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U.S. Securities and Exchange Commission

SEC News Digest

Issue 2008-26
February 7, 2008

ENFORCEMENT PROCEEDINGS

In the Matter of Maximum Dynamics, Inc.

An Administrative Law Judge has issued an Order Making Findings and Revoking Registration by Default (Default Order) in the matter of Maximum Dynamics, Inc. The Order Instituting Proceedings alleged that Respondent Maximum Dynamics, Inc. failed repeatedly to file required annual and quarterly reports while its securities were registered with the Securities and Exchange Commission. The Default Order finds these allegations to be true and revokes the registrations of each class of registered securities of Maximum Dynamics, Inc., pursuant to Section 12(j) of the Securities Exchange Act of 1934. (Rel. 34-57288; File No. 3-12884)


In the Matter of Kenneth M. Christison, Esq.

On February 7, the Commission issued an Order Instituting Cease-and-Desist Proceedings, Making Findings and Imposing a Cease-and-Desist Order Pursuant to Section 8A of the Securities Act of 1933 (Order) against California attorney Kenneth Christison. The Order finds that on four occasions between May 1, 2004, and Nov. 30, 2004, Michael Paloma hired Christison to issue opinion of counsel letters warranting that certain offerings of securities of issuers were exempt from the registration provisions of the federal securities laws and that there was no restriction on resale of the securities sold in those offerings pursuant to Rule 504 of Regulation D under the Securities Act. Based on these opinion letters, a transfer agent issued shares for each issuer without restrictive legends that would otherwise provide potential third party purchasers and financial intermediaries with notice that the shares were restricted as to transferability. Following each issuance, Paloma sold his shares in unregistered, non-exempt transactions to the public.

According to the Commission, in each instance, Christison knew or should have known that his opinion letter would contribute to Paloma's unregistered public distribution of securities through non-exempt transactions. Additionally, Christison possessed documents and other information signaling Paloma's intent to conduct unlawful distributions by ultimately selling these securities into the public marketplace.

Based on the above, the Order directs Christison to cease and desist from committing or causing violations of Sections 5(a) and 5(c), the securities registration provisions, of the Securities Act of 1933. Christison consented to the issuance of the Order without admitting or denying any of the findings in the Order. (Rel. 33-8892; File No. 3-12950)


Civil Action Filed Against VesCor Capital Corp. and Val E. Southwick in $180 Million Offering Fraud

The Commission has filed a civil action seeking permanent injunctions, disgorgement and civil penalties against VesCor Capital Corp., Val E. Southwick and four related companies in connection with VesCor's and Southwick's fraudulent offers and sales of approximately $180 million in notes to over 800 investors since the early 1990's. The Commission's complaint alleges that many of VesCor's investors were senior citizens who invested substantial portions of their savings or mortgaged their homes to pay for the investments.

The complaint alleges the defendants engaged in a fraudulent, unregistered offering of notes by VesCor-related companies, all of which were controlled by Southwick. The defendants allegedly promised annual returns of 8% to 24%, with the returns being generated by profits from VesCor's real estate projects. The complaint further alleges that the defendants made material misrepresentations concerning those real estate projects and operated a Ponzi scheme in which newly invested funds were often used: (1) to pay the promised returns to earlier investors, (2) to fund Southwick's and his family's living expenses and (3) to pay the operating expenses of the VesCor enterprise. Southwick allegedly made a variety of misrepresentations to investors, including: (1) invested funds would be used to develop specific real estate projects; (2) the real estate developments were highly profitable, and (3) the investment risk was nonexistent or extremely limited because investments were secured by recorded property interests or were highly collateralized. Finally, the complaint alleges that, contrary to VesCor and Southwick's representations, investor funds were used in whatever manner Southwick chose, VesCor's real estate projects were not profitable and VesCor's operations were insolvent and could not continue operating without continually obtaining new investor money.

It is alleged that through this conduct the defendants violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. The Commission acknowledges the assistance of the Utah Division of Securities and the Utah Attorney General's Office in this matter. [SEC v. VesCor Capital Corp., VesCor Capital, Inc., Vescorp Capital, LLC, VesCorp Capital IV-A, LLC, VesCorp Capital IV-M, LLC and Val E. Southwick, Case No. 1:08cv0012DB (USDC D.Ut.)] (LR-20450)


INVESTMENT COMPANY ACT RELEASES

Barclays Global Fund Advisors, et al.

