proceeding before an administrative law judge. (Rel. 34-58163; File No. 3-13075)
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Delinquent Filers' Stock Registrations Revoked
The registrations of the stock of Struthers, Inc. (n/k/a Global Marine, Ltd.), Sun Vacation Properties Corp., and Sunshine Mining & Refining Co. have been revoked. None had filed any annual or quarterly reports with the Securities and Exchange Commission for any period ended subsequent to 2003. Thus, each violated a crucial provision of the federal securities laws that requires public corporations to publicly disclose current, accurate financial information so that investors may make informed decisions. The revocations were ordered in an administrative proceeding before an administrative law judge. (Rel. 34-58167; File No. 3-13061)
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SEC Files Two Market Manipulation Enforcement Actions With a Common Defendant
Cases Each Include a Settlement with Mark B. Lindberg; Sniffex Case Includes Other Defendants
The Commission filed two separate market manipulation enforcement cases: one filed today involving Homeland Safety International, Inc. (originally incorporated as Sniffex, Inc.), a Nevada corporation with a principal place of business in Irving, Texas (Sniffex), and the other filed yesterday involving three issuers - National Storm Management Group, Inc., a Nevada corporation with its principal place of business in Glen Ellyn, Illinois (NLST); Deep Rock Oil and Gas, Inc., a Nevada corporation with its principal place of business in Tulsa, Oklahoma (DPRK); and Global Beverages Solutions (GBVS), a Nevada corporation with its principal place of business in Tulsa, Oklahoma. The companies traded over the counter under the symbols SNFX (now HSFI), NLST, DPRK and GBVS, respectively. Mark B. Lindberg, 40, of Coppell, Texas, was charged in both cases and has settled them without admitting or denying the allegations in the two complaints. In the Sniffex complaint, the Commission also named Sniffex; its President Paul B. Johnson, 60, of Colleyville, Texas; Petar D. Mihaylov, 28, of Pazardjik, Bulgaria; Yuri P. Markov, 50, of Sofia, Bulgaria; Nicholas V. Klausgaard, 22 of Denmark; and Ilona V. Klausgaard, 49, of Denmark as defendants.
Allegations in the Sniffex Complaint
The Commission's complaint filed in the Northern District of Texas alleges that from October 2004 through April 2006, defendants Mihaylov and Markov acquired control of Sniffex - and carried out a $32 million pump-and-dump fraud scheme in concert with the other defendants.
The Commission's complaint charges Sniffex, Lindberg, Mihaylov, Markov, and Johnson with violations of the securities-registration provisions and the anti-fraud provisions of the federal securities laws, specifically Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5, and charges the Klausgaards with violations of the securities-registration provisions, Sections 5(a) and 5(c) of the Securities Act. The Commission seeks the following relief from Mihaylov, Markov, Johnson, and the Klausgaards: permanent injunctions against future violations of the federal securities laws, disgorgement plus prejudgment interest, civil monetary penalties, penny-stock bars, and accountings. Lindberg, without admitting or denying any allegations in the complaint, has agreed to a permanent injunction, an officer-and-director bar, and a penny-stock bar.
Allegations in the National Storm, Deep Rock, and Global Beverage Complaint
The Commission's complaint filed in the Northern District of Oklahoma alleges that defendant Lindberg and other members of a Shell Creation Group (SCG) manipulated at least three penny stocks from 2004 through 2006, including NLST, DPRK, and GBVS.
The Commission's complaint charges Lindberg with violations of the securities-registration provisions and the anti-fraud provisions of the federal securities laws, specifically Sections 5(a), 5(c), and 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act and Rule 10b-5. Lindberg, without admitting or denying any allegations in the complaint, has agreed to a permanent injunction, an officer-and-director bar, and a penny-stock bar.
Acknowledgements
The Commission acknowledges the assistance of the U.S. Attorney's Office for the Northern District of Oklahoma, the Federal Bureau of Investigation; the Internal Revenue Service; the U.S. Postal Inspection Service; and FINRA.
The Commission's investigations in these matters are ongoing. [SEC v. Homeland Safety International, Inc. F/K/A Sniffex, Inc.; Mark B. Lindberg, Petar D. Mihaylov, Yuri Markov, Paul B. Johnson, and Nicholas V. Klausgaard and Ilona V. Klausgaard, Civil Action No. 3:08 CV 11970 (N.D. Tex.); SEC v. Mark B. Lindberg, Civil Action No. 08 CV 402 CVE SAJ (N.D. Okla.)] (LR-20645)
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SELF-REGULATORY ORGANIZATIONS
Approval of Proposed Rule Change
The Commission approved a proposed rule change (SR-NASDAQ-2008-031) filed by the NASDAQ Stock Market under Section 19(b)(1) of the Exchange Act. The approved rule change requires foreign private issuers be eligible to participate in the Direct Registration System administered by a clearing agency registered under Section 17A of the Act unless the laws or regulations of the issuer's home country prohibit compliance with the rule. Publication is expected in the Federal Register during the week of July 21. (Rel. 34-58125)
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Immediate Effectiveness of Proposed Rule Change
A proposed rule change filed by the Chicago Board Options Exchange to delete references to Hybrid 2.0 Platform and Hybrid 2.0 Option Classes (SR-CBOE-2008-67) has become immediately effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 21. (Rel. 34-58153)
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SECURITIES ACT REGISTRATIONS
Latest Securities Act registrations (TXT)
--------------------------------------------------------------------------------
RECENT 8K FILINGS
Latest 8-K filings (TXT)
http://www.sec.gov/news/digest/2008/dig071608.htm
July 15, 2008 SEC News Digest
Issue 2008-136
ENFORCEMENT PROCEEDINGS
In the Matter of GSI Securitization Ltd. (n/k/a GSI Securitization, Inc.)
An Administrative Law Judge has issued an Order Making Findings and Revoking Registrations by Default (Default Order) in the matter of GSI Securitization Ltd. (n/k/a GSI Securitization, Inc. The Order Instituting Proceedings alleged that GSI Securitization Ltd. (n/k/a GSI Securitization, Inc.), Interliant, Inc. (n/k/a I Successor Corp.), Namibian Minerals Corp., Nix Co., Ltd., Number Nine Visual Technology Corp., and Oncor, Inc., each failed repeatedly to file required annual and quarterly reports while their securities were registered with the Securities and Exchange Commission.
On July 14, the Commission accepted an offer of settlement from GSI Securitization Ltd. (n/k/a GSI Securitization, Inc.).
The Default Order finds these allegations to be true as to the other five Respondents. It revokes the registrations of each class of registered securities of Interliant, Inc. (n/k/a I Successor Corp.), Namibian Minerals Corp., Nix Co., Ltd., Number Nine Visual Technology Corp., and Oncor, Inc., pursuant to Section 12(j) of the Securities Exchange Act of 1934. (Rel. 34-58151; File No. 3-13044)
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In the Matter of Amit Mathur
On July 14, the Commission settled an administrative proceeding previously instituted against Massachusetts-based investment adviser Amit Mathur. In an Order Making Findings and Imposing Remedial Sanctions Pursuant to Section 203(f) of the Investment Advisers Act of 1940 (Order) instituted on July 14, 2008, the Commission imposed, by consent, a bar against Mathur from association with any investment adviser pursuant to Section 203(f) of the Advisers Act. The Commission imposed the sanction based on the Mathur's May 16, 2008 criminal conviction, when a jury found Mathur guilty of 20 counts of mail and wire fraud in violation of Title 18 United States Code, Sections 1341, 1342 and 1343 before the United States District Court for the District of Massachusetts, in United States v. Amit Mathur, Case No. 4:06-CR-40034FDS.
The Commission's Order included findings that during the relevant period, Mathur acted as an investment adviser not registered with the Commission and was a person associated with an unregistered investment adviser, Entrust Capital Management LLC (Entrust). In addition, the counts of the criminal indictment to which Mathur was found guilty alleged that, while acting as an investment adviser, Mathur engaged in a scheme to defraud that involved (a) misappropriation of millions of dollars of funds that Entrust's clients had provided Entrust for the purpose of investment in specific securities and in the Entrust hedge fund; and (b) misrepresentation of how money was invested and of how the hedge fund was performing, which misrepresentation was designed to induce clients to transmit funds to Entrust and to conceal the misappropriation of funds and losses experienced in the hedge fund. The criminal indictment also alleged that: (a) from approximately September 2001 until approximately March 2005, approximately fifteen clients invested approximately $16 million with Entrust to fund investments in publicly traded securities; (b) during the period from September 2001 to March 2005, Mathur represented to each of Entrust's clients that Entrust was achieving positive rates of return and that the Entrust portfolio was consistently growing in value. In fact, during the life of the Entrust hedge fund, the fund lost value every month but one. Mathur was aware of these trading losses; and (c) Mathur also never disclosed to Entrust's clients that he was diverting substantial amounts of their funds for his personal use.
In view of these findings, the Commission found it appropriate and in the public interest to impose a bar from association with any investment adviser against Mathur. Mathur consented to the entry of the Order without admitting or denying the findings contained in the Order. (Rel. IA-2754; File No. 3-13053).
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Delinquent Filers' Stock Registrations Revoked
The registrations of the stock of Borough Corp., Canticle Corp., Emerald Acquisition Corp., Erebus Corp., Forward Acquisition Corp., Hercules Acquisition Corp., Jubilee Acquisition Corp., Proteque Corp., and Tecnomatic International Corp. have been revoked. None had filed any annual or quarterly reports with the Securities and Exchange Commission for six or more years. Thus, each violated a crucial provision of the federal securities laws that requires public corporations to publicly disclose current, accurate financial information so that investors may make informed decisions. The revocations were ordered in an administrative proceeding before an administrative law judge. (Rel. 34-58159; File No. 13082)
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SELF-REGULATORY ORGANIZATIONS
Proposed Rule Change
The National Securities Clearing Corporation filed a proposed rule change (SR-NSCC-2007-08) under Section 19(b)(1) of the Exchange Act that would allow NSCC to amend the its rules as they relate to membership disqualification criteria in an effort to create more uniformity between the rules of NSCC and the rules of NSCC's affiliates, Fixed Income Clearing Corporation and The Depository Trust Company. Publication is expected in the Federal Register during the week of July 14. (Rel. 34-58123)
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Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed by NYSE Arca (SR-NYSEArca-2008-72) relating to the Exchange's Quarterly Options Series Pilot Program has become immediately effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 14. (Rel. 34-58130)
A proposed rule change filed by Boston Stock Exchange relating to a new Quote Removal Mechanism Upon Technical Disconnect (SR-BSE-2008-40) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 14. (34-58140)
A proposed rule change filed by International Securities Exchange relating to linkage fees (SR-ISE-2008-52) has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 14. (Rel. 34-58143)
A proposed rule change filed by the Philadelphia Stock Exchange relating to transaction charges applicable to Linkage "P" and "P/A" Orders (SR-Phlx-2008-49) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 14. (Rel. 34-58144)
A proposed rule change filed by the International Securities Exchange (SR-ISE-2008-53) relating to fee changes has become immediately effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 14. (Rel. 34-58147)
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SECURITIES ACT REGISTRATIONS
Latest Securities Act registrations (TXT)
--------------------------------------------------------------------------------
RECENT 8K FILINGS
Latest 8-K filings (TXT)
http://www.sec.gov/news/digest/2008/dig071508.htm
July 14, 2008 SEC News Digest
Issue 2008-135
COMMISSION ANNOUNCEMENTS
Wayne Strumpfer Named To Head Investor Education Unit
On July 11, the Securities and Exchange Commission announced that Wayne Strumpfer has been named to lead the investor education unit within the SEC's recently expanded Office of Investor Education and Advocacy. Mr. Strumpfer will be responsible for leading the SEC's efforts to help Americans of all ages better learn how to invest wisely and avoid costly mistakes and financial scams.
The Office of Investor Education and Outreach is one of four units created within the SEC's Office of Investor Education and Advocacy (OIEA) after SEC Chairman Christopher Cox directed an expansion of the Commission's investor advocacy and outreach initiatives beginning last year. Mr. Strumpfer joined the SEC's OIEA staff this week as Assistant Director, Investor Education. He worked most recently at the California Department of Corporations, where he was the Deputy Commissioner of Enforcement and Investor Education. He also has served as the Chairman of the Investor Education Section for the North American Securities Administrators Association.
"I am so pleased that Wayne has agreed to join the SEC staff," said Kristi Kaepplein, Director of the SEC's Office of Investor Education and Advocacy. "Wayne's experience in investor education and outreach as well as in securities law enforcement and fraud victim assistance for the nation's most populous state will greatly benefit the Commission and the investors we serve."
Mr. Strumpfer said, "I am looking forward to this new opportunity with the SEC to serve individual investors on a national level and help ensure they are armed with the requisite knowledge to make wise investments."
In addition to his prior duties as Deputy Commissioner in California, Mr. Strumpfer has worked closely with many state and federal regulators to promote investor education and financial literacy. During his tenure in California, the state enhanced its nationally recognized senior protection project and created a program to assist military members and their families to avoid financial fraud. On a national level, Mr. Strumpfer produced a publication aimed at educating law enforcement about securities fraud, and has coordinated investor education efforts in many states. He also served as a member of the Board of Trustees for the national Investor Protection Trust.
Prior to his tenure with the Department of Corporations, Mr. Strumpfer served as Deputy Attorney General and in other important legal and legislative roles in California, including Deputy Executive Director of the California District Attorneys Association, Executive Director of the Office of Criminal Justice Planning, and Executive Director of the Fair Political Practices Commission.
The SEC's Office of Investor Education and Advocacy was expanded last year by Chairman Cox to ensure that the views of individual investors inform the Commission's regulatory policies and disclosure initiatives. Among the Commission's key projects aimed at retail investors are educating senior investors about protecting themselves from securities fraud, promoting the use of "plain English" in investment disclosures, and informing investors how "interactive data" can make disclosures more useful to them. OIEA has contact with tens of thousands of individual U.S. investors each year through its investor assistance and education programs. The four units within OIEA are the Office of Investor Education and Outreach, the Office of Policy, the Office of the Freedom of Information Act, and the Office of Investor Assistance. (Press Rel. 2008-139)
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Securities Regulators to Examine Industry Controls Against Manipulation of Securities Prices Through Intentionally Spreading False Information
Prevention Effort Augments SEC's Ongoing Enforcement Investigations
Washington, DC, July 13, 2008-The Securities and Exchange Commission today announced that the SEC and other securities regulators will immediately conduct examinations aimed at the prevention of the intentional spread of false information intended to manipulate securities prices. The examinations will be conducted by the SEC's Office of Compliance Inspections and Examinations, as well as the Financial Industry Regulatory Authority and New York Stock Exchange Regulation, Inc.
The securities laws require that broker-dealers and investment advisers have supervisory and compliance controls to prevent violations of the securities laws, including market manipulation. Examiners will focus on these controls and whether they are reasonably designed to prevent the intentional creation or spreading of false information intended to affect securities prices, or other potentially manipulative conduct.
These examinations are in addition to the Commission's enforcement investigations into alleged intentional manipulation of securities prices through rumor-mongering and abusive short selling that are already underway.
"The examinations we are undertaking with FINRA and NYSE Regulation are aimed at ensuring that investors continue to get reliable, accurate information about public companies in the marketplace," said SEC Chairman Christopher Cox. "They will also provide an opportunity to double-check that broker-dealers and investment advisers have appropriate training for their employees and sturdy controls in place to prevent intentionally false information from harming investors."
FINRA, NYSE Regulation and the Options Regulatory Surveillance Authority recently reminded industry firms that intentionally spreading false rumors or engaging in collusive activity to affect the financial condition of an issuer are violative activities, and further reminded market participants to review their internal controls and procedures to prevent this type of conduct.
(http://www.finra.org/PressRoom/NewsReleases/2008NewsReleases/P038211 (Press Rel. 2008-140)
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Greg Burton Named Corporation Finance Division Academic Accounting Fellow
The Securities and Exchange Commission's Division of Corporation Finance today announced the selection of Greg Burton as the Academic Accounting Fellow for a one-year term beginning this month.
"The value of the Academic Accounting Fellow program becomes more evident as we address more complex accounting and reporting issues. I am delighted that Greg will be joining us, and our accounting staff looks forward to working with him," said Wayne Carnall, Chief Accountant in the Division of Corporation Finance.
Mr. Burton is the Deloitte & Touche Fellow and Associate Professor of Accounting at Brigham Young University in Provo, Utah, where he teaches auditing, risks and controls, and international business at both the undergraduate and graduate level. He has been honored with several teaching awards, and has published in Contemporary Accounting Research, Accounting Organizations and Society, Research in Accounting Regulation, and the Journal of Information Systems. His research spans fraud, market behavior, audit, and international accounting topics. Mr. Burton earned a Ph.D. from the University of South Carolina and both bachelors and masters degrees from Utah State University. In addition to his academic qualifications, he has professional experience with KPMG, most recently as a senior manager in the firm's Los Angeles office.
Academic Accounting Fellows in the Division of Corporation Finance serve as a research resource for the staff on current financial reporting and auditing issues. In addition, Academic Fellows work with the Division staff to address issues involving difficult and unusual accounting, auditing and financial reporting questions, participate in rulemaking projects, and review filings by public companies to identify significant accounting and disclosure problems.
Cheryl Linthicum, the outgoing Academic Accounting Fellow, is Associate Professor of Accounting at the University of Texas in San Antonio. While at the Commission, Ms. Linthicum worked on International Financial Reporting Standards (IFRS) related issues, including filing reviews and staff training, and assisted in addressing a number of policy initiatives.
"Cheryl was a valuable member of our team and made a significant contribution to our mission during her tenure," said Mr. Carnall. (Press Rel. 2008-141)
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Meridith Mitchell Named SEC Deputy General Counsel
The Securities and Exchange Commission announced today that Meridith Mitchell has been named the agency's Deputy General Counsel for Legal Policy and Administrative Practice.
