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U.S. Securities and Exchange Commission

SEC News Digest

Issue 2008-86
May 2, 2008

COMMISSION ANNOUNCEMENTS

SEC Completes Largest-Ever Global Training Program

76 Nations Participate in Securities Regulatory Institute

The Securities and Exchange Commission completed its 18th Annual International Institute for Securities Market Development on April 17, 2008. Record attendance at this year's training program totaled 192 senior securities officials from 76 foreign jurisdictions, including four jurisdictions attending the Institute for the first time.

SEC Chairman Christopher Cox said, "With three-quarters of U.S. investors owning foreign securities, cross-border cooperation is more important now than ever before. The Institute is an invaluable opportunity for the SEC and our overseas regulatory counterparts to cooperate on a wide variety of securities regulatory and enforcement issues. The record-setting number of participants at this year's Institute shows the strong interest among regulators from around the world in strengthening securities regulation for the benefit of investors as well as economic growth in their countries."

Ethiopis Tafara, Director of the SEC's Office of International Affairs, added, "The record attendance at this year's Institute speaks volumes about the commitment of our counterparts to developing high quality securities regulation and to forging cooperative relationships with one another and with the SEC. As our fellow regulators return to their home countries, we look forward to continuing to work with them both bilaterally through cooperation in securities enforcement matters, and multilaterally through a variety of ongoing international initiatives."

The two-week, senior-level Institute is one of the SEC's flagship global training programs. It provides a wide ranging group of participants from countries with emerging markets an opportunity to discuss the core principles of securities regulation and features lectures, panels, and workshops that focus on the development, operation, and regulation of securities markets. The Institute's faculty includes senior SEC officials as well as representatives of other governmental agencies, securities exchanges and other key securities industry participants.

For more information on the Institute or on the SEC's technical assistance program, contact Dr. Robert M. Fisher or Z. Scott Birdwell in the SEC's Office of International Affairs at 202-551-6690 or OIA@SEC.gov. (Press Rel. 2008-73)


The Tax Refund Check is in the Mail, With Investor Tips From the SEC

SEC Investor Education Information Accompanying IRS Refund Checks to 3 Million Americans

The Securities and Exchange Commission today announced that investors awaiting their refund checks from the Internal Revenue Service will simultaneously be receiving information about a new SEC phone-based information resource that can help them learn more about various investing topics and avoid investment scams.

More than 3 million Americans will receive an SEC investor information card as an insert with IRS refund checks being mailed on May 3. The SEC's largest-ever direct mail outreach effort is intended to reach millions of Americans, particularly senior citizens, who do not have Internet access to online investor education information.

"By sending informative mailers in the same envelopes as IRS refund checks, the SEC is saving taxpayer money and using the combined services of the federal government to further its mission of educating all American investors," said Kristin Kaepplein, Director of the SEC's Office of Investor Education and Advocacy. "The sheer scope of our effort, the largest of its kind, demonstrates our commitment to helping all investors make informed decisions, including those without Internet access."

The SEC information card encourages recipients to "Call Now and Become a Smarter Investor" by dialing 1-866-358-6652 and choosing an investment topic best suited for them to hear helpful automated information. Topics range from "Getting Started With Investing" and "Protecting Your Nest Egg" to "How to File an Investment Complaint" and "Sales Seminars - No 'Free Lunch'."

Recipients are additionally given the option of visiting the Internet for more SEC information on investing topics at www.investor.gov. (Press Rel. 2008-75)


ENFORCEMENT PROCEEDINGS

Former Compliance Officer and Broker-Dealer Fined for Violating Securities Exchange Act Provision Designed to Prevent Use of Material Nonpublic Information

On May 1, the Commission entered an Order against A. Carlos Martinez (Martinez), the compliance officer of Chanin Capital LLC (Chanin), a broker-dealer formerly registered with the Commission. As described in the Commission's Order, at all relevant times, Martinez had sole responsibility for maintaining and enforcing Chanin's written policies and procedures designed to prevent the misuse of material nonpublic information by Chanin's employees and associated persons. Between January 1999 and September 2003, Chanin, through Martinez, did not enforce these written policies. In September 2003, and again in 2004, Chanin revised its written policies and procedures. While Chanin's compliance with this expanded set of policies and procedures improved, Chanin, through Martinez, failed to reasonably review whether the firm maintained and enforced its new policies.

The Commission found that Martinez willfully aided and abetted and caused Chanin's violation of Section 15(f) of the Securities Exchange Act of 1934 (Exchange Act), which requires brokers and dealers registered with the Commission to establish, maintain and enforce written policies and procedures reasonably designed to prevent the misuse of material nonpublic information by its employees and associated persons. Martinez, without admitting or denying any of the findings in the Order except as to the jurisdiction of the Commission over him, consented to the entry of the Order which censures him, orders him to pay $25,000 pursuant to Section 21B of the Exchange Act, and orders him to cease and desist from causing any violations and any future violations of Section 15(f).

