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U.S. Securities and Exchange Commission

SEC News Digest

Issue 2008-208
October 27, 2008

COMMISSION ANNOUNCEMENTS

SEC Suspends Trading in the Securities of Hat Trick Beverage, Inc.

The Commission today announced the temporary suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934 of trading in the securities of Hat Trick Beverage, Inc., at 9:30 a.m. EDT, Oct. 27, 2008, through 11:59 p.m. EDT, on Nov. 7, 2008.

The Commission temporarily suspended trading in these securities because questions have arisen concerning the accuracy and adequacy of statements in the company's press releases and public statements regarding its business operations. Hat Trick Beverage, Inc. is a company that does not file periodic reports with the Commission and is quoted on the PinkSheets under the ticker symbol HKBV. See In the Matter of Hat Trick Beverage, Inc. (Rel. 34-58860)


ENFORCEMENT PROCEEDINGS

In the Matter of Peter In Cho

An Administrative Law Judge has issued an Order Making Findings and Imposing Sanction by Default (Default Order) in Peter In Cho, Administrative Proceeding No. 3-13118. The Order Instituting Proceedings alleged that Peter In Cho pleaded guilty to multiple counts of wire fraud in violation of 18 U.S.C. §§ 1343 and 1346 and has been convicted by the U.S. District Court for the Northern District of Illinois. The Default Order finds the allegation to be true, and bars Cho from association with any broker or dealer pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934. (Rel. 34-58851; File No. 3-13118)


In the Matter of Q-Entertainment, Inc. (f/k/a Q-Zar, Inc.), et al.

An Administrative Law Judge has issued an Order Making Findings and Revoking the Registration of Securities of Q-Entertainment, Inc. (f/k/a Q-Zar, Inc.), Q-Seven Systems, Inc., Qualton, Inc., and QuikBIZ Internet Group, Inc., by Default, in Q-Entertainment, Inc., Admin. Proc. No. 3-13206 (Default Order). The Default Order finds that each of the named Respondents failed to file required periodic reports with the Commission. Because of these reporting failures, each named Respondent failed to comply with Section 13(a) of the Securities Exchange Act of 1934 and Exchange Act Rules 13a-1 and 13a-13 or 13a-16. The Default Order finds it necessary and appropriate for the protection of investors to revoke the registration of each class of each Respondent's registered securities. (Rel. 34-58852; File No. 3-13206)


In the Matter of Quadxsports.com, Inc., et al.

An Administrative Law Judge has issued an Order Making Findings and Revoking the Registration of Securities of Quadxsports.com, Inc., Quality Resorts of America, Inc., Quentra Networks, Inc., Quicksilver Enterprises, Inc., and Quokka Sports, Inc., by Default, in Quadxsports.com, Inc., Admin. Proc. No. 3-13221 (Default Order). The Default Order finds that each of the named Respondents failed to file required periodic reports with the Commission. Because of these reporting failures, each named Respondent failed to comply with Section 13(a) of the Securities Exchange Act of 1934 and Exchange Act Rules 13a-1 and 13a-13. The Default Order finds it necessary and appropriate for the protection of investors to revoke the registration of each class of each Respondent's registered securities. (Rel. 34-58853; File No. 3-13221)


In the Matter of Liberty or Death, Inc., et al.

An Administrative Law Judge has issued an Order Making Findings and Revoking the Registration of Securities of Liberty or Death, Inc., Mammoth Organ & Piano, Inc., Mozambique, Inc., Pachyderm Promoters, Inc., Platypus Discoveries, Inc., and S&M Ventures, Inc., by Default, in Liberty or Death Inc., Admin. Proc. No. 3-13224 (Default Order). The Default Order finds that each of the named Respondents failed to file required periodic reports with the Securities and Exchange Commission. Because of these reporting failures, each named Respondent failed to comply with Section 13(a) of the Securities Exchange Act of 1934 and Exchange Act Rules 13a-1 and 13a-13. The Default Order finds it necessary and appropriate for the protection of investors to revoke the registration of each class of each Respondent's registered securities. (Rel. 34-58854; File No. 3-13224)


Commission Revokes Registration of Securities of Inter Con Pc, Inc. for Failure to Make Required Periodic Filings

On October 27, the Commission revoked the registration of each class of registered securities of Inter Con PC, Inc. (ICPC) for failure to make required periodic filings with the Commission.