Ms. Mitchell fills the position previously held by Alexander F. Cohen, who recently became the SEC's Deputy Chief of Staff. She joins Andrew N. Vollmer, who is Deputy General Counsel for Litigation and Adjudication.
Since 2000, Ms. Mitchell has been the Principal Associate General Counsel of the SEC. As part of the senior management team in the Office of the General Counsel, Ms. Mitchell has played a key role in providing legal and policy advice to the Commission on its regulatory and enforcement programs.
The SEC's General Counsel, Brian Cartwright, said, "The Commission is fortunate indeed to have someone of Meridith's caliber in this role. Her background as Principal Associate General Counsel and her leadership of the Office of Legal Policy make her uniquely qualified for the challenges of her new position. She brings to the task an encyclopedic knowledge of not only the securities laws but also administrative law. During her career at the SEC, she has worked with five Chairmen, eight General Counsels, many Commissioners and countless Division and Office heads and other staff throughout the agency. She is deeply committed to the mission of the SEC. Since I have been at the Commission, I have benefited from her judgment and experience on a daily basis. I could not be more delighted that she has agreed to serve in this new capacity."
Ms. Mitchell said, "I have a deep respect for the talented staff of the General Counsel's Office who work tirelessly in support of the Commission and its Divisions and Offices, and I take great pride in their work on behalf of America's investors. I also have had the honor of learning from the outstanding General Counsels with whom I have worked. I look forward to continuing to work alongside the staff in my new role, and I thank Chairman Cox and Brian Cartwright for this wonderful opportunity."
Ms. Mitchell joined the SEC's Office of General Counsel as a staff attorney in 1992. Prior to her role as Principal Associate General Counsel, Ms. Mitchell was Senior Counselor to the General Counsel, Counsel to Commissioner Paul R. Carey, Assistant General Counsel and Special Counsel for Corporation Finance and Accounting, and a Staff Member of the Advisory Committee on the Capital Formation and Regulatory Processes. Ms. Mitchell has received numerous awards for her dedicated work at the Commission, including the Chairman's Award for Excellence, the Capital Markets Award, the Law and Policy Award, and the Distinguished Service Award - the Commission's highest honor. Before joining the SEC, Ms. Mitchell was at Wolf, Block, Schorr & Solis-Cohen in Philadelphia, where she specialized in corporate and securities law. She earned her J.D. from Columbia Law School and B.A. from Oberlin College. (Press Rel. 2008-142)
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Notice of Meeting of SEC Advisory Committee on Improvements to Financial Reporting
The Securities and Exchange Commission Advisory Committee on Improvements to Financial Reporting is providing notice that it will hold a public telephone conference meeting on Thursday, July 31, 2008 beginning at 1:00 pm. Members of the public may take part in the meeting by listening to the webcast accessible on the Commission's Web site at www.sec.gov or by calling telephone number (888) 285-4585 and using code number 578070. Persons needing special accommodations to take part because of a disability should notify James L. Kroeker, Deputy Chief Accountant, or Shelly C. Luisi, Senior Associate Chief Accountant, at (202) 551-5300, Office of the Chief Accountant, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-6561.
The agenda for the meeting includes adoption of the Committee's final report to the Commission. The Committee may also discuss written statements received and other matters of concern. The public is invited to submit written statements for the meeting, including any comments on the draft final report discussed at the Committee's July 11, 2008 open meeting available at http://www.sec.gov/about/offices/oca/acifr.shtml. (Rels. 33-8942; 34-58146; File No. 265-24)
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ENFORCEMENT PROCEEDINGS
Alex Rabinovich Barred From Association With Any Broker, Dealer, or Investment Adviser
On July 11, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Section 203(f) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions (Order) against Alex Rabinovich. The Order finds that from at least November 2003 through at least November 2007, Rabinovich, a self-described "private wealth manager," acted as an unregistered investment adviser and was associated with Rabinovich & Associates, L.P., an unregistered broker-dealer and unregistered investment company. At all relevant times, Rabinovich was the general partner of Rabinovich & Associates, and was responsible for the day-to-day operations and management of the firm. Rabinovich, aged 29, is a resident of Brooklyn, New York.
The Order further finds that on March 14, 2008, Rabinovich pleaded guilty to one count of securities fraud in violation of Title 15, United States Code, Sections 78j(b) and 78ff; Title 17, Code of Federal Regulations, Section 240.10b-5; and Title 18, United States Code, Section 2, before the United States District Court for the Southern District of New York, in U.S. v. Alex Rabinovich, Crim. Information No. 1:08-Cr-220 (DC). The count of the criminal information to which Rabinovich pleaded guilty alleged that Rabinovich violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder by soliciting investments in Rabinovich & Associates by means of materially false and misleading statements. Specifically, the information alleged that from in or about December 2003, up to and including in or about November 2007, Rabinovich fraudulently obtained approximately $2,312,822 from approximately 137 investors by falsely claiming, inter alia, that Rabinovich & Associates (a) maintained offices on Wall Street and was a member of the National Association of Securities Dealers, the New York Stock Exchange, and the Securities Investor Protection Corporation; (b) had a history of generating extraordinary profits for investors; and (c) would use investors' funds to trade in the stock market or make other similar investments.
Based on the above, the Order bars Rabinovich from association with any broker, dealer, or investment adviser. Rabinovich consented to the issuance of the Order without admitting or denying any of the findings, except as to the Commission's jurisdiction over him and the subject matter of these proceedings, and the entry of his guilty plea. (Rels. 34-58148; IA-2752; File No. 3-13089)
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In the Matter of Michael Sassano, Dogan Baruh, Robert Okin, and R. Scott Abry
On July 11, the Commission issued a settled order (Order) against Dogan Baruh (Baruh) in a previously instituted administrative proceeding.
The Order finds that Baruh, a former registered representative (RR) at CIBC World Markets Corp. (CIBC) and Fahnestock & Co., Inc. (Fahnestock), engaged in a scheme to defraud mutual fund companies. Between June 1998 and September 2003, Baruh and certain other registered representatives (the brokers) actively assisted market timing customers in deceiving mutual funds. CIBC, Fahnestock and the brokers received hundreds of letters and emails from mutual funds regarding their market timing trading activities. Baruh and the brokers repeatedly ignored these communications, and continued to work with their market timing customers to implement their market timing strategies up until the point when mutual funds threatened to terminate their dealer agreements with CIBC or Fahnestock. Among the deceptive practices that Baruh and the brokers engaged in on behalf of their customers were the following: (a) using new account numbers for blocked customer accounts; (b) creating new RR numbers to disguise themselves and their customers from the mutual funds; (c) trading in smaller amounts in order to avoid detection by the mutual funds, including using an in-house electronic trading platform to break up trades into small dollar volumes; (d) using annuities to avoid restrictions on market timing; (e) using the investment adviser trading platforms of two broker-dealers, Charles Schwab & Co., Inc. and FMR Corp., to continue market timing mutual funds that had previously blocked Baruh's customers' trading; and (f) on one instance, sending trades from a different branch to deceive the mutual funds about the origins of the trade. Additionally, Baruh accepted orders from a hedge fund client for the purchase or sale of mutual fund shares after 4:00 p.m. ET, and submitted those orders for processing as if they had been received prior to 4:00 p.m. ET. As a result of his conduct, Baruh willfully violated Section 17(a) of the Securities Act of 1933 (Securities Act), Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, willfully aided and abetted and caused his customers' violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, willfully aided and abetted and caused CIBC's violations of Section 15(c) of the Exchange Act and Rule 10b-3, and willfully aided and abetted and caused CIBC's violations of Rule 22c-1, as adopted under Section 22(c) of the Investment Company Act.
Based on the above, the Order directs Baruh to cease and desist from committing or causing any violations and any future violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and from causing any violations and any future violations of Section 15(c) of the Exchange Act and Rule 10b-3 thereunder and Rule 22c-1 promulgated under Section 22(c) of the Investment Company Act. The Order bars Baruh from association with any broker, dealer or investment adviser, and is prohibited from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter. Finally, the Order directs Baruh to pay disgorgement of $1 and a civil money penalty in the amount of $325,000. Baruh consented to the issuance of the Order without admitting or denying the Commission's findings, except as to the Commission's jurisdiction over him and the subject matter of the proceedings.
For further information, see: Rel. No. 33-8592 (July 20, 2005); Rel. No. 3-12554 (Jan. 31, 2007); Rel No. 55209 (Jan. 31, 2007); Rel. No. 34-57880 (May 28, 2008); Rel. No. 34-57879 (May 28, 2008). (Rels. 33-8943; 34-58150; IA-2753; IC-28330; File No. 3-12554)
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Commission Revokes Registration of Securities of GSI Securitization Ltd. (n/k/a GSI Securitization, Inc.) for Failure to Make Required Periodic Filings
On July 14, the Commission revoked the registration of each class of registered securities of GSI Securitization Ltd. (n/k/a GSI Securitization, Inc.) (GSII) for failure to make required periodic filings with the Commission.
Without admitting or denying the findings in the order, except as to jurisdiction, which it admitted, GSII consented to the entry of an Order Making Findings and Revoking Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of 1934 as to GSI Securitization Ltd. (n/k/a GSI Securitization, Inc.) finding that it had failed to comply with Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 13a-1 and 13a-13 thereunder and revoking the registration of each class of GSII's securities pursuant to Section 12(j) of the Exchange Act. This order settled the charges brought against GSII in In the Matter of GSI Securitization Ltd. (n/k/a GSI Securitization, Inc.), et al., Administrative Proceeding File No. 3-13044.
Brokers and dealers should be alert to the fact that Exchange Act Section 12(j) provides, in pertinent part, as follows:
No member of a national securities exchange, broker, or dealer shall make use of the mails or any means or instrumentality of interstate commerce to effect any transaction in, or to induce the purchase or sale of, any security the registration of which has been and is suspended or revoked . . . .
For further information see Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934, In the Matter of GSI Securitization Ltd. (n/k/a GSI Securitization, Inc.), et al., Administrative Proceeding File No. 3-13044, Exchange Act Release No. 57868 (May 27, 2008). (Rel. 34-58151; File No. 3-13044)
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In the Matter of Amaroq Asset Management, LLC
An Administrative Law Judge has issued an Initial Decision in the matter of Amaroq Asset Management, LLC.
The Order Instituting Proceedings (OIP) alleges that Amaroq Asset Management, LLC (Amaroq), a registered investment adviser, willfully violated Section 204 of the Investment Advisers Act of 1940 (Advisers Act) and Advisers Act Rules 204-1 and 204-2(f). It also alleges that Dwight Andree Sean O'Neal Jones (Jones), the firm's sole stockholder and principal, willfully aided and abetted and caused Amaroq's violations.
The OIP charges that Jones failed to maintain or produce Amaroq's advisory business records and make them available for review by the Commission's staff, as required by law. It further charges that Amaroq failed to file three annual amendments to its Form ADV and failed promptly to notify the Commission when it changed the location of its principal business office, as also required by law. Finally, the OIP alleges that, although Jones claimed that Amaroq discontinued its advisory business in 2004, Amaroq never notified the Commission of its purported discontinuation, as also required by law. To the contrary, until mid-2007, Amaroq continued to promote its wealth management program on the internet, where it represented that it was "subject to periodic SEC examinations."
The matter was the subject of a two-day hearing in San Francisco, California, in January 2008. The Initial Decision sustains most of the charges in the OIP. It dismisses the charge that Amaroq willfully violated Advisers Act Rule 204-2(f), and that Jones willfully aided and abetted and caused that violation. The Initial Decision orders Amaroq and Jones to cease and desist from committing or causing violations of Section 204 of the Advisers Act and Advisers Act Rule 204-1. It revokes Amaroq's registration as an investment adviser and bars Jones from associating with any investment adviser, with a right to apply for association after one year. Finally, the Initial Decision imposes a civil penalty of $15,000 against Jones. (Initial Decision No. 351; File No. 3-12822)
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Clarence Friend Barred
Clarence Friend, of Fountain Valley, California, has been barred from association with any broker-dealer. The sanctions were ordered in an administrative proceeding before an administrative law judge, following a court-ordered injunction against him. In April 2008, Friend was enjoined from committing further violations of the antifraud and registration provisions of the securities laws based on misconduct that occurred during 2004 to 2005.
Friend violated the securities laws in connection with the sale of unregistered stock in AirTrac, Inc., of which he was the founder and controlling shareholder. Friend and others raised approximately $1.8 million from over 200 investors in what the U.S. District Court for the Central District of California described as a well-thought-out and long-running attempt to accumulate millions of dollars in investor funds based on patently false information. (Initial Decision No. 352; File No. 3-13017)
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SEC Charges Stock Based Loan Companies and Their Owners With Fraud; Judge Enters Temporary Restraining Order
The Commission today announced that on July 10, it filed a civil action in the U.S. District Court for the Southern District of Ohio charging convicted felon Michael Spillan, his wife Melissa Spillan, and their companies, One Equity Corporation, Triangle Equities Group, Inc., Victory Management Group, Inc. and Dafcan Finance, Inc. (collectively, the One Equity Companies) with operating an ongoing fraudulent stock loan program.
The Commission's complaint alleges that, since at least 2004, the Spillans, who are residents of Gahanna, Ohio, and the One Equity Companies, which are located in Westerville, Ohio, raised approximately $70 million from 125 borrowers by holding themselves out as stock based lenders, underwriters, or administrators. According to the complaint, the defendants raised the money by inducing borrowers to transfer ownership of millions of shares of publicly traded stock to them as collateral for purported non-recourse loans based on a false promise to return the shares to borrowers who repaid their loans. In fact, the defendants generally sold all of the stock received from borrowers before funding each loan. After funding each loan, the Spillans did not set aside any cash reserves to repurchase and return shares to borrowers who repaid their loans. Instead, they used all of the money to pay expenses, including over $1 million in salaries and benefits to themselves.
In an order dated July 10, the Honorable Judge Edmund A. Sargus, Jr. entered a temporary restraining order that, among other things, prohibits defendants from making any loans, making any disbursements from business accounts without prior Court approval, paying salaries to the Spillans, and destroying or discarding any relevant financial records. [SEC v. One Equity Corp., et al., Civil Action No. C2-08-667, USDC, S.D. Ohio] (LR-20643)
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SEC Charges Co-CEOs of Mobile Phone Marketing Company with "Pump and Dump" Stock Fraud
The Commission today announced the filing of a civil action in the United States District Court for the Northern District of Georgia against Mobile Ready Entertainment Corp. (Mobile Ready) and its former co-chief executive officers Michael H. Magolnick (Magolnick) and Craig A. Mora (Mora). The Commission alleges that, between January and July 2007, Magolnick and Mora, acting through Mobile Ready, created artificial demand for Mobile Ready stock through the issuance of false and misleading press releases that contained baseless revenue projections and identified contracts for future business that did not exist. These false and misleading press releases inflated the per share price and trading volume of Mobile Ready. The complaint alleges that Magolnick and Mora thereafter made additional false statements in efforts to obtain unfounded legal opinion letters supporting their sales of Mobile Ready shares, which were not freely tradable. As a result of their efforts to artificially inflate the market for Mobile Ready stock and their obtaining baseless legal opinions supporting their sales, Magolnick and Mora sold personal holdings of more than 2 million restricted shares each.
The Commission alleges that, by their misconduct, defendants violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and that Magolnick and Mora further violated Sections 5(a) and 5(c) of the Securities Act of 1933. The Commission seeks against the defendants permanent injunctive relief, and, with respect to Magolnick and Mora, an accounting, disgorgement of ill-gotten gains plus prejudgment interest, civil penalties, and penny-stock and officer-director bars. [SEC v. Mobile Ready Entertainment Corp., Michael H. Magolnick and Craig A. Mora, Case No. 1:08-CV-2263, (Northern District of Georgia (Atlanta Division)] (LR-20644)
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SELF-REGULATORY ORGANIZATIONS
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change (SR-CBOE-2008-68), filed by the Chicago Board Options Exchange to amend the CBOE Fees Schedule has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 14. (Rel. 34-58127)
A proposed rule change filed by the Boston Stock Exchange (SR-BSE-2008-37) to extend the current Pilot Program for Quarterly Options Series on the Boston Options Exchange facility has become immediately effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 14. (Rel. 34-58131)
The Commission issued notice of filing and immediate effectiveness of a proposed rule change (SR-NYSE-2008-55) filed by the New York Stock Exchange under Rule 19b-4 of the Securities Exchange Act of 1934 amending Rule 17 to address issues related to vendor liability. Publication is expected in the Federal Register during the week of July 14. (Rel. 34-58137)
A proposed rule change filed by the International Securities Exchange relating to changes to the fee schedule (SR-ISE-2008-54) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 14. (Rel. 34-58139)
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Proposed Rule Changes
NYSE Arca, through its wholly owned subsidiary, NYSE Arca Equities, Inc., filed a proposed rule change (SR-NYSEArca-2008-70) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 amending NYSE Arca Equities Rule 5.2(j)(6)(B)(I), the Generic Listing Standard for Equity Index-Linked Securities. Publication is expected in the Federal Register during the week of July 14. (Rel. 34-58142)
The NASDAQ Stock Market filed a proposed rule change under Rule 19b-4 (SR-NASDAQ-2008-016) to establish fees for Nasdaq Market Pathfinders Service. Publication is expected in the Federal Register during the week of July 14. (Rel. 34-58145)
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SECURITIES ACT REGISTRATIONS
Latest Securities Act registrations (TXT)
--------------------------------------------------------------------------------
RECENT 8K FILINGS
Latest 8-K filings (TXT)
http://www.sec.gov/news/digest/2008/dig071408.htm
July 11, 2008 SEC News Digest
Issue 2008-134
ENFORCEMENT PROCEEDINGS
Commission Revokes Registration of Securities of National Fruit and Vegetable Technology Corp. for Failure to Make Required Periodic Filings
On July 11, the Commission revoked the registration of each class of registered securities of National Fruit and Vegetable Technology Corp. (National Fruit) for failure to make required periodic filings with the Commission.
