Temporary Suspension of Trading in the Securities of e-Smart Technologies, Inc.
The U.S. Securities and Exchange Commission announced the temporary suspension of trading of the securities of e-Smart Technologies Inc. (e-Smart), commencing at 9:30 a.m. EDT on Oct. 17, 2008, and terminating at 11:59 p.m. EDT on Oct. 30, 2008.
The Commission temporarily suspended trading in the securities of e-Smart due to questions that have arisen concerning the accuracy and adequacy of publicly-available information about the company, particularly concerning: (1) e-Smart's statements concerning a large supply contract for 20 million units of its product, contained in a Feb. 26, 2008 press release, a March 13, 2008 Current Report on Form 8-K and a May 15, 2008 news article, all of which are available on e-Smart's website; and (2) e-Smart's failure to make required periodic filings with the Commission of information required pursuant to the Securities Exchange Act of 1934 for any period since the period ending Sept. 30, 2007. Questions have also arisen concerning a possible distribution of e-Smart's common stock without registration under the Securities Act of 1933.
The Commission cautions brokers, dealers, shareholders and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by the company.
Further, brokers and dealers should be alert to the fact that, pursuant to Rule 15c2-11 under the Exchange Act, at the termination of the trading suspension, no quotation may be entered unless and until they have strictly complied with all of the provisions of the rule. If any broker or dealer has any questions as to whether or not he has complied with the rule, he should not enter any quotation but immediately contact the staff in the Division of Trading and Markets, Office of Interpretation and Guidance, at (202) 551-5777. If any broker or dealer is uncertain as to what is required by Rule 15c2-11, he should refrain from entering quotations relating to e-Smart's securities until such time as he has familiarized himself with the rule and is certain that all of its provisions have been met. If any broker or dealer enters any quotation which is in violation of the rule, the Commission will consider the need for prompt enforcement action.
If any broker, dealer or other person has any information which may relate to this matter, they should contact Gregory G. Faragasso, Assistant Director, Division of Enforcement, at (202) 551-5466, or by e-mail at email@example.com. (Rel. 34-58801)
Commission Bars Justin F. Ficken from Association With any Broker, Dealer, or Investment Adviser
The Commission has barred Justin F. Ficken, an associated person of Prudential Securities, Inc., formerly a broker dealer and investment adviser registered with the Commission, from association with any broker, dealer, or investment adviser. The Commission's action was based on Ficken's injunction from violations of the antifraud provisions of the federal securities laws. The Commission concluded that the public interest requires that Ficken be barred. In reaching this determination, the Commission noted that Ficken's misconduct was egregious and evidenced a high degree of scienter. The Commission further noted that, as Ficken has shown no recognition of the wrongful nature of his conduct and has provided no assurance against future violations, there is a significant risk that, given the opportunity, Ficken would commit further misconduct if he were not barred. (Rels. 34-58802; IA-2803; File No. 3-12832)
In the Matter of Struthers Indus., Inc.
An Administrative Law Judge has issued an Order Making Findings and Revoking Registrations by Default as to Six Respondents (Default Order) in Struthers Indus., Inc., Administrative Proceeding No. 3-13154. The Order Instituting Proceedings alleged that seven Respondents each failed repeatedly to file required annual and quarterly reports while their securities were registered with the Securities and Exchange Commission (Commission).
The Default Order finds these allegations to be true as to six Respondents. It revokes the registrations of each class of registered securities of Struthers Industries, Inc., Sun River Development Co., Sun River Investment Co., Sun West Enterprises, Inc. (n/k/a Natural Alternative Products, Inc.), Surecare, Inc., and Symbolics, Inc., pursuant to Section 12(j) of the Securities Exchange Act of 1934.
The Commission previously accepted a settlement offer from the seventh Respondent, SunBank Resorts International, Inc. (f/k/a Kaufman & Hurtz, Inc.). (Rel. 34-58803; File No. 3-13154)
Defendant in SEC Enforcement Action Sentenced on Related Criminal Charges in Connection With Fraudulent Offering of CD-Like Securities
The Commission announced today that on Oct. 15, 2008, Michael P. Luckett, 37, a former resident of Boston, Massachusetts currently residing in Gainesville, Georgia and a defendant in a previously-filed Commission enforcement action, was sentenced by U.S. District Judge William G. Young to 36 months imprisonment, plus three years of supervised release, and was ordered to pay restitution of $97,387. Luckett had previously pled guilty to mail fraud in connection with a scheme to defraud investors through the offer of so-called Transnational Certificates that Luckett promoted as though they were high-yield certificates of deposit.
