SEC, FINRA Announce Schedule For Regional CCOutreach BD Seminars
The Securities and Exchange Commission and the Financial Industry Regulatory Authority (FINRA) today announced the schedule and beginning of registration for 14 regional CCOutreach BD seminars. These regional seminars are designed to help broker-dealer compliance officers perform their compliance responsibilities, and will be held in April, May, June and July at locations across the country.
Each regional seminar will include panel discussions on such topics as the SEC examination process and priorities and FINRA's examination program and findings. The regional seminars also will include highlights from topics covered at the National CCOutreach BD Seminar, and will include question-and-answer sessions to provide an opportunity for CCOs to ask questions of local SEC and FINRA staff.
"We are focusing our CCOutreach BD regional programs on the compliance issues that are of most interest to CCOs to assist them in developing and enhancing effective compliance programs for the benefit of investors," said Lori Richards, Director of the SEC's Office of Compliance Inspections and Examinations. "We created the regional seminars with the hope that the smaller, more personal atmosphere will encourage the CCOs who take part to meet and discuss important compliance issues with their local regulators."
FINRA CEO Mary Schapiro said, "By reaching out through these seminars, we are providing a unique opportunity for CCOs across the country to discuss priority topics and issues of concern directly with regulators. That personal interaction can be invaluable in developing robust compliance programs."
Information regarding the regional seminars, including the dates, locations, and registration information, is available on the SEC's Web site at www.sec.gov/info/bdccoutreach.htm and FINRA's Web site at www.finra.org/bdccoutreach. These regional compliance seminars for broker-dealer compliance personnel are different from the regional seminars provided for investment adviser and investment company compliance personnel. Seating is limited, with priority given to broker-dealer chief compliance officers on a first-come, first-registered basis.(Press Rel. 2008-37)
SEC Obtains Emergency Orders against Unregistered Day-Trading Firm and its Principal
On March 4, the Commission filed an emergency action against Tuco Trading, LLC (Tuco), an unregistered securities day-trading firm in La Jolla, California, and its principal, Douglas G. Frederick (Frederick), charging them with violations of the broker-dealer registration and antifraud provisions of the Securities Exchange Act of 1934. On March 5, U.S. District Judge Dana M. Sabraw of the U.S. District Court for the Southern District of California found that the SEC had made a prima facie showing that Tuco and Frederick have engaged in, and will continue to engage in future violations, of the broker-dealer registration and antifraud provisions of Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, appointed a temporary receiver as a monitor over Tuco, and issued orders against the defendants for accountings, expedited discovery, and prohibiting destruction of documents.According to the SEC's complaint, the defendants provided securities day-trading capability to Tuco's over 250 traders who had approximately $10.2 million invested in Tuco. They permitted traders to day-trade securities in Tuco's own brokerage accounts at registered broker-dealers through sub-accounts created at Tuco for each trader. The SEC's complaint also alleged that Tuco received transaction-based compensation for its members' trading. The complaint also alleged that the defendants' used traders' equity to pay Tuco's expenses and to cover trader losses and inaccurately reported to the traders their equity balances.
In its complaint, the SEC also seeks against Tuco and Frederick preliminary and permanent injunctions against future violations of the broker-dealer registration and antifraud provisions of Section 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, disgorgement, and civil penalties, and against Tuco, a permanent receiver. [SEC v. Tuco Trading, LLC, and Douglas G. Frederick, Case No. 08 CV 0400 DMS BLM (S.D. Cal.)] (LR-20480)
SEC Charges Five Individuals in a Financial Fraud Scheme Arising From Their Involvement with Certified Services, Inc.
The Commission announced today that it filed a complaint against W. Anthony Huff, Danny L. Pixler, Anthony R. Russo, Otha Ray McCartha, and Charles J. Spinelli in the United States District Court for the Southern District of Florida charging them with a financial fraud conducted in violation of the federal securities laws arising from their involvement with Certified Services, Inc., (Certified) a South Florida publicly traded company. Certified operated a professional employee leasing business providing, among other things, workers' compensation insurance services to small and medium size businesses. Since May 2006, Certified has been a Chapter 11 debtor under the control of a Chapter 11 trustee appointed by the bankruptcy court.