Without admitting or denying the findings in the order, except as to jurisdiction, which it admitted, National Fruit consented to the entry of an Order Making Findings and Revoking Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of 1934 as to National Fruit and Vegetable Technology Corp. finding that it had failed to comply with Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 13a-1 and 13a-13 thereunder and revoking the registration of each class of National Fruit's securities pursuant to Section 12(j) of the Exchange Act. This order settled the charges brought against National Fruit in In the Matter of National Fruit and Vegetable Technology Corp., et al., Administrative Proceeding File No. 3-13080.
Brokers and dealers should be alert to the fact that Exchange Act Section 12(j) provides, in pertinent part, as follows:
No member of a national securities exchange, broker, or dealer shall make use of the mails or any means or instrumentality of interstate commerce to effect any transaction in, or to induce the purchase or sale of, any security the registration of which has been and is suspended or revoked . . . .
For further information see Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934, In the Matter of National Fruit and Vegetable Technology Corp., et al., Administrative Proceeding File No. 3-13080, Exchange Act Release No. 58009 (June 24, 2008). (Rel. 34-58141; File No. 3-13080)
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Ralph Gregory Gibbs Sentenced to More Than Five Years in Prison for Mail Fraud in Connection With a Nationwide Ponzi Scheme
The Commission announced today that, in a judgment entered on July 2, 2008, Ralph Gregory Gibbs was sentenced in the United States District Court for the Eastern District of Virginia to 63 months (5 years and 3 months) in prison following his guilty plea to mail fraud. In support of his plea, Gibbs admitted that he engaged in a scheme to defraud numerous investors through a nationwide Foreign Currency Market (FOREX) Ponzi scheme.
On March 19, 2008, Gibbs pled guilty to mail fraud and the Commission filed a settled civil injunctive action in the U.S. District Court for the Eastern District of Virginia against Gibbs for operating a Ponzi scheme. S.E.C. v. Ralph Gregory Gibbs, Civil Action No. 3:08 CV 174 (E.D. Va.). The Commission's Complaint alleges that since at least April 2005 through February 2007, Gibbs, doing business as Golden Summit Group, raised approximately $21 million from at least 150 investors in at least 25 states through the offer and sale of securities. Based on Gibbs' promises that they would receive large returns on their investments and guaranteed returns of their principal, a significant number of the investors liquidated their retirement savings or obtained home equity loans to invest the money with Gibbs.
Simultaneous with the filing of the Commission's Complaint, and without admitting or denying the Commission's allegations, Gibbs consented to the entry of: a final judgment permanently enjoining him from future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; ordering him to pay disgorgement, plus prejudgment interest thereon, totaling $21,421,418, but based upon Gibbs' representations in his sworn statement of financial condition, waiving payment of all but the monies and assets Gibbs placed into a constructive trust for investors, namely $4,142,493 in cash, plus accumulated interest, two real estate properties and certain personal property; and not imposing a civil penalty based upon Gibbs' representations in his sworn statement of financial condition; and an order appointing a receiver to assume control of the constructive trust for liquidation and ultimate distribution to the injured investors. On March 27, 2008, the Court entered the Final Judgment and ordered the appointment of the receiver. For further information, please see Litigation Rel. No. 20503 (March 19, 2008). [U.S. v. Ralph Gregory Gibbs, Criminal No. 3:08CR100 (E.D. Va.)] (LR-20641)
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SEC Settles Securities Fraud Case With El Paso Corporation, Its Subsidiaries, And Several Former Employees
On July 11, the Commission filed a civil action against El Paso Corporation (El Paso), its subsidiaries El Paso CGP Company LLC (CGP) and El Paso Exploration & Production Co. (EPPH), and several former employees alleging that they inflated, or participated in the inflation of, the companies' proved natural gas and oil reserves in violation of the federal securities laws. The complaint names Rodney D. Erskine, the former president of El Paso's Exploration and Production Business Segment, Randy L. Bartley, the former senior vice president of El Paso's Exploration and Production Business Segment, and Steven L. Hochstein, John D. Perry, and Bryan T. Simmons, former vice presidents of El Paso's Exploration and Production Business Segment. According to the complaint, the defendants violated the antifraud provisions of the federal securities laws. The Commissions also alleges that El Paso, CGP, and EPPH violated, and Erskine, Bartley, Hochstein, Simmons, and Perry aided and abetted violations of, the reporting, books and records, and internal controls provisions of the Exchange Act. All defendants have agreed to settle the charges against them, without admitting or denying the Commission's allegations.
In 2004, El Paso restated its financial statements for years 1999 through 2002, and for the first nine months of 2003, reducing its previously reported proved natural gas and oil reserves at December 31, 2002, 2001, and 2000 by 2.2 trillion cubic feet equivalent of natural gas (TCFe), 3.3 TCFe, and 3.3 TCFe, respectively, and materially reducing its previously reported standardized measures of future cash flows. The total cumulative impact of the restatements reduced El Paso's stockholders' equity as of September 30, 2003 by $1.7 billion. CGP and EPPH also restated their previously issued financial statements to correct their material overstatements of proved natural gas and oil reserves, standardized measures of future cash flows, and capitalized costs relating to their natural gas and oil producing activities. The Commission's complaint alleges that, between 1998 and the quarter ended September 30, 2003, El Paso and its subsidiaries, with the assistance of the individual defendants, inflated its proved natural gas and oil reserves, overstated its standardized measure of future cash flows, and overstated its capitalized costs relating to its natural gas and oil producing activities.
Specifically, the Commission alleges that El Paso violated Section 17(a)(2) of the Securities Act, and Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder. El Paso consented to a judgment that permanently enjoins it from future violations of these provisions.
The Commission alleges that CGP violated Section 17(a) of the Securities Act, and Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, and 13a-13 thereunder. CGP consented to a judgment that permanently enjoins it from future violations of these provisions.
The Commission alleges that EPPH violated Section 17(a) of the Securities Act, and Sections 10(b), 13(b)(2)(A), 13(b)(2)(B), and 15(d) of the Exchange Act and Rules 10b-5, 12b-20, 15d-1, and 15d-13 thereunder. EPPH consented to a judgment that permanently enjoins it from future violations of these provisions.
The Commission alleges that Erskine and Bartley violated Section 17(a)(2) of the Securities Act, and Exchange Act Rules 13b2-1 and 13b2-2, and aided and abetted: i) El Paso and CGP's violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act, and Rules 12b-20, 13a-1, and 13a-13 thereunder; and ii) EPPH's violations of Sections 13(b)(2)(A), 13(b)(2)(B), and 15(d) of the Exchange Act and Rules 12b-20, 15d-1, and 15d-13 thereunder. Erskine and Bartley consented to judgments that permanently enjoin them from future violations of these provisions and order them to pay civil penalties of $75,000 and $40,000, respectively.
The Commission alleges that Hochstein violated Section 17(a) of the Securities Act, and Sections 10(b) and 13(b)(5) of the Exchange Act, and Rules 10b-5, 13b2-1, and 13b2-2 thereunder, and aided and abetted: i) El Paso and CGP's violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act, and Rules 12b-20, 13a-1, and 13a-13 thereunder; and ii) EPPH's violations of Sections 13(b)(2)(A), 13(b)(2)(B), and 15(d) of the Exchange Act and Rules 12b-20, 15d-1, and 15d-13 thereunder. Hochstein consented to a judgment that permanently enjoins him from future violations of these provisions and orders him to pay a $40,000 civil penalty.
The Commission alleges that Perry violated Section 17(a) of the Securities Act, and Sections 10(b) and 13(b)(5) of the Exchange Act, and Rules 10b-5, 13b2-1, and 13b2-2 thereunder, and aided and abetted: i) El Paso and CGP's violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act, and Rules 12b-20, 13a-1, and 13a-13 thereunder; and ii) EPPH's violations of Sections 13(b)(2)(A), 13(b)(2)(B), and 15(d) of the Exchange Act and Rules 12b-20, 15d-1, and 15d-13 thereunder, and iii) CGP and EPPH's violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Perry consented to a judgment that permanently enjoins him from future violations of these provisions and orders him to pay a $40,000 civil penalty.
The Commission alleges that Simmons violated Section 17(a) of the Securities Act, and Sections 10(b) and 13(b)(5) of the Exchange Act, and Rules 10b-5, 13b2-1, and 13b2-2 thereunder, and aided and abetted El Paso and CGP's violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act, and Rules 12b-20, 13a-1, and 13a-13 thereunder. Simmons consented to a judgment that permanently enjoins him from future violations of these provisions and orders him to pay a $40,000 civil penalty. [SEC v. El Paso Corporation, et. al., Civil Action No. 4:08-CV-02191, USDC, SDTX, Houston Division] (LR-20642; AAE Rel. 2844)
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SELF-REGULATORY ORGANIZATIONS
Proposed Rule Changes
The Depository Trust Company filed a proposed rule change (SR-DTC-2007-07) under Section 19(b)(1) of the Exchange Act that would amend the applicant disqualification criteria contained in its rules. Publication is expected in the Federal Register during the week of July 14. (34-58122)
A proposed rule change (SR-FINRA-2008-031) has been filed by the Financial Industry Regulatory Authority regarding a proposal to amend the arbitration Uniform Submission Agreement and related rules. Publication is expected in the Federal Register during the week of July 14. (Rel. 34-58124)
The Fixed Income Clearing Corporation filed a proposed rule change (SR-FICC-2007-04) under Section 19(b)(1) of the Securities Exchange Act. The proposed rule change would amend FICC's Government Securities Division's and Mortgage Backed Securities Division's rules concerning applicant disqualification criteria. Publication is expected in the Federal Register during the week of July 14. (Rel. 34-58128)
A proposed rule change (SR-ISE-2008-21) has been filed by the International Securities Exchange regarding a proposal to require members to integrate the responsibility for supervision of their public customer options business into their overall supervisory and compliance programs. In addition, the proposal would require members to strengthen their supervisory procedures and internal controls as related to their public customer options business. Publication is expected in the Federal Register during the week of July 14. (Rel. 34-58129)
The Financial Industry Regulatory Authority filed a proposed rule change (SR-FINRA-2008-025) pursuant to Section 19(b)(1) of the Securities Exchange Act and Rule 19b-4 thereunder that proposes to move current NASD Rule 2790 (Restrictions on the Purchase and Sale of Initial Equity Public Offerings) to the Consolidated FINRA Rulebook as FINRA Rule 5130 as well as proposing minor technical changes to the rule text. Publication is expected in the Federal Register during the week of July 14. (Rel. 34-58134)
A proposed rule change (SR-CBOE-2007-30) has been filed by the Chicago Board Options Exchange regarding a proposal to amend CBOE Rule 9.21 (Communications to Customers). Publication is expected in the Federal Register during the week of July 14. (Rel. 34-58138)
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Immediate Effectiveness of Proposed Rule Changes
The National Securities Clearing Corporation filed a proposed rule change (SR-NSCC-2008-04), which became effective upon filing pursuant to Section 19(b)(3)(A) of the Exchange Act, that amends membership rules and use of mutual fund services to allow an investment manager in a managed account program to access mutual fund services without money settlement. Publication is expected in the Federal Register during the week of July 14. (Rel. 34-58126)
A proposed rule change filed by the NASDAQ Stock Market regarding routing to affiliated exchanges (SR-NASDAQ-2008-061) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 14. (Rel. 34-58135)
A proposed rule change (SR-BSE-2008-41) filed by the Boston Stock Exchange relating to options based on shares of the SPDR® Gold Trust has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 14. (Rel. 34-58136)
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SECURITIES ACT REGISTRATIONS
Latest Securities Act registrations (TXT)
--------------------------------------------------------------------------------
RECENT 8K FILINGS
Latest 8-K filings (TXT)
http://www.sec.gov/news/digest/2008/dig071108.htm
Trading suspensions: TYTT -- Typhoon Touch Technologies, Inc.
7/18 - 7/31/08
34-58187: http://www.sec.gov/litigation/suspensions/2008/34-58187.pdf
Order: http://www.sec.gov/litigation/suspensions/2008/34-58187-o.pdf
C-SPAN re-airs important stuff like that. check the schedule, will you?
thanks
listened once
definitely worth
re-listening to
---
4kids
all jmo
The is the link to watch - it apparently takes 3 weeks or so for a transcript to hit their web site:
The short selling FRE and FNM discussion must have been in the Q&A.
http://banking.senate.gov/public/index.cfm?Fuseaction=Hearings.Detail&HearingID=8f6a9350-3d39-43a0-bbfb-953403ab19cc
US Senator Christopher J. Dodd
Chairman US Senator Richard Shelby
Ranking Member
Committee:
Title: Recent Developments in U.S. Financial Markets and Regulatory Responses to Them "Video Courtesy of C-Span"
Date: 7/15/08
Time: 11:30 AM
Place: 325 Russell Senate Office Building
Publication: Printable Hearing not available at this time
Member Statements
Witness Testimony
Panel 1
Honorable Henry M. Paulson , Jr., Secretary of the Treasury
The Honorable Ben S. Bernanke , Chairman, Board of Governors of the Federal Reserve System
Honorable Christopher Cox , Chairman, Securities and Exchange Commission
i'd try c-span
tho' imo it's
not worth the paper
it's written on
imo cox is either
so grossly incompetent
or on the take ..
maybe a combo of both
what doesn't this moron
get? nss is freaking illegal
honestly is there no common
sense or logic left ..
well -- when retail loses
ever more .. and as oil climbs
to 200 ppb .. and gold .. to 3k
-- maybe the natives will get
restless enough .. to shake off
the complacency and educate
themselves .. highly doubtful
but one can hope ..
---
http://www.c-span.org/
---
4kids
all jmo
I think the new rule is pretty gay.
The government needs to stop poking around in the free market. What is this, communism??
Testimony Concerning
Recent Developments in U.S. Financial Markets and Regulatory Responses
by Chairman Christopher Cox
U.S. Securities and Exchange Commission
Before the U.S. Senate Committee on Banking, Housing and Urban Affairs
July 15, 2008
Chairman Dodd, Senator Shelby, and Members of the Committee:
Thank you for this opportunity to describe the SEC's actions to deal with the recent developments in our financial markets.
Since the credit market crisis began with the deterioration of mortgage origination standards and a contagion of abusive lending practices, and then spread to the capital markets through securitization, the SEC has used its law enforcement and regulatory powers to contribute to orderly and liquid markets. We have acted in three main areas:
Investigation and prosecution of violations of the securities laws;
Regulation of problem areas in the markets, including credit rating agencies under recent authority granted us by Congress; and
Accounting and disclosure standards to bring hidden risk into the light.
Our work in these areas has been both national and international.
First and foremost, the SEC is a law enforcement agency. Our enforcement actions to address the capital markets turmoil have involved not only our Division of Enforcement and each of the agency's 11 regional offices, but also nearly every major SEC division and office, and every area of professional emphasis, through our agency-wide Subprime Task Force. We are also working closely with other federal and state law enforcement agencies.
The SEC has over four dozen pending law enforcement investigations in the subprime area. They fall primarily into three broad categories: first, subprime lenders; second, investment banks, credit rating agencies, insurers and others involved in the securitization process; and third, banks and broker-dealers who sold mortgage-backed investments to the public.
We are investigating whether mortgage lenders properly accounted for the loans in their portfolios, and whether they established appropriate loan loss reserves. In connection with the sale of mortgage-backed securities and collateralized debt obligations, we are investigating the role of the various parties involved in the securitization process. Among other things, we are focused on whether lenders adequately disclosed the risk profiles of underlying loans, whether they valued their portfolios appropriately, and whether they made adequate risk disclosures to investors.
We are also investigating whether investment banks and broker-dealers defrauded retail customers by making false representations, or by putting investors into unsuitable mortgage-backed investments.
As one example of these initiatives, just a few weeks ago the Commission brought enforcement actions against two portfolio managers of Bear Stearns Asset Management, whose hedge funds collapsed in June of last year. We allege that they deceived their investors and institutional counterparties about the financial state of the hedge funds, and in particular the hedge funds' over-exposure to subprime mortgage-backed securities. The collapse of the funds caused investor losses of over $1.8 billion. These cases, and others like them in the subprime area, are making it clear that vigorous investor protection extends to hedge funds, which are by no means unregulated when it comes to fraud. Those who commit fraud at the expense of investors will always be the target of a relentless SEC.
That same vigorous commitment to investors extends to our jealous protection of the integrity of public disclosure. Because the reliability of information about public companies in the marketplace is so important to market confidence, there have long been clear rules in place that prohibit market manipulation by knowingly spreading false rumors. But for the entirety of its 74-year history until 2008, the Commission had never brought an enforcement action of this kind.
It is probably because of the difficulty in tracing where a false rumor starts, and proving that it was knowingly false, that these cases haven't been brought in the past. But now the same technology that instantly spreads market rumors across the globe is also helping law enforcement track down the culprits. As a result, just a few weeks after the demise of Bear Stearns, we successfully sued a trader who used instant messages to other brokerage firms and hedge funds to spread fake information about a pending acquisition. The false rumors that he started caused the stock to drop by 17%, and wiped out $1 billion of market cap in the first 30 minutes. That caused the NYSE to halt trading in the company's securities. Following our enforcement action, the Commission not only hit the trader with penalties and other sanctions, but also banned him for life from the industry. If we are successful in bringing future cases like this, I believe the penalties should be commensurate with the enormous amount of shareholder value that is destroyed by this kind of wantonness toward other people's money.
For several months, we have had other active investigations underway concerning the possible manipulation of securities prices through various combinations of manufacturing false rumors and short selling in a number of cases that may have contributed to the increase in market volatility that is impacting so many ordinary investors. In addition, the Commission has joined with other securities regulators in undertaking industry-wide sweep examinations that will include hedge fund advisers, aimed at preventing the spread of intentionally false rumors to manipulate securities prices. Our examiners will focus on whether firms and advisers have proper controls in place, and whether those controls are reasonably designed to prevent the intentional creation or spreading of false information intended to affect securities prices, as well as other potentially manipulative conduct.
