SEC Chairman Cox, Prime Minister Rudd Meet Amid U.S.-Australia Mutual Recognition Talks
On March 29, in a meeting at historic Blair House in Washington, Securities and Exchange Commission Chairman Christopher Cox and Australian Prime Minister Kevin Rudd announced that the SEC, the Australian Securities and Investment Commission (ASIC) and the Australian Treasury Department have begun formal discussions to develop a mutual recognition arrangement for the two nations' securities markets. The discussions are intended to enhance cross-border law enforcement cooperation, facilitate regulatory coordination, and increase investor access to well-regulated capital markets.
The SEC recently announced that it would explore a limited agreement with one or more foreign regulatory counterparts that could provide the basis for the development of a more general approach to mutual recognition through rulemaking. Any mutual recognition agreement would be based upon a comparability assessment by the SEC and by the foreign authority of one another's regulatory structures. The discussions between the SEC and the Australian authorities represent the first step toward a possible bilateral arrangement and will cover potential recognition to allow securities exchanges and market participants to operate in each other's markets.
Prime Minister Kevin Rudd added, "Australia has a long history of recognising foreign regulation of securities markets and welcomes this opportunity to be included in a pilot mutual recognition arrangement with the SEC. We look forward to more bilateral arrangements with the SEC and other financial market regulators. Identifying and eliminating impediments to cross-border trading will mean easier and less costly access to well-regulated investment and will improve transparency and liquidity in our markets. This is a good economic and regulatory outcome."
Over the past two decades, the SEC and ASIC have developed a close partnership on enforcement and regulatory issues, which was formalized in a 1993 Memorandum of Understanding on securities law enforcement. In recent years, SEC and ASIC enforcement staff have regularly worked together on cross-border investigations of violations of U.S. and Australian securities laws.
The SEC and ASIC agreed to undertake a formal assessment of each other's regulatory systems to determine the extent to which each jurisdiction produces a comparable level of investor protection. The results of the comparability assessment would be published for public comment before being made final. Once the comparability assessment is completed, this would provide the basis for further discussions between the SEC and ASIC regarding a formal mutual recognition arrangement, which would include specific discussion of the extent to which, and under what circumstances, U.S. and Australian securities exchanges and market participants could operate in each other's markets and would articulate the additional cooperation arrangements that would be necessary and appropriate to ensure the integrity of financial markets and the protection of investors. (Press Rel. 2008-52)
Statement of SEC Chairman Christopher Cox Regarding Blueprint for Financial Regulatory Reform
Securities and Exchange Commission Chairman Christopher Cox today issued the following statement regarding the Blueprint for Financial Regulatory Reform being proposed by the Treasury Department:
In the Matter of Aimsi Technologies, Inc.
An Administrative Law Judge has issued an Order Making Findings and Revoking Registration by Default (Default Order) in Aimsi Technologies, Inc., formerly known as Advanced Integrated Management Services, Inc. The Order Instituting Proceedings alleged that Respondent Aimsi Technologies, Inc., formerly known as Advanced Integrated Management Services, 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 registration of each class of registered securities Aimsi Technologies, Inc., formerly known as Advanced Integrated Management Services, Inc., has with the Commission, pursuant to Section 12(j) of the Securities Exchange Act of 1934. (Rel. 34-57580; File No. 3-12945)
SEC Obtains Temporary Restraining Order and Asset Freeze against Madison Real Estate Group, LLC, Richard Ames Higgins, Brandon S. Higgins, and Allan D. Christensen
On March 28, the United States District Court for the District of Utah entered an order temporarily restraining and freezing the assets of Madison Real Estate Group, LLC (Madison), Richard Ames Higgins (Higgins), Brandon S. Higgins (Brandon), and Allan D. Christensen (Christensen), from making fraudulent offers, sales and purchases of securities. The Court also appointed a receiver to take control of the frozen assets.
The complaint alleges that the defendants have obtained investments of at least $15 million from the fraudulent sale of limited partnerships interests in apartment buildings to at least 42 investors. Among the misrepresentations made to investors were: (1) that Madison is a family-owned limited liability company with over 30 years of experience in the commercial real estate business; (2) that Madison generates monthly income of $250,000; (3) that investors were guaranteed a 1% monthly return from apartment buildings purchased at below fair market value, and were then renovated and sold, ultimately generating a 30% return to investors after one to two years. However, it is alleged that the defendants actually paid above fair market value for the buildings and that the returns were paid to investors from newly- invested funds from other investors.