The Commission's complaint alleges that from approximately 2001 through 2004, the defendants siphoned approximately $30 million from Certified through an elaborate scheme. The Commission's complaint also alleges that during the same time period, the defendants participated in a scheme to inflate Certified's financial statements by reporting approximately $47 million in bogus letters of credit as assets while not recording liabilities which reached a high of about $65 million in the third quarter of 2004. In addition, the complaint alleges that Certified did not fully disclose related party relationships.
The Commission's complaint charges Pixler, Certified's chief executive officer, and Russo, Certified's chief financial officer and a licensed certified public accountant, with violating Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5, 13a-14, 13b2-1, 13b2-2 thereunder and aiding and abetting Certified's violations of Sections 13(a), 13(b)(2)(A),and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder. The complaint also charges Pixler and Huff with violating Section 17(a) of the Securities Act of 1933 (Securities Act).
The complaint further charges Huff with aiding and abetting Certified's violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and for his role as an undisclosed control person of Certified pursuant to Section 20(a) of the Exchange Act. The complaint charges McCartha with violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and for aiding an abetting Certified's violations of Section 13(a) of the Exchange Act and Rules 13a-1 and 12b-20 thereunder. The complaint charges Spinelli with aiding and abetting Certified's violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The Commission's complaint also names Sheri Huff, Roxann Pixler, Midwest Merger Management, LLC and Brentwood Capital Corporation as relief defendants (relief defendants) in connection with their receipt of ill-gotten gains.
The Commission seeks permanent injunctive relief against all defendants, disgorgement and a Court-ordered sworn accounting from Pixler, Russo, Huff, and the relief defendants, the imposition of civil money penalties against each of the proposed defendants except Spinelli and McCartha, an officer and director bar against Pixler, Huff, Spinelli, Russo and McCartha, and orders barring Pixler, Huff, Spinelli, Russo and McCartha from participating in any offering of a penny stock.
McCartha and Spinelli have consented to the entry of Final Judgments providing for full injunctive relief. In October 2007, the Honorable Adalberto Jordan, United States District Judge for the Southern District of Florida, sentenced Spinelli and McCartha to 21 and 24 months incarceration respectively, and ordered them to pay restitution.
In addition to the civil actions against the defendants and relief defendants, on March 6, 2008, the Commission also issued an Order of Suspension pursuant to Rule 102(e)(2) of the Commission's Rules of Practice forthwith suspending Spinelli, an attorney, from appearing or practicing before the Commission, based on the entry of a felony conviction against him. In addition, the Commission simultaneously instituted a public administrative proceeding pursuant to Section 12(j) of the Exchange Act to suspend or revoke each class of Certified's securities based on its failure to comply with Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder. [SEC v. W. Anthony Huff, Danny L. Pixler, Anthony R. Russo, Otha Ray McCartha and Charles J. Spinelli, Case No. 08-60315-CIV-ZLOCH (S. D. Fla.)] (LR-20481)
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed by the Philadelphia Stock Exchange relating to the specialist option transaction charge credit pilot program (SR-Phlx-2008-19) 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 March 10. (Rel. 34-57434)
A proposed rule change (SR-CBOE-2008-18) filed by the Chicago Board Options Exchange related to Delayed Start Option SeriesTM 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 March 10. (Rel. 34-57436)
A proposed rule change (SR-NYSE-2008-13) filed by the New York Stock Exchange to delete from Section 802.01E of the Exchange's Listed Company Manual text that is no longer relevant 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 March 10. (Rel. 34-57442)
Approval of Proposed Rule Change
The Commission approved a proposed rule change (SR-ISE-2007-95), as modified by Amendment Nos. 2 and 3, submitted by the International Securities Exchange relating to reserve orders. Publication is expected in the Federal Register during the week of March 10. (Rel. 34-57441)
Accelerated Approval of Proposed Rule Change
The Commission granted accelerated approval to a proposed rule change (SR-NASDAQ-2007-090), as modified by Amendment No. 1, filed by The NASDAQ Stock Market under Section 19(b)(1) of the Securities Exchange Act of 1934 to accept financial statements prepared in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board, for certain foreign private issuers, consistent with Commission rules. Publication is expected in the Federal Register during the week of March 10. (Rel. 34-57445)
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