In addition to enforcing our existing regulations, the Commission is also using our authority to promulgate new rules to address serious issues that have arisen in the subprime crisis.
We are using our new authority under the Credit Rating Agency Reform Act to write sweeping new regulations to deal with one of the most significant problem areas that led to the spread of the subprime crisis. Until the passage of this landmark legislation, the credit rating industry has been largely unregulated. Now, in the 10 months since the first firms became registered under the new law, they are subject to thorough-going regulation of everything from their public disclosures, to their management of conflicts of interest, to their ability to prevent unfair, abusive, or coercive behavior in the ratings process.
The new law also gave us the authority to examine these firms, and we have been aggressively using it. Our examinations have focused on the rating agencies' processes for rating subprime residential mortgage-backed securities and collateralized debt obligations. We've looked at whether they followed impartial procedures for determining credit ratings, or instead diverged from their stated methodologies in order to publish higher ratings. As you know, we recently provided to the Committee a complete report of our staff's findings in these examinations. The report describes serious shortcomings in the three largest credit ratings agencies, including a lack of disclosure to investors and the public, inadequate policies and procedures to manage the rating process, and insufficient attention to conflicts of interest.
All of the issues that we identified in these examinations are being squarely addressed through real-time supervision, and through new rulemaking. Our proposed new rules directly address concerns about the integrity of the firms' ratings procedures and methodologies. They also address conflicts of interest and require disclosures that are specifically designed to increase the transparency and accountability of the firms and their ratings. Our proposed rules also require that a rating agency differentiate the ratings it issues on structured products from those it issues on corporate bonds through the use of different symbols, or by issuing a report explaining the differences. The new rules would also clarify for investors the limits of credit ratings, and the purposes for which they're suited.
Even before these new rules take effect, the firms themselves have committed to the SEC that they will make changes in their own procedures. Each of the firms we recently examined has agreed to take remedial measures as recommended in our report. In addition to following up with these firms to evaluate whether they have in fact complied, we will also initiate examinations of each of the other credit rating agencies registered with the SEC in the coming months.
The subprime crisis was also deepened by problems with disclosure and accounting. In recent months our Division of Corporation Finance has asked financial institutions to provide additional disclosure regarding both off-balance sheet arrangements and the application of fair value to financial instruments. The Division also provided suggestions to improve the transparency and content of this disclosure to investors. It encouraged disclosure about the types of events that could require consolidation of off-balance sheet arrangements, as well as the implications of consolidating if it were to occur. And it encouraged disclosures that would help an investor understand the significance of fair value measurements, including how they were determined by management and the judgments used by management. Financial institutions have improved their disclosures in subsequent public filings by taking into consideration these suggestions.
A related set of issues concerns the application of accounting rules to balance sheet consolidation and fair value accounting. The Commission's Chief Accountant has asked the Financial Accounting Standards Board to revisit the underlying accounting guidance to determine whether the subprime experience points to the need for changes. This review by the FASB is currently underway.
Yet another pathology of the subprime crisis has been the difficulty of applying fair value accounting rules to assets for which there is no current market. Last Wednesday, the Commission hosted a Roundtable to hear from market participants and regulators about the challenges of the current fair value accounting and auditing regime. While the consensus of the panelists was that fair value standards provide important discipline for market participants and important information to investors, there were calls for additional information on how best to implement these standards at the margin, and especially in today's challenging market conditions. We are now working with both FASB and the PCAOB to tackle that challenge.
Since the events of mid-March that culminated in the Bear Stearns acquisition, the SEC has broadly engaged with other regulators on issues related to capital and liquidity. The lessons from recent market events were clear when it came to both securities regulators' and bank regulators' analysis of the adequate levels of both capital and liquidity. The SEC has broadly strengthened liquidity requirements for the largest investment banks. We are closely scrutinizing the secured funding activities of each CSE firm, to encourage the establishment of additional term funding arrangements and to reduce their dependency on "open" transactions.
Working together with the Federal Reserve, we have developed additional stress scenarios in light of the Bear Stearns experience that are focused on shorter duration but more extreme events. These scenarios entail a substantial loss of not only unsecured funding, but secured funding as well. They also assume no access to the Fed's liquidity facilities. And we are continually discussing with CSE senior management their longer-term funding plans, including specifically their plans for selling risky assets and raising new capital — both equity and long-term debt.
Our recently concluded Memorandum of Understanding with the Federal Reserve Board is facilitating this cooperation as well as our joint work in a number of other important areas, including anti-money laundering, bank brokerage activities under the Gramm-Leach-Bliley Act, the regulation of transfer agents, and clearance and settlement in the banking and securities industries.
This cooperative focus on clearance and settlement is especially important when it comes to the over-the-counter derivatives markets, where the investment banks the SEC supervises are some of the most active participants. To enhance their operational capacity, we are encouraging the firms to reduce their gross exposures by tearing up, or netting, offsetting positions. And they are doing this — both bilaterally with trading partners, and multilaterally through vendor-provided solutions. The SEC, the Fed, and other regulators are also discussing whether and how the market for OTC derivatives contracts might benefit from a central clearing party for the credit default swaps market. In our view, this could serve to handle spikes in transaction volume, and promote certainty of contract settlement. It would also reduce the negative effects of misinformation and rumors that can occur during high volume periods.
The subprime crisis has affected markets all over the world, and so for months we have been working with our international regulatory counterparts to ensure that our solutions to these problems work across national boundaries. As Chairman of the Subprime Task Force of IOSCO, I have had an exceptional opportunity to coordinate with other national regulators both on diagnosing the problems that led to the current distressed market conditions, and on the best regulatory solutions. Since March we have been working with the Basel Committee to amend the capital adequacy standards to deal explicitly with liquidity risk. And because the American credit rating agencies are relied on around the world, we have worked closely with our overseas counterparts to revise the international code of conduct for rating agencies.
The SEC's mission to protect investors, maintain orderly markets, and promote capital formation is more important now than it has ever been. We will continue to work not only within the SEC but in close cooperation with our regulatory counterparts to promote the continued health and vibrancy of our markets. Thank you again for this opportunity to discuss these important issues. I am happy to take your questions.
http://www.sec.gov/news/testimony/ts071508cc.htm
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Home | Previous Page Modified: 07/15/2008
Spotlight On: Short Sales
Fails-to-Deliver Data
Impact of Recent SHO Amendment on Fails to Deliver (Memo from Office of Economic Analysis, June 9, 2008)
Amendments to Exchange Act Rule 10a-1 and Rules 201 and 200(g) of Regulation SHO — Small Business Compliance Guide
Amendments to Exchange Act Rules 203(b)(3) and 200(e) of Regulation SHO — Small Business Compliance Guide
Fails to Deliver Statistics in Threshold Securities (Memo from Office of Economic Analysis, March 3, 2008)
Proposed Rule 10b-21: "Naked" Short Selling Anti-Fraud Rule (Release No. 34-57511, March 17, 2008)
Proposed Rule: Amendments to Regulation SHO (Release No. 34-56213, August 7, 2007)
Final Rule: Amendments to Regulation SHO (Release No. 34-56212, August 7, 2007)
Final Rule: Amendments to Regulation SHO and Rule 10a-1 (Release No. 34-55970; June 28, 2007)
Office of Economic Analysis: Economic Analysis of the Short Sale Price Restrictions Under the Regulation SHO Pilot (February 6, 2007)
Proposed Rule: Amendments to Regulation SHO and Rule 10a-1 (Release No. 34-54891; December 7, 2006)
Comments
Transcript of the SEC Roundtable on the Regulation SHO Pilot (September 15, 2006)
Draft Economic Analysis of the Short Sale Price Restrictions Under the Regulation SHO Pilot (September 14, 2006)
Fails to Deliver Pre- and Post-Regulation SHO (August 21, 2006)
Agenda for the SEC Roundtable on the Regulation SHO Pilot
Proposed Rule: Amendments to Regulation SHO (July 14, 2006)
Order Extending Term of Short Sale Pilot (April 20, 2006)
No-action Letters
Regulation SHO — Pilot Program (March 4, 2005) UPDATED 04/19/05; 04/29/05
Key Points About Regulation SHO (April 11, 2005)
Division of Market Regulation: Responses to Frequently Asked Questions Concerning Regulation SHO (FAQ; December 17, 2004) UPDATED 7/6/2007
Order Delaying Pilot Period for Suspension of the Operation of Short Sale Price Provisions (Release No. 34-50747; November 29, 2004)
Order Suspending the Operation of Short Sale Price Provisions for Designated Securities and Time Periods (Release No. 34-50104; July 28, 2004)
Final Rule: Short Sales (Release No. 34-50103; July 28, 2004)
SEC Adopts Changes to Short Sale Rules, Disclosures Regarding Advisory Contract Approval and Investment Company Governance Provisions (Press Release No. 2004-87; June 23, 2004)
Proposed Rule: Short Sales (Release No. 34-48709; October 28, 2003)
Comments on Proposed Rule: Short Sales, File No. S7-23-03
http://www.sec.gov/spotlight/shortsales.htm
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Home | Previous Page Modified: 07/10/2008
34-58107 Jul. 7, 2008 Amendment to Regulation SHO
SECURITIES AND EXCHANGE COMMISSION 17 CFR PART 242 [Release No. 34-58107; File No. S7-19-07] RIN 3235-AJ57 Amendment to Regulation SHO AGENCY: Securities and Exchange Commission.
ACTION: Proposed rule; notice of re-opening of comment period.
SUMMARY: The Securities and Exchange Commission is re-opening the comment period on the “Amendments to Regulation SHO” it re-proposed in Securities Exchange Act Release No. 56213 (August 7, 2007), 72 FR 45558 (August 14, 2007), (the “Proposal”). In view of the continuing public interest in the Proposal we believe that it is appropriate to re-open the comment period to provide the public with additional information before we take action on the Proposal.
DATES: Comments should be received on or before August 13, 2008.
ADDRESSES: Comments may be submitted by any of the following methods: Electronic Comments:
•
Use the Commission’s Internet comment form
(http://www.sec.gov/rules/proposed.shtml); or
•
Send an e-mail to rule-comments@sec.gov. Please include File Number S7-19-07 on the subject line; or
•
Use the Federal eRulemaking Portal (http://www.regulations.gov). Follow the instructions for submitting comments.
Paper Comments:
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090. All submissions should refer to File Number S7-19-07. This file number should be included on the subject line if e-mail is used. To help us process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (http://www.sec.gov/rules/proposed.shtml). Comments are also available for public inspection and copying in the Commission’s Public Reference Room, 100 F Street, NE, Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. All comments received will be posted without change; we do not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly.
FOR FURTHER INFORMATION CONTACT: James A. Brigagliano, Associate Director, Josephine J. Tao, Assistant Director, Victoria L. Crane, Branch Chief and Christina M. Adams, Staff Attorney, Office of Trading Practices and Processing, Division of Market Regulation, at (202) 551-5720, at the Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549.
SUPPLEMENTARY INFORMATION: The Commission is requesting additional public comment on proposed amendments to Rules 200 and 203 of Regulation SHO [17 CFR 242.200 and 242.203] under the Securities Exchange Act of 1934 (“Exchange Act”). In the Proposal, the Commission re-proposed amendments to Regulation SHO under the Exchange Act intended to further reduce the number of persistent fails to
2
deliver1 in certain equity securities by eliminating the options market maker exception to the close-out requirement of Regulation SHO. The Commission also sought comment on two alternatives to elimination that would limit the scope of the options market maker exception. The Commission is re-opening the comment period, which ended on September 13, 2007, to provide additional information with respect to the Proposal to the public.
At the same time that the Commission re-proposed amendments to Regulation SHO to eliminate the options market maker exception to Regulation SHO’s close-out requirement, the Commission approved amendments to Regulation SHO to eliminate the rule’s “grandfather” provision.2 The “grandfather” provision had provided that fails to deliver established prior to a security becoming a threshold security did not have to be closed out in accordance with Regulation SHO’s thirteen consecutive settlement day close-out requirement. The amendment to eliminate the “grandfather” exception became effective on October 15, 2007. The amendment also contained a one-time phase-in period that provided that previously-grandfathered fails to deliver in a security that was a threshold security on the effective date of the amendment must be closed out within 35 consecutive settlement days from the effective date of the amendment. The phase-in period ended on December 5, 2007.3
1
A “fail to deliver” occurs when the seller of a security fails to deliver the security by
settlement date. Generally, investors must complete or settle their security transactions within three
business days. This settlement cycle is known as T+3 (or ‘‘trade date plus three days’’). T+3 means
that when the investor purchases a security, the purchaser’s payment generally must be received by its
brokerage firm no later than three business days after the trade is executed. When the investor sells a
security, the seller generally must deliver its securities, in certificated or electronic form, to its
brokerage firm no later than three business days after the sale.
2
Securities Exchange Act Release No. 56212 (Aug. 7, 2007), 72 FR 45544 (Aug. 14, 2007).
3
See id.
3
In response to the Proposal, commenters urged the Commission to obtain empirical data to demonstrate the relationship between fails to deliver and the options market maker exception before it determines whether additional rulemaking is necessary. In particular, commenters urged the Commission to obtain data relating to the impact of the elimination of the grandfather provision and connecting fails to deliver to the options market maker exception.4 The Commission has obtained additional data on fails to deliver since the Proposal was published. Accordingly, in response to commenters and because the Commission believes the additional data will aid the public in commenting on the Proposal, the Commission is re-opening the comment period to share with the public data obtained by the Commission regarding fails to deliver and the options market maker exception, and to provide the public with an opportunity to comment on the data.
To ascertain whether fails to deliver are not being closed out due to the options market maker exception to the close-out requirement since the elimination of the “grandfather” provision, Commission staff obtained data on securities with extended fails to deliver from a National Securities Clearing Corporation (“NSCC”) participant which settles and clears for a large segment of the options market for January and February 2008. A review of this data reveals that a high number of fails to deliver were not closed out as a result of the options market maker exception.5 Specifically, the data indicated that as of January 31, 2008, the options market maker exception was claimed in 16 threshold securities for a total of 6,365,158 fails to deliver. As of February 29, 2008, the
4
See e.g., Comments of Keith F. Higgins, Committee on Federal Regulation of Securities, American Bar Association, Section of Business Law (Oct. 5, 2007); comments of John Gilmartin and Ben Londergan, Group One Trading, LP (Sept. 28, 2007); see also comments of Gerald D. O’Connell, Susquehanna Investment Group (Oct. 11, 2007).
5
We note that the data reflects only those extended fails to deliver not closed out due to the options market maker exception and, therefore, does not reflect all fails to deliver in the securities included in the data.
4
data indicated that the options market maker exception was claimed in 20 threshold
securities for a total of 6,963,949 fails to deliver.
In addition, the Commission is releasing the results of a recent analysis by the
Commissions’ Office of Economic Analysis (“OEA”) of fails to deliver before and after
the elimination of Regulation SHO’s “grandfather” provision.6 As set forth below, these
results show that extended fails to deliver in non-optionable threshold securities declined
significantly after the elimination of the “grandfather” provision while extended fails to
deliver in optionable threshold securities increased significantly. Specifically, changes
for optionable threshold securities include:
•
The average daily number of optionable threshold list securities increased by 25.0%.
•
The average daily number of new fail to deliver positions in optionable threshold securities increased by 45.3%.
•
For fails aged more than 17 days in optionable threshold securities, the average daily dollar value of fails to deliver increased by 73.4%.
•
For fails aged more than 17 days in optionable threshold securities, the average daily number of fail to deliver positions increased by 30.7%.
•
The average daily number of optionable threshold list securities with fails aged more than 17 days increased by 40.9%.
Further, changes for non-optionable threshold securities include:
•
The average daily number of non-optionable threshold list securities decreased by 3.5%.
•
The average daily number of new fail to deliver positions in non-optionable threshold securities increased by 7.4%.
•
For fails aged more than 17 days in non-optionable threshold securities, the average daily dollar value of fails to deliver decreased by 34.5%.
•
For fails aged more than 17 days in non-optionable threshold securities, the average daily number of fail to deliver positions decreased by 38.8%.
See Memorandum from the Commission’s Office of Economic Analysis (dated June 9, 2008), which is available on the Commission’s internet website at http://www.sec.gov/comments/s7-19-07/s71907.shtml (the “OEA Memorandum”). As discussed above, the “grandfather” provision was eliminated as of October 15, 2007 with a one-time phase in period which expired on December 5, 2007. The sample data used in the OEA Memorandum compares two time periods: April 9, 2007 – October 14, 2007, which is defined as the “pre-amendment period” and December 10, 2007 – March 31, 2008, which is defined as the “post-amendment period.”
5
6
• The average daily number of non-optionable threshold list securities with fails aged more than 17 days decreased by 32.6%.7 To ascertain the extent to which fails to deliver were not being closed out due to the options market maker exception to the close-out requirement prior to the elimination of the “grandfather” provision, Commission staff obtained data from certain self-regulatory organizations for 2006 and 2007 regarding use of the options market maker exception. This data is explained in more detail below. In 2007, as part of its regular Regulation SHO surveillance, the Financial Industry Regulatory Authority (“FINRA”) conducted a review of securities with extended fails to deliver at the NSCC to ascertain the continuing cause of fails to deliver, and to also assess compliance with NYSE Rule 440/SEA8 and Regulation SHO. As set forth below, according to data provided by one NSCC participant that settles and clears for a large segment of the options market, a number of fails to deliver at that participant were not closed out due to claims that the fails were excepted from the close-out requirement as a
result of the options market maker exception. A review of the FINRA data for 2007 shows the following:
Month
Fails to
Deliver9 No. of Securities
February 35,665 1
March 900,276 5
April 3,433,639 8
May 228,878 2
June 2,441,122 14
July 462,414 6
August 3,065,710 12
7
See id.