Additionally, the complaint alleges that the defendants have omitted to state material facts, including: (1) the defendants failed to pay the mortgages on the buildings: (2) contractors were not being paid for renovations and materials; (3) unpaid renovation costs exceeded hundreds of thousands of dollars; (4) the buildings were actually operating at a loss; (5) Higgins and Christensen were receiving undisclosed management fees, commissions, and referral fees: and (6) the defendants were using invested funds for personal expenses. Finally, it is alleged that Higgins, Brandon and Christensen failed to disclose that Higgins had been enjoined in a prior Commission enforcement action, had been convicted in an action by the State of Utah for securities fraud and had been disbarred by the State of Utah.
The complaint charged Madison, Higgins, Christensen, and Brandon with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and 10b-5 thereunder. [SEC v. Madison Real Estate Group, LLC, a Wyoming limited liability company, Richard Ames Higgins, Brandon S. Higgins, and Allan D. Christensen, Civil No. Case No. 2:08CV00243 (USDC Utah] (LR-20513)
INVESTMENT COMPANY ACT RELEASES
Deregistrations under the Investment Company Act
For the month of March, 2008, a notice has been issued giving interested persons until April 22, 2008, to request a hearing on any of the following applications for an order under Section 8(f) of the Investment Company Act declaring that the applicant has ceased to be an investment company:
Kohlberg Capital Corporation
A notice has been issued giving interested persons until April 22, 2008, to request a hearing on an application filed by Kohlberg Capital Corporation for an order under Section 61(a)(3)(B) of the Investment Company Act approving applicant's proposal to issue stock options to non-employee directors under applicant's 2008 non-employee director plan. (Rel. IC-28228 - March 28)
Approval of Proposed Rule Changes
A proposed rule change (SR-CBOE-2008-03) filed by the Chicago Board Options Exchange relating to complex orders, has been approved pursuant to Section 19(b)(2) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of March 31. (Rel. 34-57556)
The Commission approved a proposed rule change (SR-Phlx-2008-06), as modified by Amendment No. 1 thereto, submitted under Rule 19b-4 of the Securities Exchange Act of 1934 by the Philadelphia Stock Exchange relating to U.S. dollar-settled FCO spot prices. Publication is expected in the Federal Register during the week of March 31. (Rel. 34-57575)
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed by the Boston Stock Exchange to amend rules pertaining to the Terms of Index Option Contracts (SR-BSE-2008-14) 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 31. (Rel. 34-57570)
A proposed rule change (SR-NSX-2008-08) filed by the National Stock Exchange to extend the effective period for Rule 2.12, regarding third-party routing services in respect of orders entered into NSX BLADE, 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 31. (Rel. 34-57574)
A proposed rule change (SR-CBOE-2008-33), as modified by Amendment No. 1 thereto, filed by the Chicago Board Options Exchange relating to the Penny Pilot Program 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 March 31. (Rel. 34-57576)
Proposed Rule Changes
A proposed rule change (SR-FINRA-2008-010) has been filed by the Financial Industry Regulatory Authority regarding a proposal to amend the Codes of Arbitration Procedure to establish new procedures for arbitrators to follow when considering requests for expungement relief. Publication is expected in the Federal Register during the week of March 31. (Rel. 34-57572)
The Depository Trust Company and the National Securities Clearing Corporation filed proposed rule changes (SR-DTC-2007-14 and SR-NSCC-2007-14) under Section 19(b)(1) of the Exchange Act that would allow DTC and NSCC to amend their Rules to provide a new service (ID Net Service) which will establish settlement netting functionalities for institutional transactions by leveraging the netting and settlement capabilities of NSCC with the processing capabilities of DTC. Publication is expected in the Federal Register during the week of March 31. (Rel. 34-57573)
Accelerated Approval of Proposed Rule Change
The Commission granted accelerated approval to a proposed rule change, as modified by Amendment Nos. 1 and 2 thereto, by the Municipal Securities Rulemaking Board (SR-MSRB-2007-06) under Section 19(b)(2) of the Securities Exchange Act of 1934, relating to an amendment to the Municipal Securities Information LibraryŽ System to establish a pilot system for consolidated dissemination of disclosure documents and related information through an Internet-based public access portal. Publication is expected in the Federal Register during the week of March 31. (Rel. 34-57577)
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