In a related action, on April 28, 2008, the Commission filed a settled complaint in the U.S. District Court for the District of Columbia seeking judgment against Chanin, based on charges that it violated Section 15(f) Exchange Act. Chanin, without admitting or denying the allegations in the Commission's complaint, consented to the entry of a proposed final judgment against it, which orders it to pay a $75,000 penalty. (Rel. 34-57755; File No. 3-13032); [SEC v. Chanin Capital LLC, Civil Action No. 1:08-cv-00728-JDB (LR-20551)


SEC Halts Multimillion Dollar Fraud by Orange County Company

The Commission yesterday obtained a court order halting a $25 million fraudulent scheme perpetrated by an Orange County company. The SEC sued Laguna Hills, Calif.-based Safevest, LLC and its principals, Jon G. Ervin, Sr., age 61 and a resident of Mission Viejo, Calif., and John V. Slye, age 68 and a resident of Arlington, Va., for allegedly running a Ponzi-like scheme and misappropriating investor funds. The Honorable James V. Selna, United States District Court Judge for the Central District of California, issued an order freezing assets and appointing a temporary receiver over Safevest and its affiliates.

The SEC's complaint, filed in federal court in Santa Ana, Calif., alleges that since at least May 2007, the defendants have raised at least $25 million from more than 500 investors, including many from the Christian community, misrepresenting that investor funds would be pooled and invested in futures commodities trading, that the investment would generate daily profits ranging from 1.5% to 1.9%, and that investors could receive their money back within 72 hours of requesting it. In reality, according to the complaint, no investor money was invested in futures trading, and requests by investors for withdrawal of their funds have either not been honored or have only been partially honored. The complaint further alleges that, undisclosed to investors, the defendants paid more than $18 million to investors in Ponzi-like fashion. The defendants also allegedly misappropriated investor funds for the personal use of Ervin, Slye, and their family members.

In its lawsuit, the SEC obtained an order (1) freezing the assets of Ervin and Slye; (2) freezing the assets of, and appointing a temporary receiver over, Safevest and its affiliates; (3) preventing the destruction of documents; and (4) temporarily enjoining Safevest, Ervin, and Slye from future violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission also seeks preliminary and permanent injunctions, disgorgement, and civil penalties against all defendants. A hearing on whether a preliminary injunction should be issued against the defendants and whether a permanent receiver should be appointed is scheduled for May 12, 2008 at 1:30 p.m.

The Commodity Futures Trading Commission also filed an emergency action yesterday against Safevest, Ervin, and Slye alleging violations of the antifraud and registration provisions of the Commodity Exchange Act, and the California Department of Corporations today issued a desist and refrain order to Safevest and Ervin. The U.S. Attorney's Office for the Central District of California also filed a criminal complaint against Ervin yesterday, and the Federal Bureau of Investigation arrested him today.

The SEC acknowledges the assistance of the Commodity Futures Trading Commission, the U.S. Attorney's Office for the Central District of California, the Federal Bureau of Investigation, and the California Department of Corporations. [SEC v. Safevest, LLC, et al., Civil Action No. SACV-08-473 JVS (MLGx) (C.D. Cal.)] (LR-20552)


INVESTMENT COMPANY ACT RELEASES

The Bessemer Group, Incorporated, et al.

A notice has been issued giving interested persons until May 27 to request a hearing on an application filed by The Bessemer Group, Incorporated (Bessemer), et al. for an order to exempt certain limited liability companies and other investment vehicles formed for the benefit of eligible employees of Bessemer and its affiliates from certain provisions of the Investment Company Act. Each limited liability company or other investment vehicle will be an "employees' securities company" within the meaning of Section 2(a)(13) of the Act. (Rel. IC-28258 - April 29)


Fidelity Rutland Square Trust, et al.

A notice has been issued giving interested persons until May 27 to request a hearing on an application filed by Fidelity Rutland Square Trust, et al., under Section 12(d)(1)(J) of the Investment Company Act for an exemption from Sections 12(d)(1)(A) and (B) of the Act, and under Sections 6(c) and 17(b) of the Act for an exemption from Section 17(a) of the Act. The order would permit certain registered open-end management investment companies to acquire shares of other registered open-end management investment companies and unit investment trusts that are within and outside the same group of investment companies. The order would supersede a prior order. (Rel. IC-28259 - April 30)


The RBB Fund, Inc. and Abundance Technologies, Inc.