8
NYSE Rule 440 requires that “[e]very member not associated with a member organization and every member organization shall make and preserve books and records as the Exchange may prescribe and as prescribed by Rule 17a-3.”
9
These numbers represent fails to deliver which, as explained in footnote 1 above, are shares of a security that are not delivered by settlement date. According to the data provided to FINRA, these fails to deliver were not closed out due to the options market maker exception.
6
October
4,456,340
13
November
1,841,063
2
December
5,621,982
15
As indicated in the table above, the options market maker exception to the close-out requirement was claimed for a large number of fails to deliver for the entire year, including both before and after October 15, 2007, the effective date of the elimination of Regulation SHO’s “grandfather” provision.
On December 11, 2006 the Chicago Board of Options Exchange (“CBOE”) along with the American Stock Exchange, NYSE Arca, Inc., and the Philadelphia Stock Exchange initiated a Regulation SHO review of options market makers covering the time period from May through July 2006. The focus of these reviews was the options market maker exception to the close-out requirement for aged fails to deliver in threshold securities that were open for thirteen consecutive settlement days.10
According to CBOE, the reviews revealed that there were 598 exceptions claimed, covering 58 threshold securities for a total of 11,759,799 fails to deliver. For the 58 threshold securities identified, the number of fails to deliver for which an exemption was claimed from the close-out requirement ranged from 207 to 1,950,655. The following is a distribution of the number of fails to deliver: # of Fails to Deliver for which # of Threshold Securities
Exception Was Claimed
0 - 100,000 35
100,001 - 200,000 4
200,001 - 300,000 4
300,001 - 400,000 5
400,001 - 500,000 4
500,001 - 600,000 2
The “grandfather” provision was also in effect during this period but was not the subject of these reviews.
7
10
600,001 - 700,000 -
700,001 - 800,000 1
800,001 - 900,000 -
900,001 - 1,000,000 1
> 1,000,000 2
Therefore, the Commission is re-opening the comment period for Exchange Act
Release No. 56213 from the date of this release through August 13, 2008.
By the Commission.
Florence E. Harmon Acting Secretary
Dated: July 7, 2008
8
http://www.sec.gov/rules/proposed/2008/34-58107.pdf
I need a transcript of Cox's current testimony before the Senate. Any idea where to find that?
Public Appearances by Officials
July 2008
When: Tuesday, July 15, 11:30 a.m.
Who: Chairman Christopher Cox
What: Testimony before the Senate Committee on Banking, Housing, and Urban Affairs
Where: Russell Senate Office Building, Room 325
Contact: John Heine, (202) 551-4120
http://www.sec.gov/about/upcoming-events.htm#apps
I DONT KNOW FOR SURE THAT IT HAS ANYTHING TO DO WITH ANY PARTICULAR COMPANY But it seems to be pretty rampant throught out the markets So ;ets just sit back and watch WE could see some very heavy hitters in prison and then maybe not..This will depend on what the USELESS SEC DOES They make more rule that appear to accomplish something and we all know what they are doing...nothing,, European markets have taken care of the problem
im still listening, , whats this have to do with rgno being sheng heied,, any implications
could be just a a case of mistaken identity---
LISTEN TO THIS
http://www.netcastdaily.com/broadcast/fsn2008-0712-2.asx
July 10, 2008 SEC News Digest
Issue 2008-133
COMMISSION ANNOUNCEMENTS
Elisse B. Walter Sworn in as SEC Commissioner
On July 9, Elisse Barbara Walter was sworn in as a Commissioner of the Securities and Exchange Commission.
Commissioner Walter, who was appointed by President George W. Bush on June 30, 2008, was sworn in by SEC Chairman Christopher Cox at a ceremony held at the SEC that was attended by her husband, Ronald Alan Stern, as well as SEC senior officials, Financial Industry Regulatory Authority (FINRA) CEO Mary L. Schapiro and Non-Executive Chairman Richard G. Ketchum, and other senior FINRA officials. Following her swearing-in ceremony, Commissioner Walter participated in an SEC Roundtable on Fair Value Accounting Standards, where she joined other SEC Commissioners in a panel discussion that also included investors, preparers, auditors, and other regulators.
Commissioner Walter previously served on the SEC staff in the Office of the General Counsel and the Division of Corporation Finance from 1977 to 1994, ascending to the positions of Associate General Counsel and Deputy Director of the Division of Corporation Finance. She earned such honors as the Presidential Rank Award (Distinguished), the SEC Chairman's Award for Excellence, and the SEC's Distinguished Service Award during her previous tenure at the SEC. Commissioner Walter also served as a senior official at the Commodity Futures Trading Commission (CFTC) and FINRA.
"During her distinguished prior service at the SEC as well as in her extensive experience at the CFTC and FINRA, Elisse Walter has consistently demonstrated her steadfast commitment to safeguarding the interests of investors," said Chairman Cox. "Her integrity, professionalism, and strong track record of investor education and advocacy make her superbly qualified to be a Commissioner. I look forward to working with her to tackle our ambitious agenda here at the SEC to further improve investor protection."
Commissioner Walter said, "It is my great honor and privilege to join SEC Chairman Christopher Cox, my fellow Commissioners, and the Commission's professional staff in serving our nation's investors and capital markets. The SEC has a richly-deserved reputation as the crown jewel of independent agencies, and today the need for this great agency and its investor protection mission are apparent. I promise to do my utmost to live up to the awesome responsibility entrusted to me."
Prior to being appointed an SEC Commissioner, Ms. Walter was Senior Executive Vice President, Regulatory Policy & Programs, at FINRA, where she coordinated policy issues across the organization and led its investor education efforts. Commissioner Walter also directed FINRA's efforts to improve regulation in the sale of mutual funds and managed task forces that proposed significant rule and investor protection initiatives in these and other areas. She held the same position at NASD before its 2007 consolidation with NYSE Member Regulation.
Commissioner Walter also served as General Counsel of the CFTC, where she was responsible for litigation, drafting administrative decisions, legal advice, and drafting rules.
Commissioner Walter is a member of the Academy of Women Achievers of the YWCA of the City of New York and the inaugural class of the ABA's DirectWomen Institute. She served on the Boards of Trustees of the SEC Historical Society and of Jewish Women International. Commissioner Walter graduated from Yale University with a B.A., cum laude, in mathematics and received her J.D. degree, cum laude, from Harvard Law School. (Press Rel. 2008-137)
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ENFORCEMENT PROCEEDINGS
Commission Revokes Registration of Securities of Harbour Intermodal, Ltd. For Failure to Make Required Periodic Filings
On July 10, 2008, the Commission revoked the registration of each class of registered securities of Harbour Intermodal, Ltd. (Harbour) for failure to make required periodic filings with the Commission.
Without admitting or denying the findings in the order, except as to jurisdiction, which it admitted, Harbour consented to the entry of an Order Making Findings and Revoking Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of 1934 as to Harbour Intermodal, Ltd. finding that it had failed to comply with Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 13a-1 and 13a-13 thereunder and revoking the registration of each class of Harbour's securities pursuant to Section 12(j) of the Exchange Act. This order settled the charges brought against Harbour in In the Matter of American Ship Building Co., et al., Administrative Proceeding File No. 3-13065.
Brokers and dealers should be alert to the fact that Exchange Act Section 12(j) provides, in pertinent part, as follows:
No member of a national securities exchange, broker, or dealer shall make use of the mails or any means or instrumentality of interstate commerce to effect any transaction in, or to induce the purchase or sale of, any security the registration of which has been and is suspended or revoked . . . .
For further information see Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934, In the Matter of American Ship Building Co., et al., Administrative Proceeding File No. 3-13065, Exchange Act Release No. 57956 (June 12, 2008). (Rel. 34-58132; File No. 3-13065)
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Commission Revokes Registration of Securities of Uniroyal Technology Corp. for Failure to Make Required Periodic Filings
On July 10, 2008, the Commission revoked the registration of each class of registered securities of Uniroyal Technology Corp. (Uniroyal) for failure to make required periodic filings with the Commission.
Without admitting or denying the findings in the order, except as to jurisdiction, which it admitted, Uniroyal consented to the entry of an Order Making Findings and Revoking Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of 1934 as to Uniroyal Technology Corp. finding that it had failed to comply with Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 13a-1 and 13a-13 thereunder and revoking the registration of each class of Uniroyal's securities pursuant to Section 12(j) of the Exchange Act. This order settled the charges brought against Uniroyal in In the Matter of Benguet Corp., et al., Administrative Proceeding File No. 3-13079.
Brokers and dealers should be alert to the fact that Exchange Act Section 12(j) provides, in pertinent part, as follows:
No member of a national securities exchange, broker, or dealer shall make use of the mails or any means or instrumentality of interstate commerce to effect any transaction in, or to induce the purchase or sale of, any security the registration of which has been and is suspended or revoked . . . .
For further information see Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934, In the Matter of Benguet Corp., et al., Administrative Proceeding File No. 3-13079, Exchange Act Release No. 57999 (June 23, 2008). (Rel. 34-58133; File No. 3-13079)
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In the Matter of Pritchard Capital Partners, LLP
An Administrative Law Judge has issued an Initial Decision in Pritchard Capital Partners, LLP, Administrative Proceeding No. 3-12753. The Initial Decision finds that Respondent Joseph John VanCook (VanCook), while associated with the broker-dealer Pritchard Capital Partners, LLP (Pritchard Capital), engaged in a fraudulent mutual fund late trading scheme. VanCook enabled, and solicited, the mutual fund late trading business executed by his clients.
The Initial Decision concludes that VanCook, for his role in the fraud, willfully violated Section 10(b) of the Securities and Exchange Act of 1934 (Exchange Act), and Rule 10b-5 thereunder. In addition, VanCook willfully aided and abetted and caused Banc of America Securities, LLC, to violate Section 22(c) of the Investment Company Act of 1940 and Rule 22c-1 thereunder. Finally, VanCook willfully aided and abetted and caused Pritchard Capital's violations of Section 17(a) of the Exchange Act, and Rule 17a-3(a)(6) thereunder. The Initial Decision orders VanCook to cease and desist from committing or causing future violations of the securities laws, bars him from associating with an investment adviser, broker, or dealer, and from working for an investment company, and orders him to disgorge $538,565.70 in ill-gotten gains (plus prejudgment interest) and to pay a civil penalty of $100,000.(Initial Decision No. 350; File No. 3-12753)
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Richard F. Selden, Former CEO of a Massachusetts Biotechnology Company, Settles SEC Fraud Action
On July 10, 2008, the Commission announced a final judgment by consent was entered on July 9, 2008 by the United States District Court Judge for the District of Massachusetts against Richard F. Selden of Lincoln Massachusetts. Selden, age 49, was the former CEO of Transkaryotic Therapies (TKT), a biotechnology company that was headquartered in Cambridge, Massachusetts, and was publicly-traded until it was acquired in July 2005.
Selden was the only defendant in a civil injunctive action filed in September 2005, alleging that he made materially misleading statements between October 2000 and October 2002 concerning results of TKT's clinical trials and its U.S. Food and Drug Administration (FDA) application for its flagship drug, Replagal. The Commission's complaint alleged that, during the relevant time period, Selden and, at his direction, TKT, made positive statements concerning Replagal's clinical benefits, describing its clinical trials as a success, and made positive statements about Replagal's chance of being approved by FDA. However, the complaint alleged that Selden knew, but failed to disclose, material negative information, including that Replagal's clinical trial failed to meet its primary objective and FDA had told TKT on several occasions that it was a failed study and had recommended additional clinical trials. The complaint further alleged that Selden benefited by selling 90,000 shares of TKT stock between May 2001 and February 2002, prior to TKT's disclosure of some negative information about Replagal on October 2, 2002, which caused TKT's stock price to fall.
The final judgment against Selden, to which he consented without admitting or denying the Commission's allegations, permanently enjoins him from violating the antifraud and other provisions of the federal securities laws, and orders Selden to pay a $125,000 civil penalty and $1,041,417 in disgorgement and prejudgment interest related to his sales of TKT stock during the period of the alleged fraud. The Court will determine whether a bar from serving as an officer or director of any public company is warranted against Selden at a later date. [SEC v. Richard F. Selden, Civil Action No. 05-11805, USDC, D. Mass.] (LR-20640)
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INVESTMENT COMPANY ACT RELEASES
ING Clarion Real Estate Income Fund, et al.
A notice has been issued giving interested persons until Aug. 4, 2008, to request a hearing on an application filed by ING Clarion Real Estate Income Fund, et al., under Section 6(c) of the Investment Company Act of 1940 (Act) for an exemption from Section 19 (b) of the Act, and Rule 19b-1 under the Act. The order would permit certain registered closed-end management investment companies to make periodic distributions of long-term capital gains (i)with respect to their common stock as part of a managed distribution plan as frequently as twelve times each year, and (ii) with respect to their preferred stock as frequently as required by the terms of such preferred stock. (Rel. IC-28329 - July 8)
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STANDARDS SETTING BOARDS
Public Company Accounting Oversight Board Proposed Rule and Rule Amendments
The Commission is publishing for public comment the Public Company Accounting Oversight Board's proposed new Ethics and Independence Rule 3526, Communication with Audit Committees Concerning Independence, proposed amendment to Rule 3523, Tax Services For Persons in Financial Reporting Oversight Roles, and proposed conforming amendments to the Public Company Accounting Oversight Board's interim independence standards. Publication of the proposed rule and rule amendments is expected in the Federal Register during the week of July 14th. The comment period will end 21 days after the proposed rule and rule amendments are published in the Federal Register. (Rel. 34-58121)
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SELF-REGULATORY ORGANIZATIONS
Approval of Proposed Rule Changes
The Commission granted approval of proposed rule changes (SR-Amex-2008-40; SR-NYSE-2008-39; and SR-NYSEArca-2008-50) submitted by the American Stock Exchange, the New York Stock Exchange and NYSE Arca, through its wholly owned subsidiary, NYSE Arca Equities, Inc., and a proposed rule change (SR-NASDAQ-2008-046), as modified by Amendment No. 1 thereto, submitted by the NASDAQ Stock Market, pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 to adopt a trading halt rule in connection with the dissemination of net asset value and disclosed portfolio for certain derivative securities products. Publication is expected in the Federal Register during the week of July 14. (Rel. 34-58111)
A proposed rule change (SR-CBOE-2008-53), filed by the Chicago Board Options Exchange pertaining to the imposition of fines for minor rule violations has been approved pursuant to Section 19(b)(2) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 14. (Rel. 34-58119)
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Immediate Effectiveness of Proposed Rule Change
A proposed rule change filed by Chicago Board Options Exchange relating to an extension of the linkage fee pilot program (SR-CBOE-2008-69) has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 14. (Rel. 34-58117)
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Proposed Rule Change
A proposed rule change has been filed by Financial Industry Regulatory Authority (SR-FINRA-2008-030) to adopt FINRA Rule 3130 (Annual Certification of Compliance and Supervisory Processes) in the consolidated FINRA rulebook. Publication is expected in the Federal Register during the week of July 14. (Rel. 34-58118)
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SECURITIES ACT REGISTRATIONS
Latest Securities Act registrations (TXT)
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RECENT 8K FILINGS
Latest 8-K filings (TXT)
http://www.sec.gov/news/digest/2008/dig071008.htm
Thanks -- just tryin' to keep the info flow going
Sweet on the present-- glad it worked out
BTW if you get a chance (or maybe you have already), you gotta' try the the new macadamia/white chocolate tilapia dish at Red Lobster-- wow! I think it violates an SEC rule lol (Sweet Eating Criteria)
http://www.redlobster.com/blog/
yeah it was very relaxing...
did nothing!
thats the best :)
this is a nice board w lots of good in4
btw the gift u suggested 4 my friends kids turned out great-
thanx!
kutie Nice to hear from you. Our 4th was nice-- kids loved watching the fireworks! Trust yours was nice too?
HI JIMMENKNEE-
HOW R U???
I HOPE U HAD A VERY NICE JULY 4th WKND :)
July 9, 2008 SEC News Digest
Issue 2008-132
COMMISSION ANNOUNCEMENTS
SEC Examinations Find Shortcomings in Credit Rating Agencies' Practices and Disclosure to Investors
On July 8, the Securities and Exchange Commission released findings from extensive 10-month examinations of three major credit rating agencies that uncovered significant weaknesses in ratings practices and the need for remedial action by the firms to provide meaningful ratings and the necessary levels of disclosure to investors.
Under new statutory authority from Congress that enabled the SEC to register and examine credit rating agencies, the agency's staff conducted examinations of Fitch Ratings Ltd., Moody's Investor Services Inc., and Standard & Poor's Ratings Services to evaluate whether they are adhering to their published methodologies for determining ratings and managing conflicts of interest. With the recent subprime market turmoil, the SEC has been particularly interested in the rating agencies' policies and practices in rating mortgage-backed securities and the impartiality of their ratings.
The SEC staff's examinations found that rating agencies struggled significantly with the increase in the number and complexity of subprime residential mortgage-backed securities (RMBS) and collateralized debt obligations (CDO) deals since 2002. The examinations uncovered that none of the rating agencies examined had specific written comprehensive procedures for rating RMBS and CDOs. Furthermore, significant aspects of the rating process were not always disclosed or even documented by the firms, and conflicts of interest were not always managed appropriately.
"We've uncovered serious shortcomings at these firms, including a lack of disclosure to investors and the public, a lack of policies and procedures to manage the rating process, and insufficient attention to conflicts of interest," said SEC Chairman Christopher Cox. "When the firms didn't have enough staff to do the job right, they often cut corners. That's the bad news. There's also good news. And that's that the problems are being fixed in real time. The recent events affecting our economy and our markets have galvanized regulators around the world to re-examine the regulatory framework governing credit rating agencies, but ultimately the responsibility for providing meaningful ratings to investors begins with the credit rating firms themselves."