A notice has been issued giving interested persons until February 26 to request a hearing on an application filed by Barclays Global Fund Advisors, et al. for an order to permit (a) series of certain open-end management investment companies to issue shares (Shares) redeemable in large aggregations only (Creation Units); (b) secondary market transactions in Shares to occur at negotiated market prices; and (c) certain affiliated persons of the series to deposit securities into, and receive securities from, the series in connection with the purchase and redemption of Creation Units. (Rel. IC-28146 - February 6)


WisdomTree Trust, et al.

A notice has been issued giving interested persons until February 26 to request a hearing on an application filed by WisdomTree Trust, et al. for an order to permit (a) series of certain open-end management investment companies to issue shares (Shares) redeemable in large aggregations only (Creation Units); (b) secondary market transactions in Shares to occur at negotiated market prices; (c) certain affiliated persons of the series to deposit securities into, and receive securities from, the series in connection with the purchase and redemption of Creation Units; and (d) certain registered management investment companies and unit investment trusts outside of the same group of investment companies as the series to acquire Shares. (Rel. IC-28147 - February 6)


SELF-REGULATORY ORGANIZATIONS

Accelerated Approval of Proposed Rule Changes

The Commission, under Section 19(b)(2) of the Securities Exchange Act of 1934, granted accelerated approval of a proposed rule change (SR-NASDAQ-2008-008) filed by The NASDAQ Stock Market to trade the shares eight funds of the ProShares Trust based on four international equity indexes pursuant to unlisted trading privileges and to amend certain generic listing standards. Publication is expected in the Federal Register during the week of February 11. (Rel. 34-57269)

The Commission granted accelerated approval to a proposed rule change (SR-FINRA-2007-010), as modified by Amendment No. 1 thereto, submitted by the Financial Industry Regulatory Authority to amend an exemption to NASD Rule 1050 and NYSE Rule Interpretation 344/02 for certain research analysts employed by a member's foreign affiliate who contribute to the preparation of a member's research report. Publication is expected in the Federal Register during the week of February 11. (Rel. 34-57278)

The Commission granted accelerated approval to a proposed rule change (SR-FINRA-2007-011), as modified by Amendment No. 1 thereto, submitted by the Financial Industry Regulatory Authority to amend NASD Rule 2711 and NYSE Rule 472 with respect to a member's disclosure and supervisory review obligations when it distributes or makes available third-party research reports. Publication is expected in the Federal Register during the week of February 11. (Rel. 34-57279)


Proposed Rule Change

The Options Clearing Corporation filed a proposed rule change (SR-OCC-2007-20) under Section 19(b)(2) of the Securities Exchange Act that would permit the incorporation of certain forms of collateral into the System for Theoretical Analysis and Numerical Simulations risk management methodology. Publication is expected in the Federal Register during the week of February 11. (Rel. 34-57270)


Approval of Proposed Rule Changes

The Commission approved a proposed rule change (SR-NYSE-2007-101) the New York Stock Exchange to amend NYSE Rule 104.21 (Specialist Organizations - Additional Capital Requirements). The rule change would reduce the net liquid asset requirements for specialist member organizations. Publication is expected in the Federal Register during the week of February 11. (Rel. 34-57272)


Immediate Effectiveness of Proposed Rule Changes

A proposed rule change filed by The NASDAQ Stock Market to modify fees for members using the Nasdaq Market Center (SR-NASDAQ-2008-009) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of February 11. (Rel. 34-57274)

A proposed rule change (SR-Phlx-2008-09) filed by the Philadelphia Stock Exchange to modify trading hours for physical delivery FCOs 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 February 11. (Rel. 34-57277)


Amendment to Proposed Rule Change

The Fixed Income Clearing Corporation filed an amendment to proposed rule change (SR-FICC-2007-08) under Section 19(b)(1) of the Exchange Act that would allow FICC to resume interbank clearing for the GCF Repo service. Publication is expected in the Federal Register during the week of February 11. (Rel. 34-57281)


SECURITIES ACT REGISTRATIONS


RECENT 8K FILINGS

 

http://www.sec.gov/news/digest/2008/dig020708.htm


Modified: 02/07/2008