Closed Meeting - Thursday, September 11, 2008 - 1:00 p.m.
The subject matter of the closed meeting scheduled for Sept. 11, 2008, will be: formal orders of investigation; institution and settlement of injunctive actions; institution and settlement of administrative proceedings of an enforcement nature; amicus consideration; and other matters relating to enforcement proceedings.
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.
RULES AND RELATED MATTERS
SEC Amends the Rule Exempting a Foreign Private Issuer from Registration under Section 12(g) of the Exchange Act
Today the Commission issued a release amending the rule that exempts a foreign private issuer from having to register a class of equity securities under Section 12(g) of the Exchange Act based on the submission to the Commission of information that the issuer has published outside the United States. The adopted rule amendments will eliminate the current written application and paper submission requirements under Rule 12g3-2(b) by automatically exempting from Exchange Act Section 12(g) a foreign private issuer that meets specified conditions. The effective date of the rule amendments will be 30 days after their publication in the Federal Register.
For further information contact: Elliot Staffin, Special Counsel, Office of International Corporate Finance, (202) 551-3450. (Rel. 34-58465; International Series Rel. 1309)
In the Matter of Joseph Yurkin
On September 4, the Commission issued an Order Instituting Administrative Proceeding Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Notice of Hearing (Order) against Joseph Yurkin (Respondent). The Order is based on allegations that Respondent willfully violated Section 15(a)(1) of the Securities Exchange Act of 1934 (Exchange Act) and allegations that a permanent injunction, by consent, was entered against the Respondent for violating the securities registration and antifraud provisions of the federal securities laws.
The Division of Enforcement alleges in the Order that from at least June 2006 through September 2007, Yurkin offered and sold Homeland Communications Corporation's (Homeland) unregistered securities to the public and received transaction-based compensation. Specifically, Yurkin solicited securities transactions on behalf of Homeland and induced investors to purchase securities in the company. Yurkin was one of Homeland's most active telemarketers and he received commissions that were based on the sale of Homeland's securities. During the period that Yurkin engaged in these sales activities, he was not registered with the Commission as a broker-dealer or associated with a registered broker-dealer.
The Order also alleges that on Nov. 16, 2007, a judgment was entered by consent against Yurkin, permanently enjoining him from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in the civil action entitled SEC v. Homeland Communications Corp., et al., Civil Action Number 07-80802-CIV-MARRA/JOHNSON (filed Sept. 5, 2007) in the United States District Court for the Southern District of Florida.
A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, and whether Yurkin willfully violated Section 15(a)(1) of the Exchange Act, and to determine what, if any, remedial action is appropriate in the public interest against Yurkin pursuant to Section 15(b)(6) of the Exchange Act. The Order requires the Administrative Law Judge to issue an initial decision no later than 210 days from the date of service of the Order. (Rel. 34-58464; File No. 3-13159)
Former Natural Health Trends Corp. Executives Settle SEC Charges that they Failed to Disclose Related Party Transactions
On September 3, the Commission filed a civil action in the United States District Court for the Northern District of Texas charging Mark D. Woodburn and Terry LaCore, two former officers of Natural Health Trends Corp. (NHT) of Dallas, Texas, with securities fraud and other violations arising from undisclosed related party transactions from 2001 through 2005. According to the complaint, from 2001 through August 2005, NHT's top distributor paid Woodburn and LaCore, directly and indirectly, approximately $2.5 million in undisclosed payments. The complaint also alleges that, in February 2004, Woodburn caused NHT to loan $256,200 to a Woodburn family-controlled company, and later took steps to conceal related party nature of the loan when it was discovered by NHT's new accounting management in the fall of 2004. As a result of Woodburn and LaCore's activities, the complaint continues, NHT failed to disclose, or inadequately disclosed, the related party transactions in periodic filings, registration statements, and proxy statements.