Lori Richards, Director of the SEC's Office of Compliance Inspections and Examinations, said, "These examinations found shortcomings in the ratings processes used by each of the firms examined. The firms have all agreed to implement broad reforms to address the letter and the spirit of the findings, to better ensure that investors can have confidence in their ratings."
The Summary Report of Issues Identified in the Commission Staff's Examinations of Select Credit Rating Agencies describes the significant weaknesses in the rating agencies' processes in rating subprime RMBS and CDOs linked to subprime residential mortgage-backed securities from January 2004 to the present.
Specifically, the examinations found:
There was a substantial increase in the number and in the complexity of RMBS and CDO deals since 2002, and some of the rating agencies appear to have struggled with the growth.
Significant aspects of the ratings process were not always disclosed.
Policies and procedures for rating RMBS and CDOs can be better documented.
The rating agencies are implementing new practices with respect to the information provided to them.
The rating agencies did not always document significant steps in the ratings process - including the rationale for deviations from their models and for rating committee actions and decisions - and they did not always document significant participants in the ratings process.
The surveillance processes used by the rating agencies appear to have been less robust than the processes used for initial ratings.
Issues were identified in the management of conflicts of interest and improvements can be made.
The rating agencies' internal audit processes varied significantly.
The examinations were conducted by staff in the SEC's Office of Compliance Inspections and Examinations, Division of Trading and Markets, and Office of Economic Analysis. The report summarizes generally the remedial actions that credit rating agencies are expected to take as a result of the examinations, and includes observations by the SEC's Office of Economic Analysis about conflicts of interest that are unique to these products. A factual summary of the models and methodologies used by the rating agencies is provided in the report to provide transparency to the ratings process and the activities of the rating agencies in connection with the recent subprime mortgage turmoil.
The SEC last month proposed a three-fold set of comprehensive reforms to regulate the conflicts of interests, disclosures, internal policies, and business practices of credit rating agencies. The first portion of rulemaking would address conflicts of interest in the credit ratings industry and require new disclosures designed to increase the transparency and accountability of credit ratings agencies. The second portion would require credit rating agencies to differentiate the ratings they issue on structured products from those they issue on bonds through the use of different symbols or by issuing a report disclosing the differences. The third part of the SEC's proposed rulemaking would clarify for investors the limits and purposes of credit ratings and ensure that the role assigned to ratings in SEC rules is consistent with the objectives of having investors make an independent judgment of credit risks. (Press Rel. 2008-135)
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ENFORCEMENT PROCEEDINGS
Delinquent Filers' Stock Registrations Revoked
The registrations of the stock of Respondents Baroque Corp., Mother Lode Gold Mines Consolidated, and Solvis Group, Inc., have been revoked. Each had repeatedly failed to file annual and quarterly reports with the Securities and Exchange Commission in compliance with the requirements of the Securities Exchange Act of 1934. Thus, each violated a crucial provision of the federal securities laws that requires public corporations to publicly disclose current, accurate financial information so that investors may make informed decisions. The revocations were ordered in an administrative proceeding before an administrative law judge. (Rel. 34-58120; File No. 3-13077)
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Commission Revokes Registration of Securities of Mother Lode Gold Mines Consolidated for Failure to Make Required Periodic Filings
On July 9, the Commission revoked the registration of each class of registered securities of Mother Lode Gold Mines Consolidated (Mother Lode) for failure to make required periodic filings with the Commission.
Without admitting or denying the findings in the order, except as to jurisdiction, which it admitted, Mother Lode consented to the entry of an Order Making Findings and Revoking Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of 1934 as to Mother Lode Gold Mines Consolidated finding that it had failed to comply with Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 13a-1 and 13a-13 thereunder and revoking the registration of each class of Mother Lode's securities pursuant to Section 12(j) of the Exchange Act. This order settled the charges brought against Mother Lode in In the Matter of Baroque Corp., et al., Administrative Proceeding File No. 3-13077.
Brokers and dealers should be alert to the fact that Exchange Act Section 12(j) provides, in pertinent part, as follows:
No member of a national securities exchange, broker, or dealer shall make use of the mails or any means or instrumentality of interstate commerce to effect any transaction in, or to induce the purchase or sale of, any security the registration of which has been and is suspended or revoked . . . .
For further information see Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934, In the Matter of Baroque Corp., et al., Administrative Proceeding File No. 3-13077, Exchange Act Release No. 57995 (June 20, 2008). (Rel. 34-58121; File No. 3-13077)
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SEC Charges Broker and Former Officer of VMT Scientific, Inc. in "Pump-And-Dump" Scheme and Suspends Trading in VMT Scientific Stock
The Securities and Exchange Commission filed a complaint today against a registered stockbroker, and the former Chief Technology Officer of VMT Scientific, Inc., a purported medical device manufacturer in Las Vegas, NV. The complaint alleges that the two defendants pumped VMT stock by issuing false press releases about VMT and then the stockbroker sold, or dumped, over 9.5 million shares for almost $1 million.
The Commission's complaint, filed in federal district court in Las Vegas, alleges that in mid-2005, Stephen H. Roebuck and Daniel Kaiser purportedly took control of VMT, a public shell company under court custodianship, and issued 120 million shares of VMT to Roebuck. Roebuck immediately transferred the shares to offshore brokerage accounts in the Cayman Islands, Turks and Caicos, and Panama.
The complaint further alleges that between November and December 2005, Roebuck and Kaiser created a website and issued a series of press releases that falsely touted the company's financial viability and its "breakthrough" product that would help patients with peripheral vascular disease. As alleged in the complaint, the website and press releases failed to state the company was under court custodianship, had no operations or revenues, and that Roebuck's stock sales were the company's only funding. After Roebuck and Kaiser issued the press releases, Roebuck sold 9,539,350 shares, resulting in proceeds over $990,000. Roebuck transferred approximately $300,000 to the company, and Kaiser took approximately $81,491 for himself.
The complaint charges the defendants with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and that Roebuck violated Sections 5(a) and 5(c) of the Securities Act. Roebuck settled to a permanent injunction, disgorgement and a civil penalty to be determined by the court, and a permanent bar from participating in an offering of penny-stock. The Commission is seeking from Kaiser an injunction, disgorgement, civil penalty, a penny-stock bar, and a permanent officer and director bar. [SEC v. Daniel Kaiser and Stephen H. Roebuck, Civil Action No. 2:08-cv-00888-JCM-LRL (D. Nev.)] (LR-20639)
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SEC Charges Sycamore Networks and Former Executives in Stock Options Backdating Case
On July 9, the Commission announced the filing of a settled civil injunctive action against Sycamore Networks, Inc., an optical networking company based in Chelmsford, Massachusetts, as well as its former Chief Financial Officer Frances M. Jewels, former Director of Financial Operations Cheryl E. Kalinen, and former Director of Human Resources Robin A. Friedman, in connection with the backdating of stock options to employees over several years.
The Commission's complaint, filed in federal court in Boston, alleges that Sycamore's unreported options-related expenses totaled nearly $250 million during the period from 2000 through 2005. According to the complaint, Jewels and Kalinen repeatedly backdated options grants between October 1999 and July 2002 to prices at or near monthly or quarterly low points for the company's stock, and they falsified or caused others to falsify various company documents concerning these grants. The Commission further alleges that Jewels and Kalinen personally benefited from backdated options grants. The complaint also alleges that Friedman was aware of a plan by Jewels and Kalinen to backdate options to five company employees without informing the company's auditors, and that, in connection with the plan, Friedman altered or created, or caused others to alter or create, company personnel and payroll records so that they would reflect incorrect information.
All parties have agreed to settle the Commission's charges without admitting or denying the allegations in the complaint. The company and the former executives will be subject to permanent injunctions prohibiting them from future violations of various provisions of the federal securities laws, and the former executives have agreed to pay more than $650,000 combined in disgorgement, interest, and penalties. Jewels also will be barred from serving as an officer or director of a public company for five years.
[SEC v. Sycamore Networks, Inc. et al., Civil Action No. 1:08-CV-11166 (D. Mass.)] (LR-20638; AAE Rel. 2843)
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SELF-REGULATORY ORGANIZATIONS
Proposed Rule Changes
The NASDAQ Stock Market LLC has filed a proposed rule change and Amendment No. 1 thereto (SR-NASDAQ-2008-019) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 to remove from the Nasdaq rules fee provisions relating to Nasdaq's Mutual Fund Quotation Service. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58102)
Financial Industry Regulatory Authority has filed a proposed rule change (SR-FINRA-2008-036) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 relating to the Incorporated NYSE Rules. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58103)
NYSE Arca has filed a proposed rule change (SR-NYSEArca-2008-47) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 to waive retroactively as of June 24, 2008, certain initial listing fees for companies transferring the listing of their securities from any other national securities exchange. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58109)
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Accelerated Approval to Proposed Rule Change
The Commission noticed and granted accelerated approval to a proposed rule change (SR-NYSE-2007-64), as modified by Amendment No. 1, submitted by the New York Stock Exchange relating to Section 31 accumulated funds. Publication is expected to be made in the Federal Register during the week of July 7. (Rel. 34-58108)
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Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed by the Boston Stock Exchange to permit the listing and trading of options on Foreign Currency ETFs and Commodity Pool ETFs (SR-BSE-2008-34) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58110)
A proposed rule change and Amendment Nos. 1, 2 and 3 filed by the National Stock Exchange (SR-NSX-2008-11) eliminating references to the Intermarket Trading System plan from NSX's rules and a technical change to Rule 8.15 have become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58112)
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Approval of Proposed Rule Changes
The Commission approved a proposed rule change (SR-NYSEArca-2008-40) submitted by NYSE Arca through its wholly owned subsidiary, NYSE Arca Equities, Inc., pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 relating to the listing and trading of shares of the NETS Tokyo Stock Exchange REIT Index Fund. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58113)
The Commission approved a proposed rule change, as modified by Amendment No. 1 thereto, submitted by the Financial Industry Regulatory Authority under Rule 19b-4 of the Securities Exchange Act of 1934 (SR-FINRA-2007-026) for TRACE to Disseminate Additional Data Elements Relating to Each Transaction. Publication is expected to be made in the Federal Register during the week of July 7. (Rel. 34-58115).
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Amendment No. 2 to a Proposed Rule Change
The Financial Industry Regulatory Authority has filed Amendment No. 2 to a proposed rule change (SR-NASD-2007-041) to amend the minimum price-improvement standards set forth in NASD Interpretive Material (IM) 2110-2. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58114).
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SECURITIES ACT REGISTRATIONS
Latest Securities Act registrations (TXT)
--------------------------------------------------------------------------------
RECENT 8K FILINGS
Latest 8-K filings (TXT)
http://www.sec.gov/news/digest/2008/dig070908.htm
July 8, 2008 SEC News Digest
Issue 2008-131
COMMISSION ANNOUNCEMENTS
Securities and Exchange Commission Temporarily Suspends Trading in VMT Scientific, Inc.
The Securities and Exchange Commission announced the temporary suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934 (Exchange Act), of trading of the securities of VMT Scientific, Inc. (VMT), of Las Vegas, Nevada at 9:30 a.m. EDT on July 8, 2008, and terminating at 11:59 p.m. EDT on July 21, 2008.
The Commission temporarily suspended trading in the securities of VMT because of questions that have been raised regarding the accuracy of assertions in press releases concerning, among other things: (1) the legal status of VMT Scientific; (2) VMT Scientific's business combinations; (3) VMT Scientific's current financial condition; and (4) VMT Scientific's assets.
The Commission cautions broker dealers, shareholders, and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by the company.
Further, brokers and dealers should be alert to the fact that, pursuant to Rule 15c2-11 under the Exchange Act, at the termination of the trading suspension, no quotation may be entered unless and until they have strictly complied with all of the provisions of the rule. If any broker or dealer has any questions as to whether or not he has complied with the rule, he should not enter any quotation but immediately contact the staff in the Division of Trading and Markets, Office of Interpretation and Guidance, at (202) 551-5760. If any broker or dealer is uncertain as to what is required by Rule 15c2-11, he should refrain from entering quotations relating to VMT securities until such time as he has familiarized himself with the rule and is certain that all of its provisions have been met. If any broker or dealer enters any quotation which is in violation of the rule, the Commission will consider the need for prompt enforcement action. (Rel. 34-58116)
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James Overdahl to Testify
James Overdahl, Chief Economist of the Commission, will testify before the Senate Subcommittee on Securities, Insurance, and Investment on Wednesday, July 9. The testimony, which concerns Reducing Risks and Improving Oversight in the OTC Credit Derivatives Market, will be presented at a hearing scheduled to begin at 2:00 p.m. in Room 538 of the Dirksen Senate Office Building.
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ENFORCEMENT PROCEEDINGS
Alex Rabinovich Permanently Enjoined, and Pleaded Guilty to Criminal Securities Fraud Charges
The Commission announced today that on June 10, 2008, the Honorable Gerard E. Lynch, United States District Judge for the Southern District of New York, entered a Judgment of Permanent Injunction and Other Relief Against Defendant Alex Rabinovich, permanently enjoining Rabinovich from violating the registration and antifraud provisions of the federal securities laws. More specifically, the judgment enjoins Rabinovich from violating Sections 5(a) and (c) and 17(a) of the Securities Act of 1933 (Securities Act), Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, and Section 206(4) of the Investment Advisers Act (Investment Advisers Act) and Rule 206(4)-8 thereunder. The judgment further orders Rabinovich to disgorge ill-gotten gains, together with prejudgment interest, and pay a civil penalty, but defers the Court's determination of the amount of disgorgement and penalty to be paid until a later date, pending a motion by the Commission. Rabinovich consented to entry of the judgment without admitting or denying the allegations in the Commission's complaint.
The Commission's complaint, filed on Nov. 26, 2007, alleged that defendants Rabinovich, Rabinovich & Associates, LP, an unregistered investment company and broker-dealer managed by Rabinovich, and Joseph Lovaglio, operating out of a storefront boiler room in Brooklyn, sold limited partnership interests in Rabinovich & Associates (sometimes referred to hereafter as the Fund or the firm) and other securities to investors, including senior citizens and retirees. The complaint further alleged that the defendants obtained investments in the Fund by cold-calling and making fraudulent statements to investors and prospective investors in the Fund, including: (1) false claims that the Fund had been extraordinarily profitable whereas the Fund's actual performance had been dismal; and (2) false representations that Rabinovich & Associates was a Wall Street firm and a member of the NASD, the New York Stock Exchange, and the Securities Investor Protection Corporation. The defendants allegedly also failed to disclose to investors that Rabinovich had been barred by the NASD from associating with any broker or dealer and that there was a pending action by the Financial Industry Regulatory Authority, Inc. seeking to bar Lovaglio from associating with any broker or dealer.
The complaint charged that the defendants defrauded Fund investors and prospective investors, unlawfully operated as unregistered broker-dealers and offered and sold securities in an unregistered offering; and that defendant Rabinovich & Associates unlawfully operated as an unregistered investment company. The complaint alleged that all defendants violated Sections 5(a) and (c) and 17(a) of the Securities Act and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5, thereunder; that Rabinovich violated Section 206(4) of the Investment Advisers Act and Rule 206(4)-8 thereunder, and Lovaglio aided and abetted those violations; and Rabinovich & Associates violated Section 7(a) of the Investment Company Act of 1940.
When it filed the complaint, the Commission also sought emergency and preliminary relief.
On Nov. 26, 2007, Judge Lynch entered an order temporarily restraining Rabinovich, Rabinovich & Associates, and Lovaglio from violating the statutes and rules charged in the complaint. The court also ordered that the defendants' assets be frozen, ordered the defendants to promptly provide sworn accountings, ordered that discovery be accelerated and that defendants be prohibited from destroying documents, and scheduled a preliminary injunction hearing. On Jan. 15, 2008, Judge Lynch entered a preliminarily injunction against Rabinovich, Rabinovich & Associates, and Lovaglio pending a final disposition of the action, and continued the emergency relief the court had ordered on Nov. 26, 2007.
Rabinovich has also been criminally charged, and pleaded guilty to a single count criminal information, in connection with the conduct alleged in the Commission's complaint. United States v. Alex Rabinovich, Crim. Information No. 1:08-Cr-220 (S.D.N.Y.) (DC).
The Commission's litigation is continuing against defendants Rabinovich & Associates and Lovaglio, and is also continuing against Rabinovich for purposes of determining penalties and disgorgement. For further information see Litigation Release No. 20372 (Nov. 27, 2007). [SEC v. Rabinovich & Associates, LP, Alex Rabinovich and Joseph Lovaglio, 07 Civ. 10547 (S.D.N.Y.) (GEL)] (LR-20637)
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SELF-REGULATORY ORGANIZATIONS
Immediate Effectiveness of Proposed Rule Change
A proposed rule change filed by the Chicago Board Options Exchange (SR-CBOE-2008-70) to extend the Short Term Option Series Pilot Program until July 12, 2009, has become immediately effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58094)
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Proposed Rule Change
The NASDAQ Stock Market filed a proposed rule change (SR-NASDAQ-2008-033), as modified by Amendment No. 1 thereto, pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 related to the submission of non-tape reports. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58101)
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SECURITIES ACT REGISTRATIONS
Latest Securities Act registrations (TXT)
--------------------------------------------------------------------------------
RECENT 8K FILINGS
Latest 8-K filings (TXT)
http://www.sec.gov/news/digest/2008/dig070808.htm
Trading suspensions: VMTF -- VMT Scientific, Inc.
7/8 - 7/21/08
34-58116: http://www.sec.gov/litigation/suspensions/2008/34-58116.pdf
Order: http://www.sec.gov/litigation/suspensions/2008/34-58116-o.pdf
July 7, 2008 SEC News Digest
Issue 2008-130
COMMISSION ANNOUNCEMENTS
SEC, FRB Sign Agreement to Enhance Collaboration, Coordination and Information Sharing
Today, Securities and Exchange Commission Chairman Christopher Cox and Board of Governors of the Federal Reserve System Chairman Ben Bernanke signed a memorandum of understanding (MOU) between the two agencies that will deepen their information sharing and cooperation, permitting both agencies to better perform their responsibilities.