Without admitting or denying the findings in the Order, except as to jurisdiction, which it admitted, ICPC consented to the entry of an Order Making Findings and Revoking Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of 1934 as to Inter Con PC, Inc. finding that it had failed to comply with Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 13a-1 and 13a-13 thereunder and revoking the registration of each class of ICPC's securities pursuant to Section 12(j) of the Exchange Act. This order settled the charges brought against ICPC in In the Matter of Entertainment Technologies & Programs, Inc., et al., Administrative Proceeding File No. 3-13186.

Brokers and dealers should be alert to the fact that Exchange Act Section 12(j) provides, in pertinent part, as follows:

No member of a national securities exchange, broker, or dealer shall make use of the mails or any means or instrumentality of interstate commerce to effect any transaction in, or to induce the purchase or sale of, any security the registration of which has been and is suspended or revoked . . . .

For further information see Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934, In the Matter of Entertainment Technologies & Programs, Inc., et al., Administrative Proceeding File No. 3-13186, Exchange Act Release No. 58527 (Sept. 12, 2008). (Rel. 34-58858; File No. 3-13186)


Commission Revokes Registration of Securities of Point Arena Group, Inc. for Failure to Make Required Periodic Filings

On October 27, the Commission revoked the registration of each class of registered securities of Point Arena Group, Inc. (Point Arena) for failure to make required periodic filings with the Commission.

Without admitting or denying the findings in the Order, except as to jurisdiction, which it admitted, Point Arena consented to the entry of an Order Making Findings and Revoking Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of 1934 as to Point Arena Group, Inc. finding that it had failed to comply with Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 13a-1 and 13a-13 thereunder and revoking the registration of each class of Point Arena's securities pursuant to Section 12(j) of the Exchange Act. This order settled the charges brought against Point Arena in In the Matter of Nicole Industries, Inc., et al., Administrative Proceeding File No. 3-13191.

Brokers and dealers should be alert to the fact that Exchange Act Section 12(j) provides, in pertinent part, as follows:

No member of a national securities exchange, broker, or dealer shall make use of the mails or any means or instrumentality of interstate commerce to effect any transaction in, or to induce the purchase or sale of, any security the registration of which has been and is suspended or revoked . . . .

For further information see Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934, In the Matter of Nicole Industries, Inc., et al., Administrative Proceeding File No. 3-13191, Exchange Act Release No. 58535 (Sept. 12, 2008). (Rel. 34-58859; File No. 3-13191)


In the Matter of Don Warner Reinhard

On October 27, the Commission issued an Order Instituting Public Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Section 203(f) of the Investment Advisers Act of 1940, and Notice of Hearing (Order) against Don Warner Reinhard, who was the sole owner and president of Magnolia Capital Advisors, Inc., an investment adviser registered with the Commission, from September 1999 through September 2003. The Order is based on the entry of a permanent injunction against Reinhard, permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933; Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; Sections 206(1), 206(2), and 207 of the Advisers Act; and against aiding and abetting violations of Section 204 and Rule 204-2(a)(7) thereunder.

The Division of Enforcement alleges that from at least January 2002 through August 2003, Reinhard, through Magnolia Capital Advisors, made false and misleading statements and omissions of material fact to investors in connection with the offer and sale of collateralized mortgage obligations (CMOs), including misrepresenting the safety of the highly leveraged CMOs he purchased for his clients' accounts and the account of Magnolia Capital Partners, L.P., a hedge fund he controlled as its general partner. The Order also alleges Reinhard omitted to disclose to his clients and in filing with the Commission a lawsuit by the Florida Department of Insurance against him involving CMO investments and allegations of fraud.

