SEC Suspends Trading in Securities of TelcoBlue, Inc.
The Securities and Exchange Commission announced the temporary suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934 (Exchange Act), of trading of the securities of TelcoBlue, Inc. (TelcoBlue), of Lexington, Kentucky at 9:30 a.m. EST on Feb. 22, 2008, and terminating at 11:59 p.m. EST on March 6, 2008.
The Commission temporarily suspended trading in the securities of TelcoBlue because TelcoBlue has failed to file its last six required periodic reports.
The Commission cautions broker dealers, shareholders, and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by the company.
Further, brokers and dealers should be alert to the fact that, pursuant to Rule 15c2-11 under the Exchange Act, at the termination of the trading suspension, no quotation may be entered unless and until they have strictly complied with all of the provisions of the rule. If any broker or dealer has any questions as to whether or not he has complied with the rule, he should not enter any quotation but immediately contact the staff in the Division of Trading and Markets, Office of Interpretation and Guidance, at (202) 551-5760. If any broker or dealer is uncertain as to what is required by Rule 15c2-11, he should refrain from entering quotations relating to TelcoBlue's securities until such time as he has familiarized himself with the rule and is certain that all of its provisions have been met. If any broker or dealer enters any quotation which is in violation of the rule, the Commission will consider the need for prompt enforcement action.
If any broker, dealer or other person has any information which may relate to this matter, the Denver Regional Office of the Securities and Exchange Commission should be telephoned at 303-844-1000. (Rel. 34-57369)
Proceedings Instituted Against TelcoBlue, Inc. for Failure to Make Required Periodic Filings
On February 22, the Commission issued an Order Instituting Proceedings Pursuant to Section 12(j) of the Securities Exchange Act of 1934 and Notice of Hearing against TelcoBlue, Inc. (TelcoBlue) to determine whether the registration of each class of its securities should be revoked or suspended for a period not exceeding twelve months based on its failure to file required periodic reports.
The Division of Enforcement (Division) alleges that TelcoBlue has failed to comply with Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 13a-1, 13a-10, and 13a-13 thereunder by failing to file periodic reports required by those laws.
A hearing will be scheduled before an Administrative Law Judge to provide TelcoBlue an opportunity to respond to the allegations of the Division contained in the Order Instituting Proceedings, to determine whether these allegations are true, and to determine whether TelcoBlue's registration should be suspended for a period not exceeding twelve months, or revoked, pursuant to Section 12(j) of the Exchange Act. As directed by the Commission, the administrative law judge shall issue an initial decision in this matter not later than 120 days from the date of service of the Order Instituting Proceedings. (Rel. 34-57370; File No. 3-12965)
In the Matter of Executive Registrar & Transfer, Inc. and John J. Donnelly
On February 22, the Commission issued an Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Sections 17A(c)(3), 17A(c)(4), and 21C of the Securities Exchange Act of 1934 (Order) against Executive Registrar & Transfer, Inc. (Executive), a transfer agent based in Englewood, Colorado, and John J. Donnelly (Donnelly). The Division of Enforcement (Division) alleges that from 2002 through 2007, Donnelly, in his capacity as president and owner of Executive and its predecessor, United Stock Transfer, Inc., was responsible for numerous and repeated violations of the rules under the Securities Exchange Act of 1934 that govern the conduct of transfer agents. The Division further alleges that almost all of these transfer agent rule violations also constitute violations of a prior cease-and-desist order issued against Donnelly by the Commission in June 2001.
A hearing will be scheduled before an Administrative Law Judge to determine whether the allegations of the Division contained in the Order are true, to provide Executive and Donnelly an opportunity to respond to these allegations, to determine what, if any, remedial actions are appropriate in the public interest against Executive and Donnelly, and to determine whether a cease-and-desist order should be issued against Executive. As directed by the Commission, the Administrative Law Judge shall issue an initial decision in this matter not later than 120 days from the date of service of the Order. (Rel. 34-57371; File No. 3-12966)
In the Matter of Robert A. Loffredi
On February 22, 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 Robert A. Loffredi (Loffredi), a resident of Hinsdale, Illinois. The Order finds that on Jan. 28, 2008, in the civil action entitled Securities and Exchange Commission v. Robert A. Loffredi, et al., Civil Action Number 07-CV-5927, in the U.S. District Court for the Northern District of Illinois, an Order of Permanent Injunction was entered by consent against Loffredi, permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
The Order finds that from at least August 2003 through Oct. 3, 2007, Loffredi was a registered representative associated with Linsco/Private Ledger Corp. (Linsco), a broker-dealer registered with the Commission. Loffredi is the President of Raymond Financial Group, Inc. (Raymond Financial), which until October 2007 operated as a branch office of Linsco. The Order also finds that the Commission's complaint alleged that from at least August 2003 through October 2007, Loffredi, through Raymond Financial, raised at least $2,833,796 from at least fourteen customers by falsely representing that he would invest their funds in securities, primarily in the form of purported certificates of deposit. Instead of using the customers' money to purchase securities, Loffredi used the customers' funds to pay his personal and business expenses, to make payments to a company owned by his wife, Advanced Sales and Marketing Corp., to make "disbursements" to other customers who had invested in the fictitious securities, and on at least one occasion to make payments on behalf of his wife.