The Commission filed an enforcement action against Luckett and Transnational Fund, Inc., based on similar conduct, on Sept. 21, 2007. The Commission's complaint alleges that Transnational and Luckett conducted a fraudulent offering of unregistered securities known as Transnational Certificates using Transnational's websites. According to the Commission's complaint, the defendants promised to pay investors at a rate of 6.35% annual percentage yield in nine months. The complaint alleges that at least 15 investors in six different states purchased these Certificates for at least $432,400. The complaint further alleges that, in soliciting investors, Transnational and Luckett made material misrepresentations and omissions in that they: (1) failed to disclose to investors that Luckett would use investor funds for personal purposes; (2) misrepresented that Transnational was just like a bank; and (3) misrepresented that Transnational had been in business for years. The Complaint alleges that Luckett took thousands of dollars in investor funds and used the money to pay for various personal living expenses. [U.S. v. Michael P. Luckett, Criminal Action No. 1:08-CR-10087-WGY (D. Mass.); SEC v. Transnational Fund, Inc., a/k/a National Savings, and Michael Luckett, Civil Action No. 07-CA-11774-RWZ (D. Mass.)] (LR-20782)
SEC v. Competitive Technologies, Inc.
The Commission announced that a federal court jury on Oct. 14, 2008, returned a verdict in favor of Stephen J. Wilson, a former registered representative of a broker-dealer in Media, Pennsylvania. The Commission had charged Wilson with violating the federal securities laws by participating in a scheme to manipulate the stock price of Competitive Technologies, Inc., (CTT), a technology development company located in Fairfield, Connecticut. The verdict followed a one-week trial in Bridgeport, Connecticut before the Honorable Janet Hall, United States District Court Judge for the District of Connecticut.
The Commission's complaint, filed against a total of eight defendants on Aug. 11, 2004, alleged that the defendants participated in a scheme to manipulate and inflate the price of CTT stock from at least July 1998 to June 2001. The complaint alleged that the defendants (which included CTT itself and its former CEO, plus six former registered representatives of broker-dealers) raised and maintained the price of CTT's stock and created a false or misleading appearance with respect to the market for CTT stock through manipulative practices such as placing buy orders at or near the close of the market in order to inflate the reported closing price (marking the close), placing successive buy orders in small amounts at increasing prices (painting the tape), and using accounts they controlled or serviced to place pre-arranged buy and sell orders in virtually identical amounts (placing "matched trades").
A previous trial in November 2007 resulted in a verdict in the Commission's favor against one scheme participant, Sheldon A. Strauss, a former registered representative from Cleveland, Ohio, and a hung jury against Wilson and one other defendant, Richard A. Kwak. The Commission's re-trial of the case against Wilson resulted in the Oct. 14, 2008 jury verdict. The Commission expects to re-try the case against Kwak at a later date. In addition, the Commission previously settled charges in the same case against: former registered representative Chauncey Steele, formerly of Cohasset, Massachusetts, in July 2005; CTT in October 2007; Frank McPike of Ridgefield, Connecticut, the former CEO of CTT, in October 2007; John R. Glushko, formerly a registered representative associated with a broker-dealer in Las Vegas, Nevada, in October 2007; and former registered representative Thomas C. Kocherhans of Orem, Utah, in October 2007. [SEC v. Competitive Technologies, Inc., et. al., Civil Action No. 304 CV 1331 JCH (District of Connecticut)] (LR-20783)
INVESTMENT COMPANY ACT RELEASES
Trust for Professional Managers and Ascentia Capital Partners, LLC
An order has been issued on an application filed by Trust for Professional Managers and Ascentia Capital Partners, LLC exempting applicants from Section 15(a) of the Investment Company Act and Rule 18f-2 under the Act. The order permits the applicants to enter into and materially amend subadvisory agreements without shareholder approval and grants relief from certain disclosure requirements. (Rel. IC-28439 - October 15)
Immediate Effectiveness of Proposed Rule Change
A proposed rule change filed by NASDAQ OMX PHLX relating to a surcharge fee (SR-Phlx-2008-72) 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 October 20. (Rel. 34-58772)
Approval of Proposed Rule Changes
The Commission granted approval to a proposed rule change (SR-CBOE-2008-90) submitted by the Chicago Board Options Exchange related to trades in restricted classes. Publication is expected in the Federal Register during the week of October 20. (Rel. 34-58778)
The Commission approved a proposed rule change (SR-NYSE-2008-78) submitted pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 by the New York Stock Exchange amending NYSE Rule 18 to allow NYSE Alternext US LLC to participate in the compensation fund established by NYSE to reimburse claimants for losses associated with NYSE-operated system failures. Publication is expected in the Federal Register during the week of October 20. (Rel. 34-58779)
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