The Order further alleges Reinhard provided clients with false quarterly account statements that materially inflated their account valuations from at least December 2002 through June 2003, and he engaged in a fraudulent "parking" scheme to artificially increase the equity in certain brokerage accounts and avoid margin calls during July and August 2003 as the market value of the CMO investments declined. Finally, the Order alleges, for a portion of the time in which Reinhard engaged in this conduct, he was a registered representative associated with broker-dealers registered with the Commission.

A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide the Respondent an opportunity to dispute these allegations, and to determine what, if any, remedial sanctions are appropriate and in the public interest. 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. (Rels. 34-58865; IA-2805; File No. 3-13280)


SEC Sues Mining Company for Securities Registration Violations and Stock Promoter for Blast Text Message Touts Sent to Cell Phone Users

On October 23, the Commission filed a civil complaint against M45 Mining Resources, Inc. (M45), a Quebec, Canada-based mining company, and Eden Miller, a California and Nevada-based stock promoter. According to the complaint, M45 violated the registration provisions of the federal securities laws, and Miller violated the registration and anti-touting provisions of the federal securities laws. M45 and Miller have agreed to settle the charges against them, without admitting or denying the Commission's allegations.

In its complaint, the Commission alleges the following: M45 files periodic reports with the Commission, and in 2007, its common stock traded on the Over the Counter Bulletin Board. In April 2007, M45 entered into a consulting agreement with I-Vest Global Corporation LLC (I-Vest), a now inactive Nevada limited liability company. Miller operated I-Vest and signed the consulting agreement on its behalf. Under the consulting agreement, I-Vest agreed to promote M45's stock and, in return, M45 agreed to issue one million "free trading shares" to I-Vest. On or about April 5, 2007, M45 filed a Form S-8 registration statement with the Commission which, among other things, attempted to register the offer and sale of one million shares to I-Vest. Generally, Form S-8 cannot register an offering of securities that is made to companies (rather than individuals), or that compensates stock promoters for their promotion services. Shortly after receiving the one million shares, Miller and I-Vest began promoting M45. In May 2007, Miller "profiled" M45 on I-Vest's website and touted M45 by sending out thousands of blast, unsolicited text messages to cell phone users. The touts by Miller and I-Vest failed to disclose the stock compensation paid by M45. Between May 2007 and October 2007, Miller liquidated the one million shares of M45 stock. Miller retained half the proceeds and transferred the other half to an associate that referred him the M45 business.

The Commission alleges that M45 violated Sections 5(a) and 5(c) of the Securities Act of 1933 (Securities Act), and Miller violated Sections 5(a), 5(c), and 17(b) of the Securities Act. M45 and Miller consented to judgments that permanently enjoin them from future violations of these provisions of the federal securities laws, and Miller has also agreed to pay disgorgement of $129,630 plus prejudgment interest of $7,162. [SEC v. M45 Mining Resources, Inc. and Eden Miller, Civil Action No. 2:08-CV-1456 U.S.D.C./District of Nevada (Las Vegas Division)] (LR-20790)


Court Enters Judgment by Default Against Alliance Transcription Services, Inc. (Formerly Known as Strategy X, Inc.) in Fraudulent Scheme to Manipulate Stock Price and Evade Registration Requirements

The Commission announced that on October 23, the United States District Court for the District of Arizona entered a final judgment by default against Alliance Transcription Services, Inc., a Nevada corporation formerly known as Strategy X, Inc. The final judgment enjoins Alliance from future violations of Section 5 of the Securities Act of 1933 (securities registration provisions) and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder (antifraud provisions).