Under the MOU between the two agencies, the SEC and the Board would share information and cooperate across a number of important areas of common interest including anti-money laundering, bank brokerage activities under the Gramm-Leach-Bliley Act, clearance and settlement in the banking and securities industries, and the regulation of transfer agents. The MOU specifically covers bank holding companies and so-called Consolidated Supervised Entities that own securities firms. It builds on and formalizes the long-standing cooperative arrangements between the SEC and the Board, as well as the more recent cooperation on matters including banking and investment banking capital and liquidity following the Board's emergency opening of credit facilities to primary dealers.
"I am pleased with this agreement," said Federal Reserve Board Chairman Ben Bernanke. "It formalizes and strengthens the ongoing cooperation between our two agencies to enhance the stability of the financial system. I look forward to continuing this productive collaboration with Chairman Cox and his staff."
SEC Chairman Christopher Cox said, "This agreement represents a valuable coordination of the roles of the SEC and the Fed in our capital markets. Years ago, when the dividing lines between commercial and investment banking were bright, the high level of coordination we are establishing today was not a priority for the U.S. government. But today, the interconnectedness of mortgage and lending markets, credit derivatives, securitizations, and counterparty relationships requires the U.S. government to adopt a more coherent and coordinated approach. Just as with our similar arrangement with the CFTC, this agreement will permit the expanded sharing of information on a confidential basis, and help ensure that regulated entities receive a coherent message from Uncle Sam. This is smart government. We look forward to enhancing our collaborative relationship with the Fed within the formal framework covered by the agreement."
The MOU will improve the ability of the SEC to perform its role as primary supervisor of Consolidated Supervised Entities and Primary Dealers, and improve the ability of the Federal Reserve to perform its role in overseeing the stability of the financial system. The importance of this deepened cooperation is highlighted by the recent stress in the financial markets affecting commercial and investment banks, as well as many other market participants.
The SEC recently entered into a similar MOU with the Commodity Futures Trading Commission. An agreement between the SEC and the Department of Labor is anticipated later this summer. (Press Rel. 2008-134)
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ENFORCMENT PROCEEDINGS
In the Matter of Phillip W. Offill, Jr., Esq.
On July 7th, the Commission issued an Order of Forthwith Suspension Pursuant to Rule 102(e)(2) of the Commission's Rules of Practice suspending Phillip W. Offill, Jr., Esq. from appearing or practicing before the Commission, based on the Texas State Bar's judgment (i) suspending him from practicing law for 36 months, and (ii) placing him on a period of probated suspension for an additional 24 months. The Commission's order finds that on March 13, 2008, a judgment was entered by the Texas State Bar, concluding that Offill, who has regularly appeared and practiced before the Commission, had committed multiple violations of the Texas Disciplinary Rules of Professional Conduct. Those violations included intending to destroy or conceal client documents when Offill knew that his former client was about to commence litigation against him, making misrepresentations to a federal judge in Florida, and misrepresenting in litigation pleadings his and his client's relationship to certain individuals. (Rel. 34-58105; File No. 3-13087)
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SELF-REGULATORY ORGANIZATIONS
Proposed Rule Changes
The Financial Industry Regulatory Authority has filed a proposed rule change (SR-FINRA-2008-028) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 and Rule 19b-4 thereunder, to adopt FINRA Rule 2010 (Standards of Commercial Honor and Principles of Trade), FINRA Rule 2020 (Use of Manipulative, Deceptive or Other Fraudulent Devices), and FINRA Rule 5150 (Fairness Opinions) in the Consolidated FINRA Rulebook. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58095)
The Philadelphia Stock Exchange has filed a proposed rule change (SR-Phlx-2008-50) under Rule 19b-4 of the Exchange Act to establish an automated process for handling complex options orders on the Phlx's electronic trading platform for options, Phlx XL. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58099)
The National Securities Clearing Corporation filed a proposed rule change (SR-NSCC-2006-17) under Section 19(b)(1) of the Exchange Act that would allow NSCC to reorganize its Rules and Procedures related to membership standards and membership requirements to conform them to current practice and to harmonize them with similar rules of NSCC's affiliate, the Fixed Income Clearing Corporation. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58100)
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Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed by the Chicago Board Options Exchange related to the appointment cost of RVX and VXN options (SR-CBOE-2008-66) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58076)
A proposed rule change filed by the NASDAQ Stock Market to modify fees for members using the NASDAQ Options Market (SR-NASDAQ-2008-058) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58081)
A proposed rule change filed by the Boston Stock Exchange extending the current pilot program for Linkage fees on the Boston Options Exchange facility (SR-BSE-2008-35) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58082)
A proposed rule change filed by the American Stock Exchange (SR-Amex-2008-57) to Extend the Quarterly Options Series Pilot Program until July 10, 2009, has become immediately effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58083)
A proposed rule change filed by the American Stock Exchange (SR-Amex-2008-55) to extend the Short Term Options Series Pilot Program until July 12, 2009, has become immediately effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58084)
A proposed rule change filed by NYSE Arca (SR-NYSEArca-2008-68) to extend the One Week Options Series Pilot Program until July 12, 2009, has become immediately effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58085)
A proposed rule change filed by the American Stock Exchange relating to an extension of the linkage fee pilot program (SR-Amex-2008-52) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58086)
A proposed rule change filed by NYSE Arca to enable the Exchange to conduct Market Order and Closing Auctions in NYSE-listed securities subject to a sub-penny trading condition (SR-NYSEArca-2008-71) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58089)
A proposed rule change filed by International Securities Exchange (SR-ISE-2008-55) relating to market maker fee changes has become immediately effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58091)
A proposed rule change filed by the NASDAQ Stock Market regarding technical and conforming changes to NASDAQ rules governing options trading (SR-NASDAQ-2008-057) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58093)
A proposed rule change filed by the New York Stock Exchange to extend the operative date of the NYSE Rule 2 requirement that NYSE-only member organizations apply for and be approved as members of the Financial Industry Regulatory Authority, Inc. (SR-NYSE-2008-54) has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58096)
National Securities Clearing Corporation filed a proposed rule change (File No. SR-NSCC-2008-05) under Section 19(b)(1) of the Exchange Act, which became effective upon filing, to revise its fee schedule to lower fees for certain NSCC services. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58104)
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Accelerated Approval of Proposed Rule Change
The Commission published notice of, and granted accelerated approval to, a proposed rule change, as modified by Amendment No. 1 thereto (SR-CHX-2008-11), submitted by the Chicago Stock Exchange pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 relating to equity-linked debt securities. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58087)
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Designation of Longer Period for Commission Action on a Proposed Rule
The Commission has designated a longer period for Commission action under Section 19(b)(2) of the Securities Exchange Act of 1934 on proposed rule change (SR-NASDAQ-2008-035) filed by the NASDAQ Stock Market which relates to the acquisition of BSE and BSECC by NASDAQ OMX. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58098)
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Approval of Proposed Rule Change
The Commission granted approval of a proposed rule change (SR-CBOE-2008-16) submitted by the Chicago Board Options Exchange under Rule 19b-4 of the Securities Exchange Act of 1934 to reduce certain order exposure periods from three seconds to one second. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58088)
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SECURITIES ACT REGISTRATIONS
Latest Securities Act registrations (TXT)
--------------------------------------------------------------------------------
RECENT 8K FILINGS
Latest 8-K filings (TXT)
http://www.sec.gov/news/digest/2008/dig070708.htm
July 3, 2008 SEC News Digest
Issue 2008-129
COMMISSION ANNOUNCEMENTS
Stewart Mayhew Named Deputy Chief Economist
The Securities and Exchange Commission announced today that Dr. Stewart Mayhew has been promoted to Deputy Chief Economist in the agency's Office of Economic Analysis.
Dr. Mayhew joined the SEC staff in 2002 as a Visiting Academic Scholar, and since 2004 has served as an Assistant Chief Economist, leading a group that provides economic analysis and support for the SEC's Division of Investment Management, Division of Trading and Markets, and Office of Compliance Inspections and Examinations. His promotion to Deputy Chief Economist is effective immediately.
"I look forward to working with Stewart in his new role," said SEC Chief Economist Dr. James Overdahl. "Stewart's background and skills make him perfectly suited to help ensure that Commission's rulemaking, policymaking, market oversight, and enforcement functions fully integrate rigorous economic analysis."
Dr. Mayhew earned a Ph.D. in finance from the University of California, Berkeley in 1996. Prior to joining the SEC staff, he served on the faculty of the Terry College of Business at the University of Georgia and the Krannert School of Management at Purdue University. Dr. Mayhew has published numerous academic articles in such publications as the Journal of Finance, the Journal of Financial and Quantitative Analysis, and the Journal of Futures Markets. (Press Rel. 2008-132)
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SEC Publishes Regulatory Actions to Streamline SRO Rule Filing Process
The Securities and Exchange Commission today published a final rule and new interpretative guidance to improve the rulemaking process for exchanges and other self-regulatory organizations (SROs) that operate under SEC oversight.
The Commission voted unanimously on June 25, 2008, to approve the final rule and issue the guidance to help increase the competitiveness of U.S. markets, the speed with which new products and services can be made available to investors, and the effectiveness of measures designed to protect investors.
Over the past decade, major securities markets have transformed themselves from member-owned quasi-utilities into shareholder-owned, for-profit, multi-national businesses, and technology has revolutionized securities trading. Trades are now measured in milliseconds, and competitive decision making in the marketplace is urgent and immediate. This era of high-tech, global, and competitive exchanges has put an even greater premium on the SEC reviewing the rule proposals of SROs in a timely manner.
"Exchanges are competing with one another to provide more products to more investors more efficiently than ever before," said SEC Chairman Christopher Cox. "But exchanges today also need to be able to change their rules quickly to respond to investors' needs in this competitive environment. These changes in the SEC's internal procedures should help strengthen the protection of investors who reap the benefits of healthier and more competitive markets."
Under the Securities Exchange Act of 1934, when a proposed rule change is submitted by an SRO for Commission review, the Commission is required to approve it or institute proceedings to disapprove it within 35 days of its publication. This 35-day deadline can be extended for up to 90 days in certain cases.
To address concerns from market participants and others about rule-processing delays, the Commission has proposed to amend its internal rules of procedure to require that any proposed rule change filed by an SRO for review be published within 15 business days. In the rare instance when a rule change is unusually complex or raised novel issues, the Director of the Division of Trading and Markets would be able to make exceptions to this 15-day requirement.
The Commission also is issuing new interpretive guidance to elaborate on the Commission's views regarding proposed rule changes that may properly be filed for immediate effectiveness, and specifically, those proposed rule changes filed pursuant to Exchange Act Rule 19b-4(f)(6), under which "non-controversial" rule changes may be filed.
First, the guidance would address the proposed changes to rules governing exchange trading systems that could be filed for immediate effectiveness. If these changes implicated any policy issues, they would have to be addressed consistently with how the Commission has dealt with them in the past. The guidance provides many helpful examples in this regard.
Additional changes that also could be filed for immediate effectiveness would include:
Those relating to an SRO's minor rule violation plan.
So-called "copycat" rule filings relating to proposed rule changes other than trading rules.
The guidance and rules will be effective upon their publication in the Federal Register.
The full text of the final rule and new interpretative guidance has been posted to the SEC Web site. (Press Rel. 2008-133)
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ENFORCEMENT PROCEEDINGS
SEC Wins Summary Judgment on Fraud Claims Against Company and Its CEO
On June 30, 2008, the Commission obtained an order on summary judgment against a San Francisco-based company and its former Chairman and CEO on claims that they misled investors about the company's expected revenues and its sources of financing. The order, issued by the U.S. District Court for the Northern District of California, found Indigenous Global Development Corporation (IGDC) and Deni G. Leonard liable for fraud in connection with the purchase and sale of IGDC securities. The case is entitled Securities and Exchange Commission v. Indigenous Global Development Corporation and Deni G. Leonard, Civ. Action No. C-06-05600 (N.D. Cal. June 30, 2008).
According to the Court's order, IGDC claimed, among other things, to be involved in the purchase and sale of natural gas, with the goal of providing "financial self-sufficiency for Native Americans . . . and indigenous people worldwide."
The Court found, that from May 2003 through September 2005, in a series of press releases and in filings with the Commission, IGDC and Leonard falsely told investors that IGDC had contracts to purchase and sell millions of dollars in natural gas and also had access to millions of dollars in financing. In fact, the Court found, IGDC was a start-up company that had no revenues and no significant contracts or sources of financing.
The Court found that Leonard committed fraud in connection with the purchase and sale of securities, in violation of Section 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder; issued false certifications as to the accuracy of IGDC filings with the Commission, in violation of Exchange Act Rule 13a-14; and aided and abetted IGDC in making filings with the Commission that were materially inaccurate, in violation of Exchange Act Section 13(a) and Rules 12b-20, 13a-1 and 13a-13.
The Court's order enjoins Leonard from violations of these provisions of the securities laws; requires him to pay disgorgement of $249,793.68 (representing the proceeds from his sales of IGDC stock to the public during the course of his fraud) plus prejudgment interest of $37,586.84; imposes a monetary penalty of $249,793.68; prohibits Leonard from serving as an officer or director of any public company; and also prohibits Leonard from involvement in the offering of any penny stock.
In addition, the Court entered judgment against IGDC, which is now defunct, and imposed a penalty of $208,000. [SEC v. Indigenous Global Development Corporation and Deni G. Leonard, Civ. Action No. C-06-05600 (N.D. Cal.)] (LR-20634)
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SEC v. Enterprise Trust Company, et al.
On July 2, 2008, the Commission obtained an Order of Permanent Injunction (Order) from the United States District Court for the Northern District of Illinois against John H. Lohmeier (Lohmeier), of Oak Brook, Illinois, pursuant to his consent. The Order permanently enjoins Lohmeier from violating the anti-fraud provisions of the federal securities laws in connection with the purchase and sale of securities. Lohmeier consented to the entry of the Order against him without admitting or denying the allegations in the Commission's complaint.
The Commission's complaint, filed on March 3, 2008, alleges that Defendants Lohmeier, Enterprise Trust Company (Enterprise) and Rebecca A. Townsend (Townsend) fraudulently induced hundreds of customers of Advisory Financial Consultants (AFC), a registered broker-dealer, to transfer custody of approximately $49 million in mutual funds to Enterprise. The complaint further alleges that unbeknownst to and without the authorization of the customers, Defendants Lohmeier, Enterprise, and Townsend placed the AFC customers' mutual funds into margin and other accounts where the AFC customers' securities served as collateral for leveraged margin trading, including options trading and short selling, that was intended to benefit Enterprise's principals, Lohmeier and Townsend, and other Enterprise customers. This margin trading was not intended to and did not benefit the AFC customers. The complaint further alleges that on February 13, 2008, more that $8 million of the AFC customers' mutual funds were sold without the AFC customers' knowledge or approval to cover Enterprise's margin debt.
The Order permanently enjoins Lohmeier from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The agreed Asset Freeze Order, entered on March 3, 2008 and which froze all assets of Lohmeier and Enterprise, remains in effect. Additionally, the Court's March 12, 2008 order appointing a receiver for Enterprise also remains in effect. The Court will determine whether to impose disgorgement and prejudgment interest, and civil penalties against Lohmeier and Enterprise will be determined at a future date. The Commission's investigation in this matter is ongoing. [SEC v. Enterprise Trust Company, et al, Civil Action 08 C 1260, United States District Court for the Northern District of Illinois] (LR-20635)
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Former Employees of Morgan Stanley and ING Investment Management Services Settle SEC Insider Trading Charges
The Securities and Exchange Commission announced today that on July 3, 2008, the Honorable Alvin K. Hellerstein, United States District Judge for the Southern District of New York, entered a final judgment against Jennifer Xujia Wang, a former employee of Morgan Stanley & Co., Inc., and her husband, Ruben Chen a/k/a Ruopian Chen, a former employee of ING Investment Management Services, LLC, in SEC v. Wang, et al., C.A. No. 07-CV-3715, an emergency insider trading case the Commission filed on May 10, 2007. On that same day, the Court issued a temporary restraining order, which among other things, froze the defendants' assets and on May 18, 2007, following the consent of the defendants, the Court issued a preliminary injunction.
The criminal authorities arrested and charged Chen and Wang the same day the Commission filed its emergency action. On Sept. 5, 2007, Chen and Wang pled guilty to conspiracy to commit securities fraud and insider trading. On December 4, 2007, Chen and Wang were each sentenced to 18 months in prison, to be served consecutively. Chen surrendered on March 3, 2008, and is currently incarcerated.
The Commission's amended complaint alleges that Chen and Wang used online brokerage accounts in Wang's mother's name, Zhiling Feng, to purchase securities of companies on the verge of announcing they would be acquired. Wang and Chen used material non-public information from Wang's then employer, Morgan Stanley, which was contacted to provide services in connection with the acquisitions. Wang and Chen obtained illegal profits of $727,733 by trading on the basis of material nonpublic information before the public announcements of five impending acquisitions: Town & Country Trust; Glenborough Realty Trust; Genesis HealthCare Corporation; Penn National Gaming, Inc.; and American Financial Realty Trust.
Without admitting or denying the allegations in the amended complaint, Chen and Wang consented to the entry of a final judgment which: (1) permanently enjoins them from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; (2) orders them to pay jointly and severally disgorgement of $727,733, plus prejudgment interest of $57,096, for a total of $784,829; and (3) imposes a civil penalty against each of $50,000, such penalty amounts having been limited based on the defendants' sworn representations in their statement of financial condition. Chen and Wang also consented to the entry of Commission orders barring Chen from association with any investment adviser and Wang from association with any broker-dealer or investment adviser.
