UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 55820 / May 29, 2007 ADMINISTRATIVE PROCEEDING File No. 3-12613 -------------------------------------------------------x : : In the Matter of : ORDER MAKING FINDINGS AND : IMPOSING REMEDIAL SANCTIONS : PURSUANT TO CHRISTIAN NIGRO : SECTION 15(b) OF THE : SECURITIES EXCHANGE ACT OF 1934 : Respondent. : : -------------------------------------------------------x I. On April 10, 2007, the Securities and Exchange Commission (“Commission”) instituted administrative proceedings, pursuant to Section 15(b) of the Securities Exchange Act of 1934 (“Exchange Act”), against Christian Nigro (“Nigro” or “Respondent”). II. Respondent has submitted an Offer of Settlement (the “Offer”), which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission’s jurisdiction over him and the subject matter of these proceedings and the findings contained in Section III. 2, which are admitted, Respondent consents to the entry of this Order Making Findings and Imposing Remedial Sanctions Pursuant to Section 15(b) of the Securities Exchange Act of 1934 (“Order”), as set forth below. 2 III. On the basis of this Order and Respondent’s Offer, the Commission finds that: 1. Nigro, age 31, from December 2000 to October 2001 was a registered representative associated with Valley Forge Securities, Inc. (“Valley Forge”), a broker-dealer registered with the Commission pursuant to Section 15(b) of the Exchange Act. 2. On May 24, 2005, Nigro pled guilty to one count of conspiracy to commit securities fraud. United States v. Christian Nigro, 06 Cr. 38 (D.N.J.). 3. The sole count of the criminal information to which Nigro pled guilty alleged, among other things, that Nigro participated in a scheme while employed at Valley Forge Securities to manipulate the price of Select Media Communications, Inc. and to receive undisclosed, excessive commissions from the sales of stocks while employed at Valley Forge. IV. In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions agreed to in Nigro’s Offer. Accordingly, it is hereby ORDERED: Pursuant to Section 15(b)(6) of the Exchange Act that Nigro be, and hereby is barred from association with any broker or dealer. Any reapplication for association by Nigro will be subject to the applicable laws and regulations governing the reentry process, and reentry may be conditioned upon a number of factors, including, but not limited to, the satisfaction of any or all of the following: (a) any disgorgement ordered against Nigro, whether or not the Commission has fully or partially waived payment of such disgorgement; (b) any arbitration award related to the conduct that served as the basis for the Commission order; (c) any self-regulatory organization arbitration award to a customer, whether or not related to the conduct that served as the basis for the Commission order; and (d) any restitution order by a self-regulatory organization, whether or not related to the conduct that served as the basis for the Commission order. For the Commission, by its Secretary, pursuant to delegated authority. Nancy M. Morris Secretary
34-55821 May 29, 2007 Commonwealth Growth Fund II, Medical Asset Management, Inc., NexTech Enterprises International, Inc., Pentagenic Pharmaceuticals, Inc., and Star Tech Health Services, Inc. http://www.sec.gov/litigation/admin/2007/34-55821.pdf
UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 55821/May 29, 2007 ADMINISTRATIVE PROCEEDING File No. 3-12617 ___________________________________ In the Matter of : : COMMONWEALTH GROWTH FUND II, : ORDER MAKING FINDINGS AND MEDICAL ASSET MANAGEMENT, INC., : REVOKING REGISTRATIONS NEXTECH ENTERPRISES : BY DEFAULT INTERNATIONAL, INC., : PENTAGENIC PHARMACEUTICALS, INC., : and STAR TECH HEALTH SERVICES, INC. : : ___________________________________ The Securities and Exchange Commission (Commission) issued its Order Instituting Proceedings (OIP) on April 12, 2007, pursuant to Section 12(j) of the Securities Exchange Act of 1934 (Exchange Act). All Respondents were served with the OIP by April 17, 2007. See Rule 141(a)(2)(ii) of the Commission’s Rules of Practice. Respondents’ Answers to the OIP were due ten days after service. See OIP at 3; 17 C.F.R. § 201.220(b). On April 30, 2007, the Division of Enforcement (Division) filed a motion for default against all Respondents for failing to file Answers. Before ruling on that motion, I ordered Commonwealth Growth Fund II (Commonwealth); Medical Asset Management, Inc. (Medical); NexTech Enterprises International, Inc. (NexTech); Pentagenic Pharmaceuticals, Inc. (Pentagenic); and Star Tech Health Services, Inc. (Star Tech), each to show cause, by May 17, 2007, why they should not be held in default and have the registrations of their securities revoked. To date, no Respondent has filed an Answer or responded to the Show Cause Order. Accordingly, Commonwealth, Medical, NexTech, Pentagenic, and Star Tech are in default for failing to file Answers, respond to a dispositive motion within the time frame provided, or otherwise defend the proceeding. See 17 C.F.R. §§ 201.155(a), .220(f). As authorized by Rule 155(a) of the Commission’s Rules of Practice, the following allegations of the OIP are deemed to be true. Commonwealth (CIK No. 810387) is a California limited partnership located in Sacramento, California, with a class of equity securities registered with the Commission pursuant to Exchange Act Section 12(g). Commonwealth is delinquent in its periodic filings with the Commission, having not filed a periodic report since it filed a Form 10-Q for the period ended September 30, 1998. Medical (CIK No. 861822) is a void Delaware corporation located in Laguna Hills, California, with a class of equity securities registered with the Commission pursuant to Exchange Act Section 12(g). Medical is delinquent in its periodic filings with the Commission, having not filed a periodic report since it filed a Form 10-QSB for the period ended September 30, 1997, which reported that the company had a net loss of $2.8 million for the prior three months. NexTech (CIK No. 889662) is a void Delaware corporation located in Westlake Village, California, with a class of equity securities registered with the Commission pursuant to Exchange Act Section 12(g). NexTech is delinquent in its periodic filings with the Commission, having not filed any periodic reports since it filed a Form 10-QSB for the period ended December 31, 1997, which reported a net loss from operations of $1.2 million for the previous nine months. Pentagenic (CIK No. 1069480) is a revoked Nevada corporation located in Irwindale, California, with a class of equity securities registered with the Commission pursuant to Exchange Act Section 12(g). Pentagenic is delinquent in its periodic filings with the Commission, having not filed any periodic reports since it filed a Form 10-SB registration statement on September 16, 1998. Star Tech (CIK No. 1058586) is a revoked Nevada corporation located in Las Vegas, Nevada, with a class of equity securities registered with the Commission pursuant to Exchange Act Section 12(g). Star Tech is delinquent in its periodic filings with the Commission, having not filed a periodic report since it filed a Form 10-QSB for the period ended September 30, 1999, which reported a net loss of $1,710 for the fiscal year ended December 31, 1998. All Respondents are delinquent in their periodic filings with the Commission, have repeatedly failed to meet their obligations to file timely periodic reports, and failed to heed delinquency letters sent to them by the Division of Corporation Finance requesting compliance with their periodic filing obligations or, through their failure to maintain a valid address on file with the Commission as required by Commission rules, did not receive such letters. Exchange Act Section 13(a) and the rules promulgated thereunder require issuers of securities registered pursuant to Exchange Act Section 12 to file with the Commission current and accurate information in periodic reports, even if the registration is voluntary under Section 12(g). Specifically, Rule 13a-1 requires issuers to file annual reports (Forms 10-K or 10-KSB), and Rule 13a-13 requires issuers to file quarterly reports (Forms 10-Q or 10-QSB). By failing to file required periodic reports while their securities were registered with the Commission, Respondents have failed to comply with Exchange Act Section 13(a) and Exchange Act Rules 13a-1 and 13a-13. In consideration of the above, it is necessary and appropriate for the protection of investors to revoke the registrations of each class of registered securities of Commonwealth, Medical, NexTech, Pentagenic, and Star Tech. ORDER IT IS ORDERED THAT, pursuant to Section 12(j) of the Securities Exchange Act of 1934, the registrations of each class of registered securities of Commonwealth Growth Fund II, 2 Medical Asset Management, Inc., NexTech Enterprises International, Inc., Pentagenic Pharmaceuticals, Inc., and Star Tech Health Services, Inc., are revoked. ____________________ James T. Kelly Administrative Law Judge 3
UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 55827/May 30, 2007 ADMINISTRATIVE PROCEEDING File No. 3-12606 ___________________________________ In the Matter of : : ORDER MAKING FINDINGS AND KENNETH KO : IMPOSING SANCTION BY : DEFAULT : ___________________________________ The Securities and Exchange Commission (Commission) issued its Order Instituting Proceedings (OIP) on April 3, 2007, pursuant to Section 15(b) of the Securities Exchange Act of 1934. The Division of Enforcement (Division) and the Office of the Secretary have provided evidence that Respondent Kenneth Ko (Ko) was served with the OIP by April 16, 2007. 17 C.F.R. § 201.141(a)(2). Ko has not filed an Answer to the OIP, due twenty days after service. OIP at 2, 17 C.F.R. § 201.220(b). On May 9, 2007, the Division filed a motion for entry of default due to Ko’s failure to file a response to the OIP. To date, Ko has not filed a response to that motion. Before ruling on that motion, I ordered Ko to show cause on or before May 24, 2007, why he should not be found in default and be barred from association with any broker or dealer. To date, Ko has not filed any response to the Show Cause Order. Accordingly, Ko is in default for failure to file an Answer, respond to a dispositive motion, or otherwise defend the proceeding. 17 C.F.R. §§ 201.155(a), .220(f). Pursuant to Rule 155(a) of the Commission’s Rules of Practice, I find the following allegations in the OIP to be true. Ko, thirty-seven years old, is a resident of Arlington Heights, Illinois. From August 1992 through October 1998, Ko was employed at John Dawson & Associates (JDAI), a broker-dealer registered with the Commission, as JDAI’s Director of Special Projects and a Managing Director. Ko was responsible for providing technical support to JDAI employees, servicing computer and network systems used by JDAI’s trading operations, serving as a liaison with JDAI’s technical vendors and acting as an assistant to JDAI’s largest producing broker. On June 7, 2006, Ko pleaded guilty to obstruction of justice under 18 U.S.C. § 1505 before the United States District Court for the Northern District of Illinois, in United States v. Ko, No. 1:05-CR-901. On August 26, 2006, a judgment in the criminal case was entered against Ko. He was sentenced to one month in prison and two years’ supervised release. The counts of the criminal indictment to which Ko pleaded guilty alleged, inter alia, that Ko corruptly and knowingly endeavored to influence, obstruct and impede the due and proper administration of law before the Commission by knowingly making false statements under oath to Commission staff members investigating JDAI and certain of its officers, directors and employees. In consideration of the above, I find it is in the public interest to bar Ko from association with any broker or dealer. ORDER IT IS ORDERED THAT, pursuant to Section 15(b) of the Securities Exchange Act of 1934, Kenneth Ko is hereby barred from association with any broker or dealer. _______________________________ Robert G. Mahony Administrative Law Judge
____________________________________ UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 55831 / May 30, 2007 Administrative Proceeding File No. 3-11524 : In the Matter of : Order Directing : Disbursement of Fair Fund PILGRIM BAXTER & : ASSOCIATES, LTD., : : Respondent. : ____________________________________: On June 30, 2006, the Securities and Exchange Commission (the “Commission”) published a proposed Plan of Distribution and issued a Notice of Proposed Distribution Plan and Opportunity for Comment (Exchange Act Release No. 54073) pursuant to Rule 1103 of the Fair Fund Rules, 17 C.F.R. § 201.1103 (the “Notice”). The Commission received comments and, on November 22, 2006, the Commission approved the proposed Plan of Distribution as modified (Exchange Act Release No. 54812). The Plan provides that a Fair Fund consisting of $250,000,000 in disgorgement and civil penalties, plus any accrued interest, less any amounts necessary to pay taxes due on Fair Fund earnings be transferred in increments to Deutsche Bank Trust Company Americas (the “Bank”) to be distributed to injured investors according to the methodology set forth in the Plan. The Plan provides that the Commission will arrange for distribution of the Fair Fund in tranches when a Payment File listing the payees with the identification information required to make the distribution has been received and accepted for each tranche. The Payment File for the second tranche has been received and accepted.1 1 By Order Directing Disbursement of Fair Fund dated April 12, 2007, the Commission ordered the disbursement of the first tranche, composed of $124,999,781.40. See Exchange Act Release No. 55627 (Apr. 12, 2007).
Accordingly, it is ORDERED that the Commission shall transfer for the second tranche $73,276,568.19 of the Fair Fund to the Bank and the Plan Administrator shall distribute the funds to investors, as provided for in the Plan of Distribution. For the Commission, by its Secretary, pursuant to delegated authority. Nancy M. Morris Secretary 2
UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 55834 / May 31, 2007 ADMINISTRATIVE PROCEEDING File No. 3-12549 In the Matter of TEMPO SECURITIES CORPORATION, ROBERT SHIFFRA, and DENNIS ZAUSZNIEWSKI ORDER MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONS PURSUANT TO SECTION 15(b) OF THE SECURITIES EXCHANGE ACT OF 1934 I. On January 24, 2007, the Securities and Exchange Commission (“Commission”) instituted public administrative proceedings pursuant to Section 15(b) of the Securities Exchange Act of 1934 (“Exchange Act”) against Tempo Securities Corporation, Robert Shiffra, and Dennis Zauszniewski (collectively “Respondents”) II. Tempo Securities Corporation, Robert Shiffra, and Dennis Zauszniewski (collectively “Respondents”) have submitted an Offer of Settlement (“Offer”) in these proceedings, which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission’s jurisdiction over them and the subject matter of these proceedings, which are admitted, each of the Respondents consents to the entry of this Order Making Findings and Imposing Remedial Sanctions Pursuant to Section 15(b) of the Securities Exchange Act of 1934 (“Order”), as set forth below. III. On the basis of this Order and Respondents’ Offer, the Commission finds that: Respondents 1. Tempo Securities Corporation (“Tempo”), a broker-dealer registered with the Commission since 1986, is a member of the National Association of Securities Dealers ("NASD"). Tempo conducts a general securities business in over-the-counter and listed securities. Tempo is headquartered in Cleveland, Ohio. From in or about 1995 to in or about 2004, Tempo had up to twenty registered representatives who operated off-site one-person offices. 2. Robert Shiffra (“Shiffra”), age 73, is the president of Tempo and owns two-thirds of the company. Shiffra has been an owner and officer of Tempo since 1991. Shiffra has been a licensed but nonpracticing attorney since 1966 and also occasionally serves as an arbitrator in the securities industry, including for the NASD. Shiffra has been working in the securities industry for at least 40 years and has held his Series 24 license since 1978. Shiffra was previously the head of the compliance department for a broker-dealer, where he wrote the firm’s compliance and procedures manual. 3. Dennis Zauszniewski (“Zauszniewski”), age 55, is a founder and the senior vice president of Tempo. Zauszniewski owns one-third of the company, has been an owner and officer of Tempo since 1986, and has held his Series 24 license since 1986. Zauszniewski occasionally serves as an arbitrator in the securities industry. Related Party 4. Gregory A. Applegate (“Applegate”), age 46, is currently serving a five-year prison term at the Federal Correctional Institute in Morgantown, West Virginia. Applegate was a registered representative associated with Tempo Securities from approximately April 1995 until approximately the end of December 2004, operating out of an office in Ashland, Ohio. Summary 5. From in or about 2001 through approximately the end of 2004, while employed by and associated with Tempo as a registered representative, Applegate made misrepresentations of material facts to over 110 investors and defrauded them regarding the investment of at least $3.1 million in what they were told to be securities. Throughout this time, Respondents supervised Applegate. Respondents, however, failed reasonably to supervise Applegate with a view to preventing and/or detecting his fraudulent conduct. Respondents failed to establish reasonable supervisory procedures for conducting on-site inspections and reviewing DBA accounts, and they failed to establish a reasonable system to effectively implement supervisory procedures that did exist for review of customer communications and review of customer account statements. 2 Finally, Shiffra and Zauszniewski failed reasonably to respond to serious “red flags” indicating possible misconduct by Applegate. Applegate Came to Tempo Amid Allegations of Fraud 6. Applegate joined Tempo in 1995. Approximately two years later, customers at Applegate’s former brokerage firm filed an NASD arbitration claim against Applegate and his former firm, alleging that Applegate had committed fraud and breach of fiduciary duty, causing damages of approximately $140,000. Applegate was accused of providing his customers fraudulent account statements that concealed his excessive trading activity on their accounts. This alleged fraudulent conduct took place just before Applegate left for Tempo. 7. Respondents were aware of the substance of these allegations soon after the claim was filed. During investigative testimony before the staff of the Division of Enforcement, Shiffra claimed that he did not remember Applegate’s explanation regarding the allegations, but Shiffra testified that he “didn’t buy it when [he] heard it.” At no time did Respondents attempt to contact Applegate’s former supervisor or the complaining customers regarding the allegations. 8. During investigative testimony before the staff of the Division of Enforcement, Shiffra admitted that the timing of this alleged fraud and Applegate’s move to Tempo “would raise concern. All of these things would be flags . . . it looks like that would be a reason he’d be leaving: under the scrutiny of Ohio Company checking with his customer.” Applegate’s Ponzi Scheme 9. From in or about 2001 through the end of August 2005, Applegate solicited at least 160 investors to invest at least $9.5 million in a supposed “hedge fund” and other investment vehicles, purportedly through an entity called “Applegate Investments” and other similar names. Applegate orally guaranteed an annual rate of return to these investors. In reality, “Applegate Investments” was a Ponzi scheme: Applegate misappropriated investor funds, using them to finance an unrelated personal business, pay personal expenses, and pay “investment returns” to earlier investors. To carry out this scheme, Applegate mailed to investors false monthly “customer statements” maintained on his office computer, reflecting securities holdings and returns that did not exist, as well as monthly “dividend checks.” 10. Throughout the period from in or about 2001 through approximately the end of 2004, Applegate was associated with Tempo as a registered representative. 11. While Applegate was associated with Tempo, at least 50% of “Applegate Investments” Ponzi scheme investors were also Tempo customers, and at least 40% of Applegate’s Tempo customers with equity accounts also invested in the “Applegate Investments” Ponzi scheme. 12. Applegate continued operating the “Applegate Investments” Ponzi scheme after leaving Tempo at the end of 2004 for another brokerage firm. In August 2005, Applegate’s supervisor at his new firm learned that one of Applegate’s customers had received possibly false account 3 statements directly from Applegate. Applegate’s supervisor immediately conducted an unannounced review of Applegate’s office in Ashland and discovered evidence of the “Applegate Investments” Ponzi scheme in Applegate’s customer files. These customers had also been Tempo customers when Applegate was with Tempo. 