The Commission's complaint, filed on Aug. 8, 2008, charges Alliance and others in connection with a scheme to manipulate Alliance's stock price and trading volume through false and misleading public disclosures and to issue and sell Alliance's common stock in an unregistered distribution. According to the Commission's complaint, Alliance's press releases made false and misleading claims about the company's contracts and revenues and were published through business newswire services and on Alliance's website from at least April 2005 through at least September 2006. The Commission's complaint further alleges that, from July 2005 to September 2006, Alliance and other defendants participated in an unregistered distribution of Alliance securities through a series of purported stock offerings by Alliance to North American Funding, Inc. (NAF), a Texas corporation. According to the complaint, several of the defendants arranged for Alliance to issue stock to NAF in offerings that purportedly were exempt from registration but that were, in fact, not exempt and the transactions were merely a device to evade the registration provisions of the federal securities laws. The complaint alleges that the stock was immediately distributed to third parties and sold into the market, without being paid for by NAF.

Simultaneous with the filing of its complaint, the Commission settled charges against William D. O'Neal of Fountain Hills, Arizona, an attorney who allegedly issued a series of legal opinions that enabled Alliance to illegally issue purportedly unrestricted shares of its stock in unregistered transactions. The litigation is continuing against the remaining defendants, Clifford A. Lewis of Huntsville, Alabama; Richard A. Dabney of Rancho Palos Verdes, California; Raymond C. Dabney of Vancouver, British Columbia; Philip M. Young of Phoenix, Arizona; and Charles J. Smith of Reno, Nevada.

The Commission previously issued an Order on Oct. 4, 2007, suspending trading in the securities of Alliance.

For further information, see Litigation Release No. 19870 (Oct. 16, 2006) [subpoena enforcement action], Securities Exchange Act Release No. 56610 (Oct. 4, 2007) [order suspending trading in Alliance securities], and Litigation Release No. 20676 (Aug. 8, 2008) [filing of civil injunctive action]. [SEC v. Alliance Transcription Services, Inc., et al., No. CV-08-01464-PHX-NVW (D. Ariz.)] (LR-20791)


INVESTMENT COMPANY ACT RELEASES

Morgan Stanley Series Funds, et al.

An order has been issued on an application filed by Morgan Stanley Series Funds, et al., under Section 6(c) of the Investment Company Act for an exemption from Rule 12d1-2(a) under the Act. The order permits funds of funds relying on Rule 12d1-2 under the Act to invest in certain financial instruments. (Rel. IC-28444 - October 21)


Delaware Management Business Trust, et al.

An order has been issued on an application filed by Delaware Management Business Trust, et al., under Section 6(c) of the Investment Company Act for an exemption from Rule 12d1-2(a) under the Act. The order permits funds of funds relying on Rule 12d1-2 under the Act to invest in certain financial instruments. (Rel. IC-28445 - October 21)


Orders of Deregistration Under the Investment Company Act

Orders have been issued under Section 8(f) of the Investment Company Act declaring that each of the following has ceased to be an investment company:


The Reserve Fund

A notice has been issued giving interested persons until fifteen days after the publication of the notice in the Federal Register to request a hearing on an application filed by the Reserve Fund for a temporary order to permit two of its series to suspend the right of redemption of their outstanding redeemable securities and to postpone payment for shares which have been submitted for redemption for which payment has not been made. The Commission issued an order on Sept. 22, 2008 granting the requested order and is now providing an opportunity for interested persons to request a hearing. (Rel. IC-28465 - October 24)


The Reserve Fund, Reserve Municipal Money-Market Trust, et al.

A notice has been issued giving interested persons until fifteen days after the publication of the notice in the Federal Register to request a hearing on an application filed by Reserve Municipal Money-Market Trust on behalf of two of its series, Arizona Municipal Money-Market Fund and Minnesota Municipal Money-Market Fund; Reserve Municipal Money-Market Trust II, on behalf of nine of its series, Interstate Tax-Exempt Fund, California Municipal Money-Market Fund, Connecticut Municipal Money-Market Fund, Florida Municipal Money-Market Fund, Michigan Municipal Money-Market Fund, New Jersey Municipal Money-Market Fund, Ohio Municipal Money-Market Fund, Pennsylvania Municipal Money-Market Fund and Virginia Municipal Money-Market Fund; Reserve New York Municipal Money-Market Trust on behalf of its single series, New York Municipal Money-Market Fund; and Reserve Short-Term Investment Trust on behalf of one of its series, Reserve Yield Plus Fund to suspend the right of redemption of their outstanding redeemable securities and to postpone payment for shares which have been submitted for redemption for which payment has not been made. The Commission issued an order on October 24, granting the requested order and is now providing an opportunity for interested persons to request a hearing. (Rel. IC-28466 - October 24)