Woodburn and LaCore agreed to settle the SEC's charges without admitting or denying the allegations of the complaint. Each agreed to be permanently enjoined from violations of the specified statutes and to a five-year officer and director bar. Woodburn agreed to pay a $60,000 civil penalty, and LaCore agreed to pay a $50,000 civil penalty. [SEC v. Mark D. Woodburn and Terry LaCore, Civil Action No. 3:08-cv-1555-G, Northern District of Texas (Dallas Division)] (LR-20702; AAE Rle. 2872)
SEC Sues Island Pacific and Former CEOs and CFO for Accounting Fraud Scheme
On September 4, the Commission filed securities fraud charges against Retail Pro, Inc. (formerly known as Island Pacific, Inc.), and two former CEOs and a former CFO for their roles in an accounting fraud scheme designed to falsely inflate Island Pacific's revenues. The Commission's lawsuit, filed in federal district court in San Diego, Calif., names Retail Pro, Inc., a La Jolla, Calif. software company, Barry M. Schechter, age 54, of La Jolla, Calif., Ran H. Furman, age 39, of San Diego, Calif., and Harvey Braun, age 69, of Livingston, New Jersey. Island Pacific, Schechter, and Braun have agreed to settle the charges.
The Commission's complaint alleges that Schechter, the former CEO, Furman, the former CFO, and Braun, another former CEO, caused Island Pacific to improperly record and report $3.9 million in revenue from a barter transaction. As alleged in the complaint, the barter transaction had little economic purpose or business substance aside from manipulating Island Pacific's financial statements. The complaint further alleges that as a result of improperly recognizing and reporting the $3.9 million as revenue, Island Pacific overstated its revenues by 140% for the second quarter of 2004, 29% for the nine months ending the third quarter of 2004, and 22% for the 2004 fiscal year. In addition, Island Pacific reported a small profit instead of a massive loss for the second quarter of 2004.
The complaint also alleges that the defendants failed to disclose the barter nature of the transaction and actively concealed their fraud from Island Pacific's outside auditors and the public by creating forged and backdated documents in an attempt to show that recognizing revenue from the transaction was proper. In addition, the complaint alleges that Schechter sold 637,750 shares of Island Pacific stock for more than $1.5 million during the fraudulent scheme.
To settle the Commission's charges, Island Pacific, without admitting or denying the allegations, consented to the entry of a final judgment permanently enjoining it from future violations of the antifraud, reporting, record-keeping, and internal controls provisions of Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934 and Rules 10b-5, 12b-20, 13a-1, and 13a-13 thereunder.
To settle the Commission's charges, Schechter, without admitting or denying the allegations, consented to the entry of a final judgment permanently enjoining him from future violations of the antifraud, record-keeping, internal controls, and lying to the accountants provisions of Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5, 13b2-1, and 13b2-2 thereunder and aiding and abetting Island Pacific's reporting violations; ordering him to pay disgorgement of $488,410 in ill-gotten gains from his stock sales during the fraud, prejudgment interest of $27,437, and a civil penalty of $120,000; and barring him from serving as an officer or director of a public company for a period of ten years. Schechter, who was Chartered Accountant in South Africa, also consented, without admitting or denying the Commission's findings, to entry of an administrative order that makes findings and suspends him from appearing or practicing before the Commission as an accountant pursuant to Rule 102(e)(3) of the Commission's Rules of Practice.
To settle the Commission's charges, Braun, without admitting or denying the allegations, consented to the entry of a final judgment permanently enjoining him from future violations of the antifraud, record-keeping, internal controls, lying to the accountants, and false certification provisions of Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5, 13b2-1, 13b2-2, and 13a-14 thereunder and aiding and abetting Island Pacific's reporting violations (except its violation of Rule 13a-1); ordering him to pay a civil penalty of $75,000; and barring him from serving as an officer or director of a public company for a period of five years. [SEC v. Retail Pro, Inc. (fka Island Pacific, Inc.), Barry M. Schecter, Ran H. Furman, and Harvey Braun, Civil Action No. CV 08-1620 WQH (RBB) (S.D. Cal.)] (LR-20703)
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