For further information, please see Litigation Rel. No. 20112 (May 10, 2007). [SEC v. Jennifer Xujia Wang and Ruben Chen a/k/a Ruopian Chen, Civil Action No. 07-CV-3715 (S.D.N.Y.) (AKH)] (LR-20636)
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INVESTMENT COMPANY ACT RELEASES
The Penn Mutual Life Insurance Company, et al.
A notice has been issued giving interested persons until July 24, 2008, to request a hearing on an application filed by The Penn Mutual Life Insurance Company, The Penn Insurance and Annuity Company, Penn Mutual Variable Annuity Account III, Penn Mutual Variable Life Account I, and PIA Variable Annuity Account I (collectively the Section 26 Applicants), Penn Series Funds, Inc. (collectively with the Section 26 Applicants, the Section 17 Applicants). The Section 26 Applicants request an order under Section 26(c) of the Investment Company Act to permit the substitution of securities issued by certain registered investment companies for shares of a certain other registered investment companies. The Section 17 Applicants also request an order pursuant to Section 17(b) of the Act exempting them from the provisions of Section 17(a) of the Act to permit certain in-kind transactions in connection with the substitution. (Rel. IC-28328 - July 2)
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SELF-REGULATORY ORGANIZATIONS
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed by the Chicago Board Options Exchange to extend the duration of CBOE Rule 6.45A(b) pertaining to orders represented in open outcry (SR-CBOE-2008-65) has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58048)
The Options Clearing Corporation filed a proposed rule change (SR-OCC-2008-10), which became effective upon filing, under Section 19(b)(1) of the Exchange Act relating to the new methodology for adjusting options contracts for cash dividends and distributions. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58059)
A proposed rule change filed by the American Stock Exchange (SR-Amex-2008-49) to amend Section 107 of the Company Guide has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58060)
A proposed rule change filed by The NASDAQ Stock Market regarding technical and conforming changes to Nasdaq rules (SR-NASDAQ-2008-054) has become immediately effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58069)
A proposed rule change filed by the International Securities Exchange (SR-ISE-2008-51) to establish an exemption for certain Regulation NMS-compliant intermarket sweep orders from the requirements in Rule 2119 (Equity EAMs Acting as Brokers) and to conform Rule 2119 to Financial Industry Regulatory Authority rules has become immediately effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58072)
A proposed rule change (SR-CBOE-2008-71) filed by the Chicago Board Options Exchange relating to the temporary membership status access fee has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58073)
A proposed rule change filed by the NYSE Arca to permit the use of a new order type known as Price Improving Orders and Quotes (SR-NYSEArca-2008-69) has become immediately effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58079)
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Proposed Rule Change
The American Stock Exchange filed a proposed rule change (SR-Amex-2008-54) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 relating to closed-end fund of hedge fund listing requirements. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58067)
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Approval of Proposed Rule Change
The Commission granted approval to a proposed rule change and Amendments No. 1 and 2 thereto submitted by the New York Stock Exchange (SR-NYSE-2008-20) under Section 19(b)(1) of the Securities Exchange Act of 1934 relating to Exchange Rule 36 (Communications Between Exchange and Member's Offices) to make permanent an existing portable phone pilot. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58068)
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SECURITIES ACT REGISTRATIONS
Latest Securities Act registrations (TXT)
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RECENT 8K FILINGS
Latest 8-K filings (TXT)
http://www.sec.gov/news/digest/2008/dig070308.htm
July 2, 2008 SEC News Digest
Issue 2008-128
COMMISSION ANNOUNCEMENTS
Securities and Exchange Commission Suspends Trading in Three Issuers for Failure to Make Required Periodic Filings
The U.S. Securities and Exchange Commission announced the temporary suspension of trading in the securities of the following issuers, commencing at 9:30 a.m. EDT on July 2, 2008, and terminating at 11:59 p.m. EDT on July 16, 2008.
WarpRadio.com, Inc. (WRPR)
Wireless Frontier Internet, Inc. (WFRI)
World Associates, Inc. (WAIV)
The Commission temporarily suspended trading in the securities of these three issuers due to a lack of current and accurate information about the companies because they have not filed periodic reports with the Commission in over three years. This order was entered pursuant to Section 12(k) of the Securities Exchange Act of 1934 (Exchange Act).
The Commission cautions brokers, dealers, shareholders and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by these companies.
Brokers and dealers should be alert to the fact that, pursuant to Exchange Act Rule 15c2-11, at the termination of the trading suspensions, no quotation may be entered relating to the securities of the subject company unless and until the broker or dealer has strictly complied with all of the provisions of the rule. If any broker or dealer is uncertain as to what is required by the rule, it should refrain from entering quotations relating to the securities of these companies that have been subject to a trading suspension until such time as it has familiarized itself with the rule and is certain that all of its provisions have been met. Any broker or dealer with questions regarding the rule should contact the staff of the Securities and Exchange Commission in Washington, DC at (202) 551-5720. If any broker or dealer enters any quotation which is in violation of the rule, the Commission will consider the need for prompt enforcement action.
If any broker, dealer or other person has any information which may relate to this matter, they should immediately communicate it to the Delinquent Filings Branch of the Division of Enforcement at (202) 551-5466, or by e-mail at DelinquentFilings@sec.gov. (Rel. 34-58078)
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SEC Announces Panelists and Agenda for July 9 Roundtable on Fair Value Accounting Standards
The Securities and Exchange Commission today announced the panelists and agenda for its July 9 roundtable on fair value accounting and auditing standards.
SEC Chairman Christopher Cox will begin the roundtable with opening remarks at 9 a.m. ET. The roundtable will be organized into two panels. The first panel will focus on fair value accounting issues from the perspective of larger financial institutions and the needs of their investors. The second panel will discuss these issues from the perspective of all public companies, including small public companies, and the needs of their investors.
The following panelists are scheduled to participate and discuss topics related to the benefits and potential challenges associated with existing fair value accounting and auditing standards.
9:15 a.m. - Panel One: Large Financial Institutions
Jane B. Adams, Maverick Capital
Russell B. Mallett, III, PricewaterhouseCoopers LLP
Kathy Petroni, Michigan State University
Joseph Price, Bank of America Corporation
Kurt N. Schacht, CFA Institute Centre for Financial Market Integrity
Matthew Schroeder, The Goldman Sachs Group, Inc.
James S. Tisch, Loews Corporation
11 a.m. - Panel Two: All Public Companies
Leonard W. Cotton, Centerline Capital Group
Sam Gutterman, PricewaterhouseCoopers LLP
Charles Holm, Federal Reserve Bank
Gary R. Kabureck, Xerox Corporation
Kenneth B. Robins, Fidelity Investments - Equity and High Income Funds
R. Harold Schroeder, Carlson Capital
Wes Williams, Crowe Chizek and Company LLC
John B. Wojcik, Bank of the West
In addition, the following individuals are scheduled to participate in both panel discussions as observers:
Thomas J. Linsmeier, Financial Accounting Standards Board
James J Leisenring, International Accounting Standards Board
Mark W. Olson, Public Company Accounting Oversight Board
The roundtable will take place on July 9, 2008, from 9 a.m. to approximately 12:30 p.m. ET at the SEC's headquarters, 100 F Street N.E., Washington D.C. The roundtable will be open to the public with seating on a first-come, first-serve basis. Doors will open at 8:30 a.m. ET. Visitors will be subject to security checks.
Real-time audio and video webcasts will be available on the SEC Web site at www.sec.gov.
For additional information, please contact John Heine in the SEC's Office of Public Affairs at 202-551-4123. (Press Rel. 2008-130)
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SEC's Jacob Stillman Earns Prestigious Award for Outstanding Government Attorneys
The Securities and Exchange Commission announced today that Jacob H. Stillman, the SEC's Solicitor, has been selected to receive the Federal Bar Association's 48th Annual Justice Tom C. Clark Award for Outstanding Government Attorney.
Mr. Stillman joined the SEC in 1962 as a staff attorney in the Office of the General Counsel. He has since held various positions of increasing responsibility in that office. As Solicitor, a position that he has held since 1999, Mr. Stillman supervises the Commission's appellate litigation staff. Among his other responsibilities, Mr. Stillman represents the Commission in cases heard before courts of appeals and (in conjunction with the Solicitor General) before the U.S. Supreme Court.
"Jake is truly deserving of this prestigious award. Just as he has endowed the SEC with his wisdom and expertise for so many years, now he is burnishing its reputation through his own achievements and the exceptional recognition that he has earned," said SEC Chairman Christopher Cox. "For nearly half a century, Jake has served the American people with great distinction - as a skilled advocate in the courts, a valued advisor to the Commission, and a leading contributor to the development of the federal securities laws. I am pleased to join my fellow Commissioners and all of the SEC staff in congratulating him for this outstanding honor."
Brian Cartwright, the SEC's General Counsel, added, "Jake Stillman is a living legend among securities lawyers, both inside and outside the Commission. His expertise and experience are unparalleled. Those of us who work beside Jake feel honored and humbled to be able to do so. No one could more truly deserve this high honor."
Before joining the SEC staff, Mr. Stillman clerked for Judge Harry E. Kalodner of the U.S. Court of Appeals for the Third Circuit, and served as an officer in the Judge Advocate General's Corps of the U.S. Army. Mr. Stillman graduated cum laude from Harvard Law School in 1958.
The Justice Tom C. Clark Award recognizes the outstanding accomplishments by lawyers during their service in the federal government or District of Columbia government. The award bears the name of Justice Tom C. Clark, a former Federal Bar Association president and government attorney who served as U.S. Attorney General and later as a Supreme Court justice.
Mr. Stillman joins four former SEC lawyers who also have received the Justice Tom C. Clark Award: Philip A. Loomis, Jr., Paul Gonson, William R. McLucas, and Stanley Sporkin. (Press Rel. 2008-131)
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Commission Meetings
Closed Meeting - July 10, 2008 - 2:00 p.m.
The subject matter of the closed meeting scheduled for July 10, 2008, will be: formal orders of investigation; institution and settlement of injunctive actions; institution and settlement of administrative proceedings of an enforcement nature; amicus consideration; and other matters related to enforcement proceedings.
At times, changes in Commission priorities require alterations in the scheduling of meeting items. For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact: The Office of the Secretary at (202) 551-5400.
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RULES AND RELATED MATTERS
SEC Proposes Rule to Require Electronic Filing of Transfer Agent Forms
The Commission published for comment a proposed rule to amend various rules and forms under the Securities Exchange Act of 1934 (Exchange Act) that rely on ratings by nationally recognized statistical rating organizations (NRSROs). The proposed amendments are designed to address concerns that the reference to NRSRO ratings in Commission rules and forms may have contributed to an undue reliance on NRSRO ratings by market participants. The proposed rule is one of three releases that the Commission published simultaneously relating to the use in its rules and forms of credit ratings issued by NRSROs. Publication of the proposal is expected in the Federal Register during the week of July 7. (Rel. 34-58070; File No. S7-17-08)
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ENFORCEMENT PROCEEDINGS
Commission Sustains Disciplinary Action Against Douglas J. Toth
The Commission has sustained NASD disciplinary action against Douglas J. Toth, a former registered representative of Bedminster Financial Group, Ltd. (Bedminster), an NASD member. The Commission also sustained NASD's decision to suspend Toth in all capacities for one year.
The Commission upheld NASD findings that Toth, in violation of NASD Rules, caused Bedminster to file an inaccurate Form U4 on his behalf by failing to disclose to the firm, when it hired him or anytime after, that a state securities fraud action was pending against him. In sustaining NASD's sanction upon Toth, the Commission underscored the importance of Form U4 to the regulatory process. The Commission found that Toth's failure to disclose the securities fraud action "deprived his firm from considering all material information in its determination of whether or under what circumstances to allow Toth to become registered with the firm." According to the Commission, "[s]uspending Toth for one year serves the public interest by impressing upon him and other applicants for registration the importance of disclosing such significant information and makes recurrence less likely." (Rel. 34-58074; File No. 3-12739)
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Commission Sustains in Part and Sets Aside in Part FINRA Disciplinary Action Against Wanda P. Sears
The Commission has sustained in part and set aside in part FINRA disciplinary action against Wanda P. Sears, a former general securities representative of American Express Financial Advisors, Inc. FINRA found that Sears violated NASD Conduct Rule 2110 by making twenty unauthorized trades in customer accounts and Rules 3030 and 2110 by preparing clients' tax returns for compensation without providing American Express Financial Advisors prompt written notice of this activity. FINRA suspended Sears for two years for the unauthorized trading and suspended Sears for six months for the undisclosed outside business activity.
The Commission sustained FINRA's findings of unauthorized trading with respect to two trades in the accounts of customers who testified at the hearing before FINRA. The Commission set aside FINRA's findings of unauthorized trading with respect to the other eighteen trades in the accounts of customers who did not testify. Under the circumstances, the Commission remanded the proceeding to FINRA so that it had the opportunity to assess appropriate sanctions on the basis of the unauthorized trading violations that the Commission sustained.
The Commission sustained FINRA's findings of undisclosed outside business activity. The Commission found that the record established that Sears prepared tax returns for her clients for compensation and did not provide American Express Financial Advisers with written notice of this activity as required by Rule 3030. The Commission sustained the six-month suspension. (Rel. 34-58075; File No. 3-12881)
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Commission Orders Hearings on Registration Suspension or Revocation Against Four Companies for Failure to Make Required Periodic Filings
In conjunction with today's trading suspension, the Commission also instituted a public administrative proceeding to determine whether to revoke or suspend for a period not exceeding twelve months the registration of each class of the securities of four companies for failure to make required periodic filings with the Commission:
WarpRadio.com, Inc. (WRPR)
Wellness America Online, Inc. (n/k/a General Ventures, Inc.) (GVSI)
Wireless Frontier Internet, Inc. (WFRI)
World Associates, Inc. (WAIV)
In the Order, the Division of Enforcement (Division) alleges that the respective respondents are delinquent in their required periodic filings with the Commission.
In this proceeding, instituted pursuant to Exchange Act Section 12(j), a hearing will be scheduled before an Administrative Law Judge. At the hearing, the judge will hear evidence from the Division and the respondents to determine whether the allegations of the Division contained in the Order, which the Division alleges constitute failures to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 thereunder, are true. The judge in the proceeding will then determine whether the registrations pursuant to Exchange Act Section 12 of the securities of these respondents should be revoked or suspended for a period not exceeding twelve months. The Commission ordered that the Administrative Law Judge issue an initial decision not later than 120 days from the date of service of the order instituting proceedings. (Rel. 34-58077; File No. 3-13086)
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In the Matter of National Manufacturing Technologies, Inc.
An Administrative Law Judge has issued an Order Making Findings and Revoking Registrations by Default (Default Order) in the matter of National Manufacturing Technologies, Inc. The Order Instituting Proceedings alleged that National Manufacturing Technologies, Inc., Natural Solutions Corp., Natural Wonders, Inc., Net Nanny Software International, Inc., Netcentives, Inc., and Netcruise.com, Inc., each failed repeatedly to file required annual and quarterly reports while their securities were registered with the Securities and Exchange Commission. The Default Order finds these allegations to be true and revokes the registrations of each class of registered securities of National Manufacturing Technologies, Inc., Natural Solutions Corp., Natural Wonders, Inc., Net Nanny Software International, Inc., Netcentives, Inc., and Netcruise.com, Inc., pursuant to Section 12(j) of the Securities Exchange Act of 1934. (Rel. 34-58080; File No. 3-13036)
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SELF-REGULATORY ORGANIZATIONS
Immediate Effectiveness of Proposed Rule Change
The Depository Trust Company filed a proposed rule change (SR-DTC-2008-04) under Section 19(b)(1) of the Exchange Act, which proposed rule change became effective upon filing, to establish an alternate choice in DTC Surety Providers. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58042)
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Approval of Proposed Rule Change
The Commission granted approval to a proposed rule change (SR-DTC-2007-12) filed by The Depository Trust Company under Section 19(b)(1) of the Securities Exchange Act of 1934 which would allow DTC to open an omnibus account at Euroclear Bank in order to facilitate the repositioning of inventory between European markets and U.S. markets for securities listed in multiple marketplaces. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58055)
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Accelerated Approval of Proposed Rule Changes
The Commission noticed Amendment No. 2 to a proposed rule change (SR-NYSEArca-2008-32) submitted pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 by NYSE Arca relating to the Minor Rule Plan and granted accelerated approval to the proposed rule change as modified by Amendment No. 2. Publication is expected in the Federal Register during the week of July 7. (Rel. 34-58066)
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SECURITIES ACT REGISTRATIONS
Latest Securities Act registrations (TXT)
--------------------------------------------------------------------------------
RECENT 8K FILINGS
Latest 8-K filings (TXT)
http://www.sec.gov/news/digest/2008/dig070208.htm
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•._.•´¯`•._.•´¯`• PURPOSE OF THIS THREAD •._.•´¯`•._.•´¯`•._.•
Regulatory Actions
This page provides links to releases concerning SEC rulemaking activity, including concept releases, proposed rules, final rules, interpretive releases, and policy statements. It also links to announcements concerning SRO rulemaking, PCAOB rulemaking, instructions for Exchange Act Exemptive Applications, other Commission notices, and public petitions for rulemaking submitted to the SEC. http://www.sec.gov/rules.shtml
Division of Enforcement
The Division of Enforcement investigates possible violations of securities laws, recommends Commission action when appropriate, either in a federal court or before an administrative law judge, and negotiates settlements http://www.sec.gov/divisions/enforce.shtml
Enforcement Actions #msg-17969541
Trading Suspensions 2008: #msg-17980493 ---> Trading Suspensions! When the SEC Suspends Trading in a Stock #msg-17969590
Recent Press Releases #msg-18794230
Information of Interest
What does it mean when an "E" is added to a stock's ticker (courtesy of Generic): #msg-31755048
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