SELF-REGULATORY ORGANIZATIONS

Immediate Effectiveness of Proposed Rule Changes

A proposed rule change (SR-NYSE-2008-106) filed by the New York Stock Exchange to eliminate subscribership to NYSE Bonds and provide that all NYSE members and member organizations are eligible to access NYSE Bonds 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 27. (Rel. 34-58833)

A proposed rule change (SR-NYSEALTR-2008-03) filed by the NYSE Alternext US regarding relocation of the trading of certain debt securities conducted on or through NYSE Alternext's legacy trading systems and facilities to an automated bond trading platform based on NYSE BondsSM 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 27. (Rel. 34-58339)

The Commission issued notice of filing and immediate effectiveness of a proposed rule change (SR-NYSE-2008-107) filed by the New York Stock Exchange under Rule 19b-4 of the Securities Exchange Act of 1934 amending NYSE Rule 17 to rescind the provisions of paragraph (b) governing vendor liability. Publication is expected in the Federal Register during the week of October 27. (Rel. 34-58850)

A proposed rule change filed by NYSE Arca (SR-NYSEArca-2008-112) relating to the listing of the NETS S&P/MIB Index Fund (Italy) 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 October 27. (Rel. 34-58856)


Proposed Rule Change

The Financial Industry Regulatory Authority filed a proposed rule change (SR-FINRA-2008-053) to amend Section 4(c) of Schedule A of the FINRA By-Laws to increase certain qualification examination fees. Publication is expected in the Federal Register during the week of October 27. (Rel. 34-58832)


Accelerated Approval of Proposed Rule Change

The Commission granted accelerated approval to, a proposed rule change (SR-NYSE-2008-93) submitted by the New York Stock Exchange pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 to temporarily suspend the operation of NYSE Rule 123D(3) to respond to market conditions for Thornburg Mortgage, Inc. (TMA) on Sept. 29, 2008. Publication is expected in the Federal Register during the week of October 27. (Rel. 34-58834)

The Commission issued notice of filing of Amendment Nos. 2 and 3 and granted accelerated approval to a proposed rule change, as modified by Amendment Nos. 1, 2, and 3, submitted by the New York Stock Exchange (SR-NYSE-2008-46) under Rule 19b-4 of the Securities Exchange Act to create a new NYSE market model, with certain components to operate as a one-year pilot, that would alter NYSE's priority and parity rules, phase out specialists by creating a designated market maker, and provide market participants with additional abilities to post hidden liquidity. Publication is expected in the Federal Register during the week of October 27. (Rel. 34-58845)


Immediate Effectiveness of Proposed Rule Change

The NASDAQ Stock Market filed a proposed rule change (SR-NASDAQ-2008-081), which became effective upon filing, under Section 19(b)(1) of the Exchange Act to amend NASDQ rules governing options trading. Publication is expected in the Federal Register during the week of October 27. (Rel. 34-58840)


JOINT INDUSTRY PLAN RELEASES

Immediate Effectiveness of the Fourteenth Substantive Amendment to the Second Restatement of the Consolidated Tape Association Plan and the Tenth Substantive Amendment to the Restated Consolidated Quotation Plan

Pursuant to Rule 608 under the Securities Exchange Act of 1934, the Consolidated Tape Association has filed amendments to the CTA and CQ Plans (Plans) (SR-CTA/CQ-2008-04) to add BATS Exchange, Inc. as a new Participant. Publication is expected in the Federal Register during the week of October 27. (Rel. 34-58838)


SECURITIES ACT REGISTRATIONS


RECENT 8K FILINGS

 

http://www.sec.gov/news/digest/2008/dig102708.htm


Modified: 10/31/2008