Based on the above, the Order bars Loffredi from association with any broker or dealer. Loffredi consented to the issuance of the Order without admitting or denying any of the findings in the Order, except he admitted the entry of the Permanent Injunction. (Rel. 34-57372; File No. 3-12968)
SEC Bars Adviser in Hedge Fund Fraud Case
On February 22, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 203(f) of the Investment Advisers Act of 1940, Making Findings and Imposing Remedial Sanctions (Order) against Edward Sewon Ehee (Ehee). Ehee was the sole member of Compass Fund Management, an investment adviser registered with the Commission from 2004 through March 2006, and the sole member of investment adviser Viper Capital Management. The Order finds that, on Jan. 30, 2008, Ehee agreed to a judgment permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1), 206(2), and 207 of the Investment Advisers Act of 1940. Ehee further agreed to disgorge the proceeds from the sale of his home, but the Commission declined to assess penalties based on Ehee's sworn financial statement.
Based on the above, the Order permanently bars Ehee from association with any investment adviser. Ehee consented to the issuance of the Order without admitting or denying any of the findings in the Order. (Rel. IA-2707; File No. 3-12967)
Final Judgment Against Vincent A. Lenarcic, Jr. and New Vision Investment Funds, LLC
The Commission announced today that on February 20, the Honorable Martin Reidinger, U.S. District Judge for the Western District of North Carolina, entered a Final Judgment against Vincent A. Lenarcic, Jr. and New Vision Investment Funds, LLC (New Vision). The order permanently enjoined the defendants from future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The court also ordered Lenarcic to pay disgorgement in the amount of $808,274.35, but that payment of disgorgement shall be deemed satisfied by the order of restitution in the parallel criminal action captioned U.S. v. Vincent A. Lenarcic, Jr., Cr. No. 3:06CR155-01 (W.D.N.C.). Further, the court ordered that the claim against relief defendant QMA Investment Management, LLC, is dismissed with prejudice. The defendants consented to the order without admitting or denying any of the allegations of the Commission's complaint.
The complaint charged Lenarcic and New Vision with securities and investment adviser fraud in connection with the sale of securities held by Fundamental Growth Investors, LP (Fundamental). The complaint alleged that from June 2000 to December 2003, Lenarcic of Charlotte, NC, and New Vision, a limited liability company located in Charlotte, misappropriated at least $807,000 by selling securities in Fundamental's account and funneling the proceeds to New Vision and QMA, investment advisers controlled by Lenarcic. The complaint further alleged that the funds were misappropriated and spent in a manner contrary to the representations made to Fundamental's investors in Fundamental's offering materials. The complaint also alleged that Lenarcic and New Vision, in violation of their fiduciary duties to their advisory clients, misled, and failed to disclose their actions to the Fundamental investors. [SEC v. Vincent A. Lenarcic, Jr. and New Vision Investment Funds, LLC, Defendants, and QMA Investment Management, LLC, Relief Defendant, Civil Action No. 3:05-CV-487 (W.D.N.C.)] (LR-20462)
SEC Charges Clean Care Technologies, Inc., Edward Klein, Al Nazon and Anil Varughese with Fraud
On February 21, the Commission filed an action against Clean Care Technologies, Inc. (CCT), its former president and principal owner, Edward Klein, and two salespeople, Al Nazon and Anil Varughese, who orchestrated a fraudulent unregistered offering of CCT securities, through which they raised approximately $2.2 million from at least 26 unsuspecting investors.
CCT purported to be the exclusive North American distributor of a self-cleaning toilet seat. As part of their effort to attract investors, Nazon and Varughese used fake names, published phony press releases and a distributed an offering memorandum with numerous material misrepresentations, including false sales claims and false representations concerning exorbitant commissions paid to the unregistered brokers selling CCT securities.
CCT also failed to inform investors that while defendants solicited investments in CCT, they also secretly solicited investments in Systems by representing that Systems held the same "exclusive" distribution rights for the self-cleaning toilet seat that CCT investors were told belonged to CCT.
The Commission's complaint, filed in the Southern District of New York, names Systems as a relief defendant based on, among other factors, the apparent co-mingling of funds between CCT and Systems and a private settlement between CCT and Systems through which Systems acquired certain of CCT's assets. The complaint charges the defendants with conducting an unregistered offering using brokers who were not registered broker-dealers or affiliated with any registered broker-dealers, and with engaging in fraudulent solicitations and sales of securities to unsuspecting investors, many of whom were elderly or had limited means. The complaint seeks a final judgment assessing civil penalties, permanently enjoining defendants from further securities law violations and trading of penny stocks, and ordering the defendants to disgorge their ill-gotten gains.
The Commission charges the defendants with violations of Section 5 and Section 17(a) of the Securities Act of 1933 and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. The Commission also charges Defendants Nazon and Varughese with violations of Section 15 of the Exchange Act, and charges Defendant Klein with aiding and abetting those violations. [SEC v. Clean Care Technologies, Inc., et al., 08 CIV 01719 [HB] (S.D.N.Y.)] (LR-20463)
Proposed Rule Change
The Philadelphia Stock Exchange filed a proposed rule change (SR-Phlx-2008-06), as modified by Amendment No. 1 thereto, relating to U.S. dollar-settled FCO spot prices. Publication is expected in the Federal Register during the week of February 25. (Rel. 34-57361)
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