A notice has been issued giving interested persons until May 27 to request a hearing on an application filed by The RBB Fund, Inc. and Abundance Technologies, Inc. (the Adviser) for an order under Section 12(d)(1)(J) of the Investment Company Act for an exemption from Sections 12(d)(1)(A) and (B) of the Act, and under Sections 6(c) and 17(b) of the Act for an exemption from Section 17(a) of the Act. The order would amend a prior order that permits certain series of a registered open-end management investment company advised by the Adviser to acquire shares of other registered open-end management investment companies and unit investment trusts that are outside the same "group of investment companies" (Underlying Funds), to include Underlying Funds that operate as feeder funds in a master-feeder structure in reliance on Section 12(d)(1)(E) of the Act and are part of the same "group of investment companies" as their corresponding master funds. (Rel. IC-28260 - April 30)


ALPS Advisers, Inc., et al.

A notice has been issued giving interested persons until April 30, 2008 to request a hearing on an application filed by ALPS Advisers, Inc., et al., for an order to permit series of open-end management investment companies whose portfolios will consist of the securities of an equity securities index to issue shares that can be redeemed only in large aggregations and would trade in the secondary market at negotiated prices. The order would allow dealers to sell shares of the series in the secondary market unaccompanied by a prospectus when prospectus delivery is not required by the Securities Act of 1933, permit certain affiliated persons of the series to deposit securities into and receive securities from the series, and permit the series to pay redemption proceeds more than seven days after the tender of shares for redemption under certain circumstances. The order also would permit certain registered management investment companies and unit investment trusts outside of the same group of investment companies as the series to acquire shares of the series. (Rel. IC-28262 - May 1)


SELF-REGULATORY ORGANIZATIONS

Immediate Effectiveness of Proposed Rule Changes

A proposed rule change (SR-CHX-2008-05) filed by the Chicago Stock Exchange to change the composition of its Regulatory Oversight Committee 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 May 5. (Rel. 34-57734)

A proposed rule change filed by the International Securities Exchange relating to position and exercise limits for options on the DIAMONDS Trust (SR-ISE-2008-35) has become immediately 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 May 5. (Rel. 34-57736)

A proposed rule change filed by the Philadelphia Stock Exchange regarding position and exercise limits for options on the DIAMONDS Trust (SR-Phlx-2008-28) has become immediately 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 May 5. (Rel. 34-57737)

A proposed rule change (SR-CBOE-2008-50) filed by the Chicago Board Options Exchange related to DPMs and LMMs 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 May 5. (Rel. 34-57742)

A proposed rule change by the New York Stock Exchange (SR-NYSE-2008-34) relating to Exchange Rule 36 (Communication Between Exchange and Exchange Members' Offices) 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 May 5. (Rel. 34-57746)


Approval of Proposed Rule Changes

The Commission approved a proposed rule change (SR-Amex-2008-17), as modified by Amendment No. 1 thereto, submitted by the American Stock Exchange pursuant to Rule 19b-4 under the Securities Exchange Act of 1934, to adopt listing rules for Fixed Income-Linked Securities, Futures-Linked Securities, and Combination-Linked Securities. Publication is expected in the Federal Register during the week of May 5. (Rel. 34-57739)

The Commission approved a proposed rule change, as modified by Amendment No. 1, filed by the Municipal Securities Rulemaking Board (SR-MSRB-2007-08) under Section 19(b)(2) of the Securities Exchange Act of 1934, relating to Rule G-8, Books and Records, Rule G-9, Preservation of Records, and Rule G-34, CUSIP Numbers and New Issue Requirements, to improve transaction reporting of new issues. Publication is expected in the Federal Register during the week of May 5. (Rel. 34-57750)

The Commission approved a proposed rule change (SR-NYSEArca-2008-29), as modified by Amendment No. 1 thereto, submitted by NYSE Arca, Inc., through its wholly owned subsidiary, NYSE Arca Equities, Inc., pursuant to Rule 19b-4 under the Securities Exchange Act of 1934, to amend the eligibility criteria for components of an index underlying Investment Company Units. Publication is expected in the Federal Register during the week of May 5. (Rel. 34-57751)


Accelerated Approval of Proposed Rule Change

The Commission published notice and granted accelerated approval of a proposed rule change (SR-Amex-2007-129) filed by the American Stock Exchange, as modified by Amendment No. 1, relating to an Exchange member's conduct in doing business with the public. Publication is expected in the Federal Register during the week of May 5. (Rel. 34-57738)


Approval of Accelerated Delivery of Supplement to the Options Disclosure Document

The Commission granted approval to the accelerated delivery of a supplement to the options disclosure document submitted by the Options Clearing Corporation (SR-ODD-2008-01) pursuant to Rule 9b-1 under the Securities Exchange Act of 1934 reflecting changes to disclosure regarding binary options, delayed start option series and the front cover page. Publication is expected in the Federal Register during the week of May 5. (Rel. 34-57744)


SECURITIES ACT REGISTRATIONS


RECENT 8K FILINGS

 

http://www.sec.gov/news/digest/2008/dig050208.htm


Modified: 05/02/2008