SEC Announces Next Steps for Implementation of Mutual Recognition Concept
On March 24, the Commission announced a series of actions it intends to take to further the implementation of the concept of mutual recognition for high-quality regulatory regimes in other countries.
The Commission contemplates taking the following actions:
The Commission's engagement of other regulators in an effort of coordination and cooperation has spanned more than 20 years. These efforts have included the reaching of memoranda of understanding regarding enforcement cooperation, technical assistance, and investigatory collaboration with more than 30 foreign jurisdictions. In the past decade, as global markets have become more interconnected, the SEC has been approached by market participants and foreign regulators regarding the possibility of reducing regulatory barriers between high-quality markets. Recently, the Commission has engaged in an extensive exploration of the issues, including the holding of a Mutual Recognition roundtable on June 12, 2007. The Commission also has had the benefit of the extensive public discourse, including the publication of formal studies and recommendations by various private groups.
The steps that the Commission is announcing today proceed from the following premises:
The Commission also is taking this opportunity to express again its interest in discussing market access with foreign counterparts, investors, and other interested parties, as well as other issues affecting international regulatory cooperation. (Press Rel. 2008-49)
Closed Meeting - Monday, March 31, 2008 - 10:00 a.m.
The subject matter of the closed meeting scheduled for Monday, March 31, will be: formal orders of investigation; institution and settlement of injunctive actions; institution and settlement of administrative proceedings of an enforcement nature; and adjudicatory matters.
At times, changes in Commission priorities require alterations in the scheduling of meeting items. For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact: The Office of the Secretary at (202) 551-5400.
Final Consent Judgment Entered Against Former CEO and President of Issuer in Offering Fraud Litigation
The Commission announced that on Feb. 27, 2008, a final consent judgment was entered in the United States District Court for the Eastern District of New York as to defendant Peter Riccardo (Riccardo), the former President and CEO of America In Line Corporation (AIL) and America In Line of Mount Sinai Corp. (AILMS). Without admitting or denying the allegations in the Commission's complaint, Riccardo consented to the entry of a final judgment which provides: (1) that Riccardo is enjoined from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; (2) that he is barred from acting as an officer or director of a public company and from participating in a penny stock offering; and (3) that he pay a civil monetary penalty of $50,000.
According to the Commission's complaint filed on Aug. 6, 2002, AIL, AILMS and Riccardo conducted a series of unregistered offerings between 1996 and 2000 in order to raise funds to construct an in-line roller hockey rink in Long Island, New York, and the offering memoranda provided to investors either failed to make any disclosures concerning the commission payments or disclosed that only 8% of the investor proceeds would be used to pay sales commissions.
On Sept. 28, 2007, the Commission obtained default judgments against AIL and AILMS which permanently enjoined them from future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. [SEC v. America In Line Corporation, et. al., 02-CIV-4362 (LDW) (EDNY)] (LR-20507)
SEC Settles With Former Officers of Riverstone Networks, Inc.
The Commission announced today that the Honorable Charles R. Breyer of the United States District Court for the Northern District of California has entered, by consent, orders of permanent injunction and other relief (Orders) in a civil action the Commission brought against five former officers and one former employee of Riverstone Networks, Inc. (Riverstone), a California-based company that formerly manufacture and market communications routers. In the lawsuit, the Commission alleged that from June 2001 through June 2002, these defendants participated in a scheme to inflate Riverstone's publicly-reported net revenues through improper revenue recognition on contingent sales (LR-19869). The defendants, in consenting to the Orders, neither admitted nor denied the allegations of the Commission's complaint.
Pursuant to the Orders, former Riverstone officers Romulus S. Pereira, chief executive officer, Robert B. Stanton, chief financial officer, L. John Kern, executive vice president of sales, Andrew D. Feldman, vice president of marketing, and William F. McFarland, vice president of finance, have been enjoined from violating Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5, 13b2-1, and 13b2-2 thereunder, and from aiding and abetting violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder. Defendants Pereira, Stanton, and McFarland were further enjoined from aiding and abetting violations of Section 13(b)(2)(B)(ii) of the Exchange Act. Former Riverstone employee Lori H. Cornmesser, director of sales operations, was enjoined from violating Section 13(b)(5) of the Exchange Act and Rule 13b2-1 thereunder, and from aiding and abetting violations of Section 13(b)(2)(A) of the Exchange Act and Rule 13b2-2 thereunder. The Orders also require defendants Pereira, Stanton, Kern, Feldman, and Cornmesser to pay disgorgement in the amount of $375,000, $175,000, $347,066, $289,507, and $17,054, respectively. Defendants Pereira, Stanton, and McFarland were further ordered to pay civil penalties in the amount of $75,000, $75,000, and $40,000, respectively. Finally, defendants Pereira, Stanton, and Kern have been barred for a period of five years from acting as an officer or director of a public company.
In related criminal cases, defendants Kern and Feldman pled guilty to one felony count each of violating the internal accounting controls of a public company under the provisions of Sections 13(b)(5) and 32 of the Exchange Act. In December 2007, they were each sentence to three years of probation and fined $5,000. U.S. v. Kern, Case No. 3:0-cr-00733 and U.S. v. Feldman, Case No. 3:07-cr-00731, N.D. Cal.] (LR-20508)
ADDITIONS AND CORRECTIONS
A summary previously published in the March 20th issue of the Digest, entitled "SEC Files Settled Books and Records and Internal Controls Charges Against AB Volvo for Improper Payments to Iraq Under the U.N. Oil for Food Program - - Company Agrees to Pay Over $12.6 Million in Civil Penalties, Disgorgement of Profits, and Interest", was inadvertently included again in yesterday's Digest.
Immediate Effectiveness of Proposed Rule Changes
The Options Clearing Corporation filed a proposed rule change (SR-OCC-2008-03) under Section 19(b)(3)(A) of the Securities Exchange Act of 1934 relating to the types of cleared contracts that may be carried in a cross-margining account at OCC. Publication is expected in the Federal Register during the week of March 24. (Rel. 34-57543)
The Options Clearing Corporation filed a proposed rule change (SR-OCC-2008-05) under Section 19(b)(3)(A) of the Securities Exchange Act to modify the description of OCC's pro rata assignment procedure with respect to flexibly structured foreign currency options. Publication is expected in the Federal Register during the week of March 24. (Rel. 34-57547)
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