13. Applegate’s misconduct described above violated 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. 14. On October 7, 2005, the Commission filed a complaint in SEC v. Gregory Applegate, No. 1:05CV2363, in the Northern District of Ohio, and obtained a temporary restraining order against Applegate, including an asset freeze. The complaint alleged the facts referred to in the first sentence of paragraph 5 above, and sought injunctive as well as monetary relief against Applegate. 15. On January 9, 2006, in the case of U.S. v. Gregory A. Applegate, No. 1:05-cr-00577PAG in the Northern District of Ohio, Applegate pled guilty to a one count information charging mail fraud, in violation of Title 18, U.S. Code, Section 1341, for conduct related to the “Applegate Investments” Ponzi scheme. 16. During the plea colloquy in the criminal case referred to in the previous paragraph, Applegate admitted that as early as 2001 and continuing until September 2005, he “executed a scheme and artifice to defraud certain clients of his and to obtain money by means of fraudulent pretenses, representations and promises.” Applegate also admitted that “in order to conceal this fraudulent scheme . . . [he] caused statements to be mailed to his clients, usually on a monthly or quarterly basis, from his office in Ashland, which falsely reflected the nature of his clients' investments and the balances in his clients' accounts.” 17. On April 26, 2006, Applegate was sentenced to 5 years in prison and was ordered to pay approximately $2.9 million in restitution to aggrieved investors of the “Applegate Investments” Ponzi scheme. 18. On October 17, 2006, in SEC v. Gregory Applegate, the District Court entered a final judgment against Applegate including the entry of an order of permanent injunction enjoining him from violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. 19. On October 30, 2006, the SEC instituted settled Administrative Proceedings against Applegate, barring him from association with any broker or dealer. Respondents held all supervisory authority at Tempo 20. Tempo, Shiffra, and Zauszniewski supervised Applegate while he was associated with Tempo as a registered representative, from approximately April 1996 to approximately the end of 2004. 4 21. Shiffra and Zauszniewski jointly made all decisions regarding establishing Tempo’s supervisory and compliance procedures and were jointly responsible for implementing and enforcing existing procedures. Shiffra and Zauszniewski jointly held all supervisory authority at Tempo, including the ability to discipline, hire and fire registered representatives. 22. Shiffra was Applegate’s designated supervisor at Tempo, and Shiffra performed all on-site visits of Applegate’s office and reviews of Applegate’s operations. Respondents failed to establish reasonable supervisory procedures or a system to implement existing procedures 23. During investigative testimony before the staff of the Division of Enforcement, Zauszniewski stated that Tempo is “not a real brokerage firm” and that Tempo does not follow compliance procedures that “real firms” use because they would be “cost [prohibitive].” 24. At all relevant times, Tempo registered representatives have been characterized by Tempo as “independent contractors,” operating out of their own offices or homes without on-site supervision. 25. Applegate operated a one-person branch office in Ashland, Ohio, over an hour’s drive from Tempo’s main office. Tempo thus did not provide on-site supervision for Applegate. Annual Reviews 26. Respondents did not establish reasonable procedures for inspections of registered representatives’ offices, or implement the procedures for inspections of registered representatives’ offices that did exist. 27. Respondents conducted only pre-announced scheduled “annual reviews” of its registered representatives’ offices and operations. Respondents never conducted any unannounced visits or inspections. 28. During investigative testimony before the staff of the Division of Enforcement, Zauszniewski admitted that, because Respondents’ reviews were always announced, Applegate “could have hid a lot of stuff, which he obviously did and intentionally hid.” 29. Respondents’ on-site visits to Applegate’s office did not include reasonable inspection or review of his operations or offices. 30. During all reviews of Applegate’s office and operations, Shiffra did not request to review Applegate’s account records or customer account files. 31. Besides looking at the top of Applegate’s desk and what was visible on his computer screen, Shiffra never conducted any physical inspection of Applegate’s office. 5 32. From approximately 2001 until the end of 2004, Applegate maintained his “Applegate Investments” Ponzi scheme records on his office computer and in a binder labeled “Applegate Investments Accounts” in his office in Ashland, Ohio. At any given time, at least one month’s worth of fraudulent customer statements, one for every “Applegate Investments” investor, was maintained in that binder. 33. The binder referenced in the previous paragraph and its label, “Applegate Investments Accounts,” were clearly visible during all compliance reviews conducted by Shiffra. Shiffra never inquired about the binder’s contents or attempted to inspect the binder. 34. During investigative testimony before the staff of the Division of Enforcement, Shiffra testified that he doubted that he had “the authority to check [Applegate’s] computer or file cabinets or desk drawers” as part of a compliance review of Applegate’s office. In fact, as Applegate’s supervisor, Shiffra had the authority to do so as part of a compliance review. 35. As part of Respondents’ annual review of Applegate’s office, a survey was mailed to him asking for responses to various compliance questions. No attempt was made to verify Applegate’s answers to the annual survey. 36. During investigative testimony before the staff of the Division of Enforcement, Shiffra stated, “I never understood what [Applegate’s assistants] did . . . . I don’t know what kept her busy full-time, especially with his production.” 37. Respondents did not ask Applegate, or his administrative assistants, what work the assistants were performing in Applegate’s office. Respondents did not attempt to interview Applegate’s administrative assistants about any compliance matters. Respondents did not monitor how many administrative assistants Applegate retained. 38. Applegate’s administrative assistants helped Applegate create and update the “Applegate Investments” Ponzi scheme customer statements every month, as well as to help mail them to customers. They also helped organize the customer files, including keeping “Applegate Investments” files separate from the legitimate Tempo customer account files. 39. Despite Tempo’s own requirements to conduct on-site reviews at least annually, Respondents failed to implement this procedure by failing to conduct an on-site review of Applegate’s office during at least one year: 2004, Applegate’s last year associated with Tempo. 40. Zauszniewski admitted to examiners from the Commission’s Office of Compliance Inspections and Examinations that Respondents did not conduct an on-site review of Applegate’s office in 2004, citing “personal issues.” Lack of Procedures for Review of Applegate’s DBA Bank Accounts 41. As an “independent contractor,” Applegate was responsible for his own business expenses, such as office rent, phone, and electricity. 6 42. Respondents did not establish procedures to review or inspect, nor did they ever review or inspect, Applegate’s business “DBA” bank accounts from which he paid his business expenses. 43. Had Respondents ever asked to review or audit Applegate’s “DBA” bank accounts during approximately 2001 through the end of 2004, they would have discovered personal checks from Applegate’s Tempo customers being deposited into his “DBA” bank accounts, and funds being diverted from those accounts to his personal bank accounts, as part of the “Applegate Investments” Ponzi scheme. 44. One of Applegate’s “DBA” bank accounts was in the name of “Applegate Investments.” Inadequate Implementation of Procedures for Review of Customer Communications 45. The Tempo Compliance and Procedure Manual required that branch supervisors “devise and institute a program whereby all communication from the public to any registered representative under his authority or control is reviewed daily prior to such material being given to the registered representative.” The Tempo Manual also required that branch supervisors “institute and supervise a system whereby the registered representative’s communications to the public concerning securities transactions for the business of this organization are reviewed and a copy retained in the branch office filed and a copy sent to the Compliance Director.” 46. During investigative testimony before the staff of the Division of Enforcement, Shiffra stated that the requirements in the previous paragraph are “referring to a real branch where all of the incoming mail is opened by one person or supervisor and read and looked at before it’s passed out. Where you’ve got one guy in an office, it doesn’t work.” Instead, for one-person offices with no on-site supervision such as Applegate’s, registered representatives were simply asked to forward copies of all customer correspondence to Respondents. However, no systems were established to effectively implement this requirement. Lack of Systems to Implement Procedures for Customer Account Statement Review 47. Tempo’s Compliance and Procedure Manual requires that supervisors “review all monthly statements at least four times per year and initial as evidence of such review.” Tempo’s clearing firm produced monthly account statements for Tempo’s customers, and copies of these statements were mailed to Tempo every month. The Tempo Manual also requires that supervisors of branch offices “review monthly the customer statements” to check for unusual activity, excessive commissions, and unusual patterns of buying or selling. 48. Starting some time in 2000, Tempo’s clearing firm stopped providing paper copies of the monthly statements, instead providing only electronic copies of customers’ monthly account statements on its web site, to which Tempo had access. Tempo had dial-up internet access at its main office. 7 49. After the clearing firm stopped providing paper copies of the monthly statements some time in 2000 until at least January 2006, Respondents failed to develop a reasonable system to implement procedures regarding review of customer account statements. No one at Tempo reviewed customers’ monthly account statements, despite having access to them through the clearing firm’s web site. Shiffra and Zauszniewski failed reasonably to respond to red flags concerning Applegate Applegate’s Commission Decline 50. Between 1995 and 2004, Applegate generally was one of Tempo’s highest “producers” in terms of commission, at times generating approximately one-third of Tempo’s total revenue and well over $100,000 in annual gross commissions. 51. Applegate’s annual gross commissions then dropped nearly in half between July 1, 2002 and June 30, 2003, Tempo’s fiscal year. Shiffra and Zauszniewski did not investigate this dramatic drop in commissions or ask Applegate why his production had declined. 52. During the same period that Applegate’s gross commissions dropped nearly in half, customer investments in the “Applegate Investments” Ponzi scheme more than doubled. Applegate’s Repeated Violation of Tempo Advertisement Policy 53. Applegate repeatedly violated Tempo’s advertisement policy when he listed his office in the local Yellow pages as “Applegate Investments” and other variations of that name, instead of “Tempo Securities.” Shiffra and Zauszniewski repeatedly told Applegate that this listing was unacceptable, but the listing remained the same for the next nine years without any follow-up, further investigation, or disciplinary action taken against Applegate. 54. Shiffra and Zauszniewski failed reasonably to enforce Tempo’s advertisement policy when they failed to follow up or take any action against Applegate for the recurring violation described in the previous paragraph. 55. In addition, Applegate’s repeated violation of this Tempo policy was a red flag of suspicious conduct, which Shiffra and Zauszniewski should have investigated. Significant Customer Liquidations 56. Shiffra and Zauszniewski were aware of numerous liquidations by Applegate’s customers from their Tempo securities accounts. 57. Shiffra and Zauszniewski never attempted to contact any of these customers regarding liquidations. 8 58. With respect to certain significant liquidations, Shiffra testified that he asked Applegate, not the customer, why the customer decided to liquidate their holdings. 59. At least $900,000 worth of customer liquidations in 2003 and 2004 were deposited in the “Applegate Investments” Ponzi scheme soon thereafter. 60. One of Applegate’s Tempo customers liquidated at least $400,000 worth of securities held with Tempo within an eight-month period. This customer countersigned all of her liquidation checks directly over to Applegate. Applegate Claimed No Correspondence with Customers 61. During annual reviews, Shiffra asked Applegate for copies of all correspondence with customers. 62. During investigative testimony before the staff of the Division of Enforcement, Shiffra testified that Applegate always told him that he had engaged in no written correspondence with his customers, except for brief notes referring the customers to newspaper articles. 63. Shiffra and Zauszniewski never attempted to verify Applegate’s repeated claims that he never engaged in any substantive customer correspondence. For example, Shiffra and Zauszniewski never communicated with customers to verify that Applegate never corresponded with them. 64. Applegate engaged in regular written correspondence with a large proportion of his Tempo customers: he mailed them monthly account statements regarding their “Applegate Investments” Ponzi scheme investments. 65. Shiffra and Zauszniewski took no independent steps to communicate with Applegate’s customers, such as periodic “happiness letters,” “activity letters” or any other regular attempts to ascertain customer satisfaction or familiarity with their accounts. Applegate’s Fraud Violations 66. By virtue of the conduct alleged above, Applegate violated Section 17(a) of the Securities Act and 10(b) of the Exchange Act and Rule 10b-5 thereunder when he made intentional misrepresentations regarding the investment activity of “Applegate Investments.” 67. Applegate represented to some customers that their investments would be pooled into a “hedge fund” invested in various securities. Other investors were told that they were investing directly into mutual funds or municipal funds. 68. In reality, Applegate misappropriated investor deposits, using customers’ funds to pay off previous investors and for various personal expenses. 9 69. Applegate also created false “Applegate Investments” monthly statements to support his misrepresentations as to the status of customers’ investments. Respondents’ Failure Reasonably to Supervise Applegate 70. Section 15(b)(4)(E) of the Exchange Act provides that the Commission can impose various sanctions against a broker-dealer, if it “has failed reasonably to supervise, with a view to preventing violations of the provisions of such statutes, rules, and regulations, another person who commits such a violation, if such other person is subject to his supervision.” Section 15(b)(6)(A)(i) of the Exchange Act similarly provides that the Commission can impose various sanctions against individuals who fail to supervise others who are subject to their supervision, within the meaning of Section 15(b)(4)(E). 71. By virtue of the conduct alleged above, Tempo, Shiffra, and Zauszniewski failed reasonably to supervise Applegate within the meaning of Section 15(b) of the Exchange Act when they failed to supervise Applegate with a view to preventing and detecting violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. 72. Respondents failed to establish reasonable supervisory procedures or a system to implement the procedures that did exist. In addition, while Applegate was associated with Tempo, several incidents occurred that should have raised red flags concerning Applegate’s conduct. Shiffra and Zauszniewski, however, did not reasonably respond to these red flags. If Respondents had developed reasonable supervisory procedures for conducting on-site inspections and reviewing DBA accounts, or reasonable systems to implement supervisory procedures for reviewing customer communications and customer account statements, or if Shiffra and Zauszniewski had responded reasonably to red flags, it is likely that they could have prevented and detected Applegate’s fraud. Undertakings 73. Respondents undertake to cease all securities business of Tempo Securities Corporation within 90 days of the entry of this Order. 74. In determining whether to accept the Offer, the Commission considered this undertaking. IV. In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions agreed to in Respondent’s Offer. Accordingly, pursuant to Section 15(b) of the Securities Exchange Act of 1934, it is hereby ORDERED: 10 A. It is ordered that within 30 days of the entry of this Order, Respondents Shiffra and Zauszniewski shall each pay a civil money penalty in the amount of $30,000 to the United States Treasury. Such payment shall be: (A) made by United States postal money order, certified check, bank cashier's check or bank money order; (B) made payable to the Securities and Exchange Commission; (C) hand-delivered or mailed to the Office of Financial Management, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Stop 0-3, Alexandria, VA 22312; and (D) submitted under cover letter that identifies Shiffra and Zauszniewski as Respondents in these proceedings, the file number of these proceedings, a copy of which cover letter and money order or check shall be sent to Peter K.M. Chan, Securities and Exchange Commission, 175 W. Jackson Blvd., Suite 900, Chicago, IL 60604. B. It is further ordered that 90 days after the entry of this Order, Respondents Shiffra and Zauszniewski shall be barred from association with any broker or dealer in a supervisory capacity, with the right to reapply for association in such capacity after one (1) year to the appropriate self-regulatory organization, or if there is none, to the Commission; C. Any reapplication for association by any of the Respondents will be subject to the applicable laws and regulations governing the reentry process, and the reentry may be conditioned upon a number of facts, including, but not limited to, the satisfaction of any or all of the following: (a) any disgorgement ordered against the Respondent, whether or not the Commission has fully or partially waived payment of such disgorgement; (b) any arbitration award related to the conduct that served as the basis for the Commission Order; (c) any self-regulatory organization arbitration award to a customer, whether or not related to the conduct that served as the basis for the Commission Order; and (d) any restitution order by a self-regulatory organization, whether or not related to the conduct that served as the basis for the Commission Order. D. It is further ordered that 180 days after the entry of this Order, the broker-dealer registration of Tempo Securities Corporation with the Commission shall be revoked. By the Commission. Nancy Morris Secretary 11
34-55835 May 31, 2007 Janus Capital Management LLC Note: See also Proposed Distribution Plan Comments due: July 2, 2007 Submit comments on Proposed Distribution Plan http://www.sec.gov/litigation/admin/2007/34-55835.htm
UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION Securities Exchange Act of 1934 Release No. 34-55835 / May 31, 2007 Administrative Proceeding File No. 3-11590
-------------------------------------------------------------------------------- : : : : : : : NOTICE OF PROPOSED DISTRIBUTION PLAN AND OPPORTUNITY TO COMMENT
Notice is hereby given, pursuant to Rule 1103 of the Securities and Exchange Commission's ("Commission") Rules on Fair Fund and Disgorgement Plans, 17 C.F.R. § 201.1103, that the Division of Enforcement has submitted to the Commission a proposed plan ("Distribution Plan") for the distribution of monies placed into a fair fund in the above-captioned matter ("Fair Fund"). On August 18, 2004, in the above-captioned matter, the Commission issued an Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 and Sections 9(b) and 9(f) of the Investment Company Act of 1940, Making Findings, and Imposing Remedial Sanctions and a Cease-And-Desist Order ("Order") (Investment Advisers Act of 1940 Release No. 2277, Investment Company Act of 1940 Release No. 26532). Among other things, the Commission's Order authorized and established the Fair Fund at issue.
OPPORTUNITY FOR COMMENT Pursuant to this Notice, all interested parties are advised that they may print a copy of the proposed Distribution Plan from the Commission's public website, www.sec.gov, and JCM's public website, http://www.janus.com. Interested parties may also obtain a written copy of the proposed Distribution Plan by submitting a written request to Jeffrey Oraker, United States Securities and Exchange Commission, 1801 California Street, Suite 1500, Denver, CO 80202. All persons who desire to comment on the Distribution Plan may submit their comments, in writing, no later than July 2, 2007:
to the Office of the Secretary, United States Securities and Exchange Commission, 100 F Street, N.E., Washington, DC 20549-1090;
by sending an e-mail to rule-comments@sec.gov. Please include the appropriate Administrative Proceeding File Number on the subject line. Comments received will be publicly available. Persons should submit only information that they wish to make publicly available.
THE DISTRIBUTION PLAN The Distribution Plan provides for distribution of the disgorgement and civil penalties paid by Janus Capital Management LLC ("JCM") in this matter to all eligible investors of funds managed by JCM who purchased shares of seven mutual funds, identified below, that were available for sale by JCM's registered representatives during the relevant time periods, identified below ("Eligible Investors"). As set forth in the Distribution Plan, the seven mutual funds and the relevant time periods for each fund are: Adviser International Growth (4/8/02-9/22/03); Adviser Worldwide (4/30/02-9/22/03); Enterprise (6/12/02-9/4/03); High Yield (11/26/02-9/10/03); Mercury (11/7/01-9/4/03); Overseas (11/30/01-9/10/03); and Worldwide (1/28/03-9/10/03). The Fair Fund consists of the $100 million paid by JCM plus any accumulated interest. As proposed in the Distribution Plan, if approved, Eligible Investors would receive a pro rata share of the Fair Fund as calculated by the Independent Distribution Consultant. The pro rata shares of the Fair Fund would be determined based on information contained in JCM's records and calculated by the Independent Distribution Consultant. Eligible Investors would not need to go through a claims process. Under the Distribution Plan, Rust Consulting is proposed to be the Fund Administrator.
For the Commission, by its Secretary, pursuant to delegated authority.
34-55839 May 31, 2007 CMERUN Corp., Combine Corp., Digital Concepts International, Inc., Integrated Homes, Inc., Lighthouse Fast Ferry, Inc., and Wannigan Capital Corp. http://www.sec.gov/litigation/admin/2007/34-55839.pdf
UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 55839 / May 31, 2007 ADMINISTRATIVE PROCEEDING File No. 3-12517 In the Matter of CMERUN CORP., COMBINE CORP., DIGITAL CONCEPTS INTERNATIONAL, INC., INTEGRATED HOMES, INC., LIGHTHOUSE FAST FERRY, INC., and WANNIGAN CAPITAL CORP., Respondents. ORDER MAKING FINDINGS AND REVOKING REGISTRATION OF SECURITIES PURSUANT TO SECTION 12(j) OF THE SECURITIES EXCHANGE ACT OF 1934 AS TO WANNIGAN CAPITAL CORP. I. The Securities and Exchange Commission ("Commission"), having issued on December 28, 2006 an Order Instituting Administrative Proceedings Pursuant to Section 12(j) of the Securities Exchange Act of 1934 (“Exchange Act”) against, among others, Wannigan Capital Corp. (“Wannigan” or “Respondent”), now deems it necessary and appropriate for the protection of investors that an Order Making Findings and Revoking Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of 1934 as to Wannigan Capital Corp.(“Order”) be issued against Respondent. II. In response to the institution of these proceedings, Respondent has submitted an Offer of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission’s jurisdiction over it and the subject matter of these proceedings, Respondent consents to the entry of this Order, as set forth below. 2 III. On the basis of this Order and Respondent’s Offer, the Commission finds1 that A. Wannigan, (f/k/a/ ThermoElastic Technologies, Inc.) is a Colorado corporation located in Fox Island, Washington with a class of securities registered with the Commission pursuant to Section 12(g) of the Exchange Act. Until December 28, 2006, the company’s common stock was quoted on the Pink Sheets (symbol “WGAN”). B. Wannigan has failed to comply with Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder, while its common stock was registered with the Commission in that it has not filed a periodic report for any fiscal period since its Form 10-KSB for the period ending September 30, 2002. IV. Section 12(j) of the Exchange Act provides as follows: The Commission is authorized, by order, as it deems necessary or appropriate for the protection of investors to deny, to suspend the effective date of, to suspend for a period not exceeding twelve months, or to revoke the registration of a security, if the Commission finds, on the record after notice and opportunity for hearing, that the issuer of such security has failed to comply with any provision of this title or the rules and regulations thereunder. No member of a national securities exchange, broker, or dealer shall make use of the mails or any means of 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 pursuant to the preceding sentence. In view of the foregoing, the Commission finds that it is necessary and appropriate for the protection of investors to impose the sanction specified in Respondent’s Offer. Accordingly, it is hereby ORDERED, pursuant to Section 12(j) of the Exchange Act, that registration of each class of Respondent’s securities registered pursuant to Section 12 of the Exchange Act be, and hereby is, revoked. For the Commission, by its Secretary, pursuant to delegated authority. Nancy M. Morris Secretary 1 The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding on any other person or entity in this or any other proceeding.
34-55840 May 31, 2007 CMERUN Corp., Combine Corp., Digital Concepts International, Inc., Integrated Homes, Inc., Lighthouse Fast Ferry, Inc., and Wannigan Capital Corp. http://www.sec.gov/litigation/admin/2007/34-55840.pdf
UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 55840 / May 31, 2007 ADMINISTRATIVE PROCEEDING File No. 3-12517 In the Matter of CMERUN CORP., COMBINE CORP., DIGITAL CONCEPTS INTERNATIONAL, INC., INTEGRATED HOMES, INC., LIGHTHOUSE FAST FERRY, INC., and WANNIGAN CAPITAL CORP., Respondents. ORDER MAKING FINDINGS AND REVOKING REGISTRATION OF SECURITIES PURSUANT TO SECTION 12(j) OF THE SECURITIES EXCHANGE ACT OF 1934 AS TO DIGITAL CONCEPTS INTERNATIONAL, INC. I. The Securities and Exchange Commission ("Commission"), having issued on December 28, 2006 an Order Instituting Administrative Proceedings Pursuant to Section 12(j) of the Securities Exchange Act of 1934 (“Exchange Act”) against, among others, Digital Concepts International, Inc. (“Digital” or “Respondent”), now deems it necessary and appropriate for the protection of investors that an Order Making Findings and Revoking Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of 1934 as to Digital Concepts International, Inc. (“Order”) be issued against Respondent. II. In response to the institution of these proceedings, Respondent has submitted an Offer of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission’s jurisdiction over it and the subject matter of these proceedings, Respondent consents to the entry of this Order, as set forth below. 2 III. On the basis of this Order and Respondent’s Offer, the Commission finds1 that A. Digital, is a Florida corporation located in Houston, Texas, with a class of securities registered with the Commission pursuant to Section 12(g) of the Exchange Act. Until December 28, 2006, Digital’s common stock was quoted on the Pink Sheets. B. Digital has failed to comply with Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder, while its common stock was registered with the Commission in that it has not filed a periodic report for any fiscal period since its Form 10-SB, filed on March 8, 2002 and amended on July 2, 2002, became effective. IV. Section 12(j) of the Exchange Act provides as follows: The Commission is authorized, by order, as it deems necessary or appropriate for the protection of investors to deny, to suspend the effective date of, to suspend for a period not exceeding twelve months, or to revoke the registration of a security, if the Commission finds, on the record after notice and opportunity for hearing, that the issuer of such security has failed to comply with any provision of this title or the rules and regulations thereunder. No member of a national securities exchange, broker, or dealer shall make use of the mails or any means of 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 pursuant to the preceding sentence. In view of the foregoing, the Commission finds that it is necessary and appropriate for the protection of investors to impose the sanction specified in Respondent’s Offer. Accordingly, it is hereby ORDERED, pursuant to Section 12(j) of the Exchange Act, that registration of each class of Respondent’s securities registered pursuant to Section 12 of the Exchange Act be, and hereby is, revoked. For the Commission, by its Secretary, pursuant to delegated authority. Nancy M. Morris Secretary 1 The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding on any other person or entity in this or any other proceeding.
34-55841 May 31, 2007 Millennium Partners, L.P., Millennium Management, L.L.C., Millennium International Management, L.L.C., Israel Englander, Terence Feeney, Fred Stone, and Kovan Pillai, and Steven B. Markovitz Note: See also Proposed Distribution Plan Comments due: July 2, 2007 Submit comments on Proposed Distribution Plan http://www.sec.gov/litigation/admin/2007/34-55841.htm
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UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION Securities Exchange Act of 1934 Release No. 34-55841 / May 31, 2007 Administrative Proceeding File No. 3-12116 Administrative Proceeding File No. 3-11292
Millennium Partners, L.P., Millennium Management, L.L.C., Millennium International Management, L.L.C., Israel Englander, Terence Feeney, Fred Stone, and Kovan Pillai
Respondents.
: : : : : : : : : : : NOTICE OF PROPOSED DISTRIBUTION PLAN AND OPPORTUNITY FOR COMMENT
Notice is hereby given, pursuant to Rule 1103 of the Securities and Exchange Commission's ("Commission") Rules on Fair Fund and Disgorgement Plans, 17 C.F.R. §201.1103, that Professor Joseph A. Grundfest, the Independent Distribution Consultant in these matters, has submitted to the Division of Enforcement his proposed plan ("Distribution Plan") for the distribution of monies placed into a Fair Fund, pursuant to Section 308 of the Sarbanes-Oxley Act of 2002, in In the Matter of Millennium Partners, et al. and In the Matter of Steven B. Markovitz. On December 1, 2005, in In the Matter of Millennium Partners, et al., the Commission issued an Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933, Section 21C of the Securities Exchange Act of 1934, Sections 203(e) and 203(f) of the Investment Advisers Act of 1940, Section 9(b) of the Investment Company Act of 1940 and Rule 102(e) of the Commission's Rules of Practice, Making Findings and Imposing Remedial Sanctions and a Cease-and-Desist Order ("Millennium Order") against Millennium Partners, L.P., Millennium Management, L.L.C., Millennium International Management L.L.C., Israel Englander, Terence Feeney, Fred Stone, and Kovan Pillai (collectively, "Millennium Respondents"). Among other things, the Millennium Order directed the Millennium Respondents to pay disgorgement in the amount of $148,000,004 and civil penalties in the amount of $32,175,000. On October 11, 2006, in In the Matter of Steven B. Markovitz, the Commission issued an Order Making Findings and Imposing Disgorgement and Civil Penalties Pursuant to Section 203(f) of the Investment Advisers Act of 1940 and Section 9(b) of the Investment Company Act of 1940 ("Markovitz Order") against Steven B. Markovitz ("Markovitz"). Among other things, the Markovitz Order directed Markovitz to pay disgorgement in the amount of $1.00 and civil penalties in the amount of $400,000.
OPPORTUNITY FOR COMMENT Pursuant to this Notice, all interested parties are advised that the Distribution Plan may be obtained by visiting http://www.sec.gov, or by submitting a written request to Timothy Wei, United States Securities and Exchange Commission, Northeast Regional Office, 3 World Financial Center – Suite 400, New York, NY 10281-1022. Further, all persons desiring to comment on the Distribution Plan may submit their views, in writing, no later than July 2, 2007:
to the Office of the Secretary, United States Securities and Exchange Commission, 100 F Street, N.E., Washington, DC 20549-1090;
by sending an e-mail to rule-comments@sec.gov. Comments submitted by e-mail or via the Commission's website should include the appropriate Administrative Proceeding File Number (3-12116) on the subject line.
Comments received will be publicly available. Persons should submit only information that they wish to make publicly available.
THE DISTRIBUTION PLAN The Distribution Plan concerns the distribution of disgorgement and civil penalties paid by the Millennium Respondents pursuant to the Millennium Order and Markovitz pursuant to the Markovitz Order. The Distribution Plan describes the procedures by which Professor Grundfest identified the entities who were harmed by the violations committed by the Millennium Respondents and Markovitz, as found by the Commission in the Millennium Order and the Markovitz Order. The Distribution Plan further describes the procedures by which Professor Grundfest will calculate the total amounts to be paid to the harmed entities, and distribute those amounts to those harmed entities.
For the Commission, by its Secretary, pursuant to delegated authority.
UNITED STATES OF AMERICA before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 55842 / June 1, 2007 ACCOUNTING AND AUDITING ENFORCEMENT Release No. 2613 / June 1, 2007 ADMINISTRATIVE PROCEEDING File No. 3-12646 : : : In the Matter of : ORDER INSTITUTING ADMINISTRATIVE : PROCEEDINGS PURSUANT TO RULE ROBIN R. SZELIGA (CPA), : 102(e) OF THE COMMISSION’S RULES OF : PRACTICE, MAKING FINDINGS, AND Respondent. : IMPOSING REMEDIAL SANCTIONS : : ____________________________________ : I. The Securities and Exchange Commission (“Commission”) deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted against Robin R. Szeliga (“Respondent” or “Szeliga”) pursuant to Rule 102(e)(3)(i) of the Commission’s Rules of Practice.1 1 Rule 102(e)(3)(i) provides, in relevant part, that: The Commission, with due regard to the public interest and without preliminary hearing, may, by order, . . . suspend from appearing or practicing before it any . . . accountant . . . who has been by name . . . permanently enjoined by any court of competent jurisdiction, by reason of his or her misconduct in an action brought by the Commission, from violating or aiding and abetting the violation of any provision of the Federal securities laws or of the rules and regulations thereunder.
II. In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission’s jurisdiction over her and the subject matter of these proceedings, and the findings contained in Section III.3 below, which are admitted, Respondent consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Rule 102(e) of the Commission’s Rules of Practice, Making Findings, and Imposing Remedial Sanctions (“Order”), as set forth below. III. On the basis of this Order and Respondent’s Offer, the Commission finds that: 1. Szeliga, age 46, of Littleton, Colorado, was employed with Qwest Communications International Inc. (“Qwest”) from approximately 1997 to August 2003. Szeliga was Qwest’s chief financial officer and executive vice president of finance from March 2001 to July 2002. Prior to that, she was Qwest’s senior vice president of financial planning and analysis and reporting. Szeliga was a certified public accountant (“CPA”) licensed in Colorado at the time of her misconduct. 2. Qwest, based in Denver, Colorado, is a telecommunications and Internet services company. At all relevant times, Qwest’s common stock was registered with the Commission pursuant to Section 12(b) of the Securities Exchange Act of 1934 (the "Exchange Act"). Qwest’s common stock trades on the New York Stock Exchange. 3. On March 15, 2005, the Commission filed a complaint against Szeliga in SEC v. Joseph P. Nacchio, et al. (Civil Action No. 05-cv-00480-MSK-CBS) in the United States District Court for the District of Colorado. On May 30, 2007, the court entered an order permanently enjoining Szeliga, by consent, from future violations of Section 17(a) of the Securities Act of 1933, Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5, 13b2-1 and 13b2-2 thereunder, and aiding and abetting violations of Sections 13(a) and 13(b)(2) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder. Szeliga was also ordered to pay $226,135 in disgorgement of ill-gotten gains, plus $100,917 in prejudgment interest, and a $250,000 civil money penalty. The court further ordered that Szeliga be barred permanently from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act or that is required to file reports pursuant to Section 15(d) of the Exchange Act. 4. The Commission’s complaint alleged, among other things, that from at least April 1, 1999 through March 31, 2002, Szeliga and others at Qwest engaged in a massive financial fraud that hid from the investing public the true source of the company’s revenue and earnings growth. The complaint alleged that to meet aggressive targets for Qwest’s revenue and earnings growth, Qwest fraudulently and repeatedly relied on immediate revenue recognition 2
from one-time sales of assets known as “IRUs” and certain equipment, while falsely claiming to the investing public that the revenue was recurring. The complaint also alleged that Szeliga fraudulently and materially misrepresented Qwest’s performance and growth to the investing public, failed properly to account for IRU sales transactions in Qwest’s financial statements, and caused the company to report falsely approximately $3 billion in revenue. The complaint alleged that Szeliga failed to make required accounting disclosures about IRUs to the investing public. In addition, the complaint alleged that, to meet revenue targets, Szeliga caused the manipulation of revenue associated with Qwest Dex, formerly a wholly-owned subsidiary of Qwest. Additionally, the complaint alleged that Szeliga fraudulently lowered liabilities related to employee vacations to increase artificially Qwest’s earnings to meet revenue and growth targets. The complaint further alleged that Szeliga sold Qwest stock knowing that Qwest had issued materially false information to the investing public in violation of the insider trading prohibition of the securities laws. IV. In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanction agreed to in Respondent Szeliga’s Offer. Accordingly, it is hereby ORDERED, effective immediately, that: Szeliga is suspended from appearing or practicing before the Commission as an accountant. By the Commission. Nancy M. Morris Secretary 3
UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 55844 / June 1, 2007 ADMINISTRATIVE PROCEEDING File No. 3-12647 In the Matter of LUIS M. CORNIDE, Respondent. ORDER INSTITUTING ADMINISTRATIVE PROCEEDINGS PURSUANT TO SECTION 15(b) OF THE SECURITIES EXCHANGE ACT OF 1934, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS I. The Securities and Exchange Commission (“Commission”) deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 (“Exchange Act”) against Luis M. Cornide (“Cornide” or “Respondent”). II. In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission’s jurisdiction over him and the subject matter of these proceedings, and the findings contained in Section III.2 below, which are admitted, Respondent consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions (“Order”), as set forth below.
III. On the basis of this Order and Respondent’s Offer, the Commission finds that: 1. From June 1999 to March 2005, Respondent acted as an unregistered broker-dealer in connection with the offer and sale of Pension Fund of America L.C. (“PFA”) securities, for which he received transaction-based compensation. During the relevant time period, he was president of PFA and held a fifty-percent ownership interest. 2. On May 21, 2007, a final judgment was entered by consent against Cornide, permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933 and Sections 15(a) and 10(b) of the Exchange Act and Rule 10b-5 thereunder, in the civil action entitled Securities and Exchange Commission v. Pension Fund of America L.C., et al., Civil Action No. 05-20863-CIV-MOORE, in the United States District Court for the Southern District of Florida. 3. The Commission’s complaint in the civil action alleged that PFA sold securities in the form of retirement trust plans, raising approximately $127 million from more than 3,400 investors. The complaint further alleged that PFA, through its offering and marketing materials, made false representations and omissions of material fact to investors relating to, among other things, PFA’s failure to disclose it used as much as 90% of investor funds to pay exorbitant commissions to sales agents, administrative fees and other costs, PFA’s failure to disclose all pertinent mutual fund fees, and PFA’s misrepresentations regarding its relationships with major financial institutions and broker-dealers, falsely holding the institutions out as trustees or custodians for investors’ funds. The complaint charged Respondent and others with violations of the broker-dealer registration and antifraud provisions of the federal securities laws in connection with the offer and sale of PFA securities. IV. In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions agreed to in Respondent Cornide’s Offer. Accordingly, it is hereby ORDERED: Pursuant to Section 15(b)(6) of the Exchange Act, Respondent Cornide be, and hereby is barred from association with any broker or dealer; Any reapplication for association by the Respondent will be subject to the applicable laws and regulations governing the reentry process, and reentry may be conditioned upon a number of factors, including, but not limited to, the satisfaction of any or all of the following: (a) any disgorgement ordered against the Respondent, whether or not the Commission has fully or partially waived payment of such disgorgement; (b) any arbitration award related to the conduct that served as the basis for the Commission order; (c) any self-regulatory organization arbitration award to a customer, whether or not related to the conduct that served as the basis for the Commission order; 2
and (d) any restitution order by a self-regulatory organization, whether or not related to the conduct that served as the basis for the Commission order. By the Commission. Nancy M. Morris Secretary 3
UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 55845 / June 1, 2007 ADMINISTRATIVE PROCEEDING File No. 3-12648 In the Matter of ROBERT DE LA RIVA, Respondent. ORDER INSTITUTING ADMINISTRATIVE PROCEEDINGS PURSUANT TO SECTION 15(b) OF THE SECURITIES EXCHANGE ACT OF 1934, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS I. The Securities and Exchange Commission (“Commission”) deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 (“Exchange Act”) against Robert De la Riva (“De la Riva” or “Respondent”). II. In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission’s jurisdiction over him and the subject matter of these proceedings, and the findings contained in Section III.2 below, which are admitted, Respondent consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions (“Order”), as set forth below. III. On the basis of this Order and Respondent’s Offer, the Commission finds that:
1. From June 1999 to March 2005, Respondent acted as an unregistered broker-dealer in connection with the offer and sale of Pension Fund of America L.C. (“PFA”) securities, for which he received transaction-based compensation. During the relevant time period, he was senior vice president of PFA and held a fifty-percent ownership interest. 2. On May 21, 2007, a final judgment was entered by consent against De la Riva, permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933 and Sections 15(a) and 10(b) of the Exchange Act and Rule 10b-5 thereunder, in the civil action entitled Securities and Exchange Commission v. Pension Fund of America L.C., et al., Civil Action No. 05-20863-CIV-MOORE, in the United States District Court for the Southern District of Florida. 3. The Commission’s complaint in the civil action alleged that PFA sold securities in the form of retirement trust plans, raising approximately $127 million from more than 3,400 investors. The complaint further alleged that PFA, through its offering and marketing materials, made false representations and omissions of material fact to investors relating to, among other things, PFA’s failure to disclose it used as much as 90% of investor funds to pay exorbitant commissions to sales agents, administrative fees and other costs, PFA’s failure to disclose all pertinent mutual fund fees, and PFA’s misrepresentations regarding its relationships with major financial institutions and broker-dealers, falsely holding the institutions out as trustees or custodians for investors’ funds. The complaint charged Respondent and others with violations of the broker-dealer registration and antifraud provisions of the federal securities laws in connection with the offer and sale of PFA securities. IV. In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions agreed to in Respondent De la Riva’s Offer. Accordingly, it is hereby ORDERED: Pursuant to Section 15(b)(6) of the Exchange Act, Respondent De la Riva be, and hereby is barred from association with any broker or dealer; Any reapplication for association by the Respondent will be subject to the applicable laws and regulations governing the reentry process, and reentry may be conditioned upon a number of factors, including, but not limited to, the satisfaction of any or all of the following: (a) any disgorgement ordered against the Respondent, whether or not the Commission has fully or partially waived payment of such disgorgement; (b) any arbitration award related to the conduct that served as the basis for the Commission order; (c) any self-regulatory organization arbitration award to a customer, whether or not related to the conduct that served as the basis for the Commission order; 2
and (d) any restitution order by a self-regulatory organization, whether or not related to the conduct that served as the basis for the Commission order. By the Commission. Nancy M. Morris Secretary 3
UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 55847 / June 1, 2007 ADMINISTRATIVE PROCEEDING File No. 3-12133 In the Matter of Veras Capital Master Fund, VEY Partners Master Fund, Veras Investment Partners, LLC, Kevin D. Larson, and James R. McBride Respondents. SECOND ORDER DIRECTING DISBURSEMENT OF FAIR FUND On August 10, 2006, the Commission published a notice of the Plan of Distribution (“Plan”) proposed by the Division of Enforcement in connection with this proceeding (Securities Exchange Act Release No. 54299). No comments were received and on October 4, 2006, the Plan was approved. The Plan of Distribution provides that a Fair Fund consisting of $37,700,488.00 in disgorgement and civil penalties, plus any accrued interest, be transferred to the Securities and Exchange Commission to be distributed by the Plan Administrator to injured investors according to the methodology set forth in the Plan. The Plan provides that the Commission will arrange for distribution of the Fair Fund when a Payment File listing the payees with the identification information required to make the distribution has been received and accepted. On February 27, 2007, the Commission issued an Order Directing Disbursement of Fair Fund providing for the transfer of $38,755,624.80 following receipt of a validated Payment File. The Plan Administrator has approved one additional payment in the amount of $756.65 and submitted a Second Payment File, which has been received and accepted by the staff. Sufficient funds remain in the Fair Fund to pay this distribution. Accordingly, it is ORDERED that the Commission staff shall transfer $756.65 of the Fair Fund and the Plan Administrator shall distribute such monies to the investor, as provided for in the Plan of Distribution. For the Commission, by its Secretary, pursuant to delegated authority. Nancy M. Morris Secretary
34-55848 Jun. 1, 2007 Trautman Wasserman & Company, Inc., Gregory O. Trautman, Samuel M. Wasserman, Mark Barbera, James A. Wilson, Jr., Jerome Snyder, and Forde H. Prigot http://www.sec.gov/litigation/admin/2007/34-55848.pdf
1/ 15 U.S.C. §§ 78o(b), 80a-9(b), 80b-3(f). 2/ 15 U.S.C. §§ 77h-1, 78u-3, 80a-9(f). The OIP seeks cease-and-desist relief under Securities Act Section 8A and Exchange Act Section 21C against Trautman Wasserman & Company, Inc.; under Securities Act Section 8A, Exchange Act Section 21C, and Investment Company Act Section 9(f) against Trautman, Wasserman, and Wilson; and under Exchange Act Section 21C against Snyder and Prigot. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. SECURITIES EXCHANGE ACT OF 1934 Rel. No. 55848 / June 1, 2007 Admin. Proc. File No. 3-12559 In the Matter of TRAUTMAN WASSERMAN & COMPANY, INC., GREGORY O. TRAUTMAN, SAMUEL M. WASSERMAN, MARK BARBERA, JAMES A. WILSON, JR., JEROME SNYDER, and FORDE H. PRIGOT ORDER DISMISSING CEASE-AND-DESIST PROCEEDINGS AGAINST BARBERA On February 5, 2007, the Commission filed an Order Instituting Proceedings ("OIP") against Trautman Wasserman & Company, Inc., Gregory O. Trautman, Samuel M. Wasserman, Mark Barbera, James A. Wilson, Jr., Jerome Snyder, and Forde H. Prigot (together, "Respondents"). The OIP alleged that Respondents engaged in late trading and deceptive market timing practices that resulted in numerous violations of the securities laws. The OIP authorized public administrative proceedings against Respondents pursuant to Section 15(b) of the Securities Exchange Act of 1934, Section 9(b) of the Investment Company Act of 1940, and Section 203(f) of the Investment Advisers Act of 1940. 1/ The OIP also authorized cease-anddesist proceedings against Respondents, which included cease-and-desist proceedings against respondent Barbera under Section 8A of the Securities Act of 1933, Section 21C of the Exchange Act, and Section 9(f) of the Investment Company Act. 2/
2 3/ 17 C.F.R. § 201.210(c)(3). Rule 210(c)(3) provides that the Commission or hearing officer may grant criminal prosecutorial authorities leave to participate in a proceeding on a limited basis for the purpose of requesting a stay during the pendency of a criminal investigation or prosecution arising out of the same or similar facts at issue in the administrative proceeding, upon a showing that such a stay is "in the public interest or for the protection of investors." 4/ 15 U.S.C. § 78u-3(b). Securities Act Section 8A(b), 15 U.S.C. § 77h-1(b), and Investment Company Act Section 9(f)(2), 15 U.S.C. § 80a-9(f)(2), contain identical requirements. 5/ Pursuant to Rule 161(c)(2), 17 C.F.R. § 201.161(c)(2), the law judge also granted a joint motion by the Division and respondent Snyder to stay the proceedings as to Snyder to permit the Commission time to consider Snyder's recent settlement offer. Respondent Wilson is a defendant in parallel criminal proceedings in New York. Wilson was indicted by a New York grand jury on two counts of fraud and nine counts of falsifying business records, based on essentially the same conduct at issue in this administrative proceeding. On March 13, 2007, the law judge granted an application by the Attorney General of the State of New York ("NYAG"), made pursuant to Rule of Practice 210(c)(3), 3/ to stay the proceeding until the conclusion of the criminal proceeding against Wilson. However, the law judge lifted the stay by order dated March 23, 2007 in response to an argument by respondent Barbera that Exchange Act Section 21C(b) provides that "[t]he notice instituting proceedings . . . shall fix a hearing date not earlier than 30 days nor later than 60 days after service of the notice unless an earlier or later date is set by the Commission with the consent of any respondent so served." 4/ In her March 23 order, the law judge set a hearing date for all respondents of April 13, 2007, a date sixty days after Barbera was served with the OIP. On March 28, 2007, the Division of Enforcement ("Division") notified the law judge by letter that it intended to file a motion with the Commission to withdraw those portions of the OIP that seek cease-and-desist relief against Barbera. On March 30, 2007, the law judge issued an order following a prehearing conference. 5/ The law judge stated that, during this conference, all Respondents except Barbera objected to commencing the hearing within sixty days and voiced concerns that the April 13 hearing date would not allow them sufficient time to review the large number of documents they expected to receive eventually from the NYAG and to prepare their defenses. After a series of motions before the law judge, on April 10, 2007, the Division filed a motion before the Commission seeking to withdraw the cease-and-desist proceedings against Barbera, arguing that withdrawal of those proceedings would permit the Division to proceed against all respondents at one hearing, thereby avoiding substantial prejudice to the Division's case-in-chief. The same day, the law judge issued an order cancelling Barbera's April 13 hearing and confirming that a hearing as to all respondents would commence on June 4, 2007.
3 6/ See Board of Trade v. SEC, 883 F.2d 525, 530 (7th Cir. 1989) (citing Heckler v. Chaney, 470 U.S. 821, 831 (1985)). On April 17, 2007, we issued an interim stay of these proceedings to preserve the status quo ante while we awaited the filing of any opposing and reply briefs. On April 20, 2007, Barbera filed a timely opposition to the Division's motion to withdraw the cease-and-desist proceedings against him; in that submission, Barbera also moved to dismiss the entire proceeding against him. We now grant the Division's motion to dismiss the cease-and-desist proceedings against Barbera for the reasons detailed below. Barbera's motion to dismiss the entire proceeding will be addressed in a separate order. In its April 10 motion, the Division argues that withdrawal of the cease-and-desist proceedings is necessary to prevent prejudice to the Division's case that would result if the Division were forced to conduct a bifurcated hearing because the two hearings would involve common witnesses and documents. The other statutory provisions under which the Division is proceeding against Barbera do not contain a requirement to commence a hearing within thirty to sixty days of service of the OIP; therefore, the Division notes, the dismissal of the cease-anddesist proceedings against Barbera would eliminate the need for a bifurcated hearing. Moreover, the Division points out that, although the result of dismissal of the cease-and-desist proceedings would be that the Division could not obtain a cease-and-desist order as relief from Barbera's alleged misconduct, "[a]ll other remedies would remain available, including revocation of registrations, bars or suspensions, civil penalties and disgorgement." We agree that it is appropriate in this case to dismiss those provisions of the OIP that authorize the institution of cease-and-desist proceedings against Barbera. Barbera urges, however, that the failure to comply with the sixty-day hearing requirement under the cease-anddesist provisions also mandates dismissal of the rest of the proceedings against him. Barbera offers no explanation or support for this position. The remaining statutes under which the OIP was authorized, namely, Exchange Act Section 15(b), Investment Company Act Section 9(b), and Advisers Act Section 203(f), do not require that Barbera receive a hearing within a specified time. As courts have long recognized, an agency's decision whether to prosecute or enforce is generally within its absolute discretion. 6/ Barbera contends that the Division has abused its discretion by making false representations to the law judge about its intent to withdraw the cease-and-desist proceedings. However, the record of prehearing proceedings in this case offers no support for Barbera's allegations. The Division was consistent in its statements to the law judge that it would move the Commission to withdraw the cease-and-desist proceedings against Barbera if the law judge believed the authorizing statutes compelled a hearing within sixty days. The law judge issued an order on March 30, 2007, in which she postponed the hearing to June 4 despite Barbera's protests. The order mentions that the Division stated its intent to withdraw cease-and-desist
4 proceedings against Barbera; however, that order does not clearly state that the law judge's decision was premised on the Division doing so. The law judge herself recognized that her order may have lacked clarity on this point, noting in her April 9, 2007 order, "I apologize to the Division because my March 30, 2007 order was not clear that the cease-and-desist provisions must be stricken at least as to Barbera." The Division promptly filed its motion to withdraw the cease-and-desist proceedings after the law judge clarified her position. Therefore, under the circumstances of this case, it is appropriate to grant the Division's motion and dismiss the cease-and-desist proceedings against Barbera. Accordingly, it is ORDERED that the cease-and-desist proceedings against Mark Barbera, as instituted by order dated February 5, 2007 and as authorized under Section 8A of the Securities Act, Section 21C of the Exchange Act, and Section 9(f) of the Investment Company Act, be, and they hereby are, dismissed. By the Commission (Commissioners ATKINS, CAMPOS, NAZARETH, and CASEY; Chairman COX not participating). Nancy M. Morris Secretary
UNITED STATES OF AMERICA BEFORE THE SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 55849 / June 1, 2007 ADMINISTRATIVE PROCEEDING File No. 3-11317 ____________________________________ : In the Matter of : : ORDER EXTENDING TIME TO Putnam Investment Management, LLC : ENTER AN ORDER APPROVING OR : DISAPPROVING DISTRIBUTION PLAN Respondent. : ____________________________________: I. On March 30, 2007, pursuant to Rule 1103 of the Fair Fund Rules, 17 C.F.R. § 201.1103, the Commission published a Notice of Proposed Distribution Plan and Opportunity for Comment for the distribution of monies placed into a Fair Fund in the above-captioned matter. The Notice invited public comment on the proposed distribution plan (the “Proposed Plan”) through April 30, 2007. Rule 1104 of the Commission’s Rules on Fair Fund and Disgorgement Plans, 17 C.F.R. § 201.1104, provides: At any time after 30 days following publication of notice of a proposed plan of disgorgement or of a proposed Fair Fund plan, the Commission shall, by order, approve, approve with modifications, or disapprove the proposed plan. In the discretion of the Commission, a proposed plan that is substantially modified prior to adoption may be republished for an additional comment period pursuant to 17 CFR 201.1103. The order approving or disapproving the plan should be entered within 30 days after the end of the final period allowed for comments on the proposed plan unless the Commission or the hearing officer, by written order, allows a longer period for good cause shown. Thirty days from the end of the final period for comments on the proposed distribution plan lapsed on May 30, 2007. Because of the complexity of the comments received, further evaluation, review and analysis are required, and good cause has been shown to extend the thirty day time period provided in Rule 1104 for entry of an order approving or disapproving the plan by forty-five days, to July 16, 2007. II. Accordingly, IT IS ORDERED that: Pursuant to Rule 1104 of the Rules on Fair Fund and Disgorgement Plans, 17 C.F.R. § 201.1104, for good cause shown, the time for entering an Order approving or disapproving the proposed distribution plan is extended to July 16, 2007. For the Commission, by its Secretary, pursuant to delegated authority. Nancy M. Morris Secretary 2
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