Commission Sets Aside Findings That James Wade Browne and Kevin Calandro Engaged In Private Securities Transactions
The Commission has set aside NASD's findings of violation and sanctions against James Wade Browne and Kevin Calandro. NASD found that Browne and Calandro engaged in private securities transactions involving the securities of e2 Communications, Inc. without prior notice to, and prior written approval from, their member firms, in violation of NASD Conduct Rules 3040 and 2110. NASD concluded that Browne and Calandro "participated" in the purchases of e2 stock by fourteen investors, for which NASD imposed upon Browne a six-month suspension and $25,000 fine and imposed upon Calandro a three-month suspension and $5,000 fine.
In setting aside NASD's findings of violation, the Commission found that, with respect to several investor purchases, "the record before us does not establish by a preponderance of the evidence . . . a factual nexus between the conduct of Browne or Calandro and the specific [stock] purchases at issue" sufficient to satisfy the definition of "participation" in a securities transaction as established by Commission precedent. With respect to other investor purchases, the Commission found that the "evidence is insufficient to find Applicants liable under Rule 3040 for participating" in those purchases as charged. The Commission accordingly set aside the sanctions NASD imposed against Browne and Calandro. (Rel. 34-58916; File No. 3-12926)
Commission Modifies Sanctions Imposed on Vincent M. Uberti
The Commission has sustained a bar imposed by FINRA on Vincent M. Uberti of Fountain Valley, California, a former registered representative of Donner Corporation International., and Lloyd, Scott, & Valenti, former FINRA members. The Commission considered the case following its Feb. 20, 2007 decision vacating and remanding FINRA's (then NASD) sanction determination.
Reviewing NASD's reconsidered sanctions, the Commission found that the bar imposed on Uberti for the preparation and dissemination of materially misleading research reports and for touting was neither excessive nor oppressive. The Commission, however, dismissed sanctions imposed on Uberti in connection with his misconduct at Lincoln Equity Research, LLC., because Uberti had not been given adequate notice that the Lincoln-related sanctions were at issue nor any opportunity to address them on remand from the Commission. (Rel. 34-58917; File No. 3-12260r)
In the Matter of Carmine J. Bua
The United States Securities and Exchange Commission (Commission) announced the issuance of an Order Instituting Administrative Proceedings Pursuant to Rule 102(e) of the Commission's Rules of Practice, Making Findings, and Imposing Remedial Sanctions (Order) against Carmine J. Bua. The Order finds that the District Court entered a permanent injunction by consent against Bua, permanently enjoining him from future violations of Section 5 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
Based on the above, the Order permanently denies Carmine J. