SEC News Digest

RULES AND RELATED MATTERS

Amendment of Procedures for Payment of Fees

The Commission amended its procedures for the remittance of fees pursuant to the federal securities laws. Most notably, these amendments revise the information relating to the Commission's lockbox depository to reflect the U.S. Treasury Department's designation of U.S. Bank, in place of Mellon Bank, as the lockbox depository effective on Feb. 4, 2008. The amendments also reflect other changes in the agency's practices for accepting filing fee payments. To facilitate compliance, the amendments consolidate in one provision the instructions for remitting filing fees and add a new explanatory note in 17 CFR 202.3a with respect to filing fee accounts. Additionally, the amendments remove references to the payment of fees under the Trust Indenture Act of 1939, which was repealed in 2002 by the Investor and Capital Markets Fee Relief Act. (Rels. 33-8885; 34-57218; 39-2452; IC-28137)

ENFORCEMENT PROCEEDINGS

In the Matter of Clifton Curtis Sneed, Jr.

On January 28, 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 Clifton Curtis Sneed, Jr. (Sneed). The Order finds that Sneed held himself out as an estate planning and senior investment specialist, and effected transactions in securities for the accounts of others. Sneed used the United States mails and the means and instrumentalities of interstate commerce to effect transactions in and to induce or attempt to induce the purchase of securities. On Jan. 11, 2008, a final judgment was entered by consent against Sneed, permanently enjoining him from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Sections 15(a) and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder in the civil action entitled Securities and Exchange Commission v. Unlimited Cash, Inc., et al., Civil Action Number 3-06CV0594-K, in the U.S. District Court for the Northern District of Texas, Dallas Division. The Commission's complaint alleged that from June 2003 to at least May 2005, in connection with the sale of unregistered securities in the form of investment contracts in "Ad Toppers," which were computer monitors displaying advertisements and typically placed on vending machines or similar devices, Sneed made materially false and misleading representations about the safety of the investment and the promised returns, falsely claimed to have extensively investigated the program, and otherwise engaged in a variety of conduct which operated as a fraud and deceit on investors. The complaint also alleged that Sneed sold unregistered securities.

Based on the above, the Order bars Clifton Curtis Sneed, Jr. from association with any broker, dealer, or investment advisor. Clifton Curtis Sneed, Jr. consented to the issuance of the Order without admitting or denying any of the findings, except that a final judgment by consent has been entered in the civil action. (Rel. 34-57215; File No. 3-12940)

Michael K. Openshaw

On January 23, the U.S. District Court for the District of Utah entered a Final Judgment against Michael K. Openshaw for violating Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 10b-5, 13a-14, 13b2-1 and 13b2-2 thereunder, and for 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, and 13a-13 thereunder.

The complaint alleged that from September through December of 2004, Openshaw, who was then CFO of Q Comm International, a Utah corporation, completed five unauthorized bank wires, transferring a total of $1,525,000 to a Q Comm vendor. It is alleged that Openshaw wired these funds without approval and without disclosing the transfers to the other members of Q Comm's management or its auditors. The complaint also alleged that Openshaw concealed the transfers through improper accounting entries and by altering documents. The Complaint further alleged that Openshaw's acts caused Q Comm's financial statements for the year ended Dec. 31, 2004, and the quarter ended March 31, 2005, to be materially misleading and to deviate from Generally Accepted Accounting Principles. Finally, the complaint alleged that Openshaw falsely certified Q Comm's annual report for the year ended Dec. 31, 2004.

Openshaw consented to the entry of the final judgment without admitting or denying the allegations in the complaint. The final judgment permanently enjoined Openshaw from future violations of Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5, 13a-14, 13b2-1 and 13b2-2 thereunder, and from 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, and 13a-13 thereunder and barring him from serving as an officer or director of a publicly-held company. [SEC v. Michael K. Openshaw, USDC, District of Utah (Civil Action No. 2:07cv0977)] (LR-20440; AAE Rel. 2773)

SEC v. Daryn Fleming and Mathew Bruce

SEC v. International Broadcasting Corporation

The Commission announced that on January 23 it filed a civil injunctive action in the U.S. District Court for the Eastern District of Washington against the former CEO of International Broadcasting Corporation, Daryn P. Fleming, (Fleming) and an agent of the company, Mathew C. Bruce (Bruce), alleging that Fleming and Bruce violated the antifraud provisions of the federal securities laws. The SEC also announced that it has filed a settled civil injunctive action against International Broadcasting Corporation, in which the company consented to the entry of a permanent injunction from violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

The SEC has alleged that as part of the scheme, International Broadcasting, through Fleming, issued false press releases about its business operations including nonexistent broadcast affiliations with various radio stations. The SEC has also alleged that when Bruce and Fleming were later questioned by investors about these supposed affiliations, they made public misrepresentations live on an International Broadcasting internet radio show to conceal the fact that the original press releases were false. [SEC v. Daryn P. Fleming and Mathew C. Bruce, Civil Action No. 08-029-FVS (E.D. Wa.)]; [SEC v. International Broadcasting Corporation, Civil Action No. 08-028-RHW (E.D. Wa.)] (LR-20442)

SEC v. Robert F. Gruder and Stinger System, Inc.

The Commission announced today that it filed a complaint in the U.S. District Court for the Northern District of Georgia against Stinger Systems, Inc. (Stinger) and Robert F. Gruder (Gruder). Stinger is a Nevada corporation based in Tampa, Florida. Gruder, who resides in Tampa, is the president of Stinger.

The complaint alleges that from October 2004 through March 2005, Stinger and Gruder made a series of material misrepresentations and omissions regarding Stinger's "flagship" stun gun product. According to the complaint, the misrepresentations consisted of press releases and direct mailings to thousands of law enforcement officers and agencies, suggesting that Stinger was manufacturing, selling and shipping its stun gun. In fact, the product was still in the development phase. The complaint further alleges that the misrepresentations also consisted of statements on the Stinger's website and/or in industry publications that indicated Stinger's stock was trading on NASDAQ, when in fact it was not. The complaint also alleges that Stinger and Gruder misrepresented that the Bureau of Alcohol, Tobacco and Firearms (ATF) certified Stinger's stun gun, even though the ATF offers no such certification. According to the complaint, these misrepresentations caused a spike in the trading volume and price for Stinger's shares once it began publicly trading in November 2004. On Nov. 12, 2004, the first full day of trading, Stinger's stock price rose by 340%, from $1.25 to $5.50. On Nov. 15, 2004, the next trading day, after Stinger announced that it anticipated shipping its stun gun products in January 2005, the stock price increased by an additional 55% to $8.50. By Nov. 17, 2004, the stock price closed at $19.25.

The complaint alleges that Stinger and Gruder violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission seeks: (i) permanent injunctions against future violations; (ii) imposition of civil penalties; (iii) an order permanently prohibiting Gruder from acting as an officer or director of any company that has a class of securities registered with the Commission; and (iv) an order barring Gruder from participating in any offering of a penny stock. [SEC v. Robert F. Gruder and Stinger Systems, Inc., Civil Action No. 1:08-CV-0294 (N.D. Ga.)] (LR-20443)

SEC v. Coadum Advisors, Inc., et al.

The Commission announced today that on January 25 the Honorable Orinda D. Evans, U.S. District Judge for the Northern District of Georgia, entered an order permanently enjoining Coadum Advisors, Inc. (Coadum), Mansell Capital Partners III, LLC (Mansell), James A. Jeffery (Jeffery), Thomas E. Repke (Repke), Coadum Capital Fund 1, LLC (Coadum 1), Coadum Capital Fund II, LP (Coadum II), Coadum Capital Fund III, LP (Coadum III) and Mansell Acquisition Company LP (MAC)(collectively, defendants). The order enjoined the defendants from future violations of Sections 17(a)(1), 17(a)(2) and 17(a)(3) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The order further enjoined Coadum, Mansell, Jeffery and Repke from future violations of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The court ordered the defendants to pay disgorgement, prejudgment interest and civil penalties in amounts to be resolved upon motion of the Commission at a later date, and directed that for purposes of that motion, the allegations of the Commission's complaint shall be deemed true. The court further ordered that, pending determination of the remaining issues of disgorgement, prejudgment interest and civil penalties, the defendants' assets remain frozen. The court ordered the continuance of the Receiver of Coadum, Mansell, Coadum 1, Coadum II, Coadum III and MAC. The defendants consented to the order without admitting or denying any of the allegations of the Commission's complaint.

The complaint alleged that the defendants engaged in fraud in conjunction with a series of four securities offerings which began in early 2006. Jeffery of Ontario, Canada and Repke of Holladay, Utah, controlled the entities and directed the offerings. The complaint further alleged that, as a result of the fraudulent scheme, approximately $30 million was raised from at least 150 investors. The complaint alleged that the defendants falsely represented to investors that they would receive a return of from 3 to 6% per month; misrepresented that their principal was protected; and failed to disclose that the defendants have made loans to themselves from the investor proceeds. Furthermore, the complaint alleged that the defendants falsely represented in monthly account statements to investors that they have earned approximately 4% per month, and that all or most of their principal was in escrow. Finally, the complaint alleged that, without disclosure to investors, Coadum and Mansell have also "borrowed" in excess of $3 million of, or against, the investors' funds and have disbursed approximately $5 million to related parties. [SEC v. Coadum Advisors, Inc.; Mansell Capital Partners III, LLC; James A. Jeffery; Thomas E. Repke; Coadum Capital Fund 1, LLC; Coadum Capital Fund II, LP; Coadum Capital Fund III, LP; and Mansell Acquisition Company LP, Civil Action No. 1:08-CV-0011-ODE (N.D. Ga.)] (LR-20444)

SELF-REGULATORY ORGANIZATIONS

Approval of Proposed Rule Change

The Commission approved a proposed rule change (SR-Amex-2007-132), as modified by Amendment No. 1 thereto, submitted by the American Stock Exchange to include volume executed by remote quoting towards the earning of remote quoting rights. Publication is expected in the Federal Register during the week of January 28. (Rel. 34-57181)

Proposed Rule Changes

The Chicago Stock Exchange filed a proposed rule change (SR-CHX-2007-18), as modified by Amendment No. 1 thereto, to make administrative changes to its routing rules. Publication is expected in the Federal Register during the week of January 28. (Rel. 34-57203)

The International Securities Exchange filed a proposed rule change (SR-ISE-2007-95), as modified by Amendment Nos. 2 and 3, relating to reserve orders. Publication is expected in the Federal Register during the week of January 28. (Rel. 34-57207)

The NASDAQ Stock Market filed a proposed rule change (SR-NASDAQ-2008-004) related to supplemental market participant identifiers. Publication is expected in the Federal Register during the week of January 28. (Rel. 34-57212)

The NASDAQ Stock Market filed a proposed rule change (SR-NASDAQ-2007-096) to modify the allocation of the maximum time an adjudicatory body may grant a company to regain compliance with the listing requirements without modifying the maximum time available under Nasdaq Rule 4802. Publication is expected in the Federal Register during the week of January 28. (Rel. 34-57214)

Accelerated Approval of Proposed Rule Change

The Commission granted accelerated approval to a proposed rule change (SR-NYSE-2008-05) submitted by the New York Stock Exchange to eliminate the one-year minimum life requirement from the listing standards for "Other Securities." Publication is expected in the Federal Register during the week of January 28. (Rel. 34-57204)

Immediate Effectiveness of Proposed Rule Changes

The Depository Trust Company filed a proposed rule change (SR-DTC-2007-17) under Section 19(b)(1) of the Exchange Act, which became effective upon filing, to revise its fee schedule. Publication is expected in the Federal Register during the week of January 28. (Rel. 34-57193)

A proposed rule change filed by the Chicago Board Options Exchange regarding fees for CBOE Stock Exchange permit applicants (SR-CBOE-2008-06) 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 January 28. (Rel. 34-57197)

A proposed rule change (SR-NASDAQ-2007-094) filed by The NASDAQ Stock Market to include in the Nasdaq rule manual notification requirements for issuers making distributions to shareholders has become effective under Section 19(b)(3)(A). Publication is expected in the Federal Register during the week of January 28. (Rel. 34-57198)

SECURITIES ACT REGISTRATIONS

• Latest Securities Act registrations (TXT)

RECENT 8K FILINGS

• Latest 8-K filings (TXT)

http://www.sec.gov/news/digest/2008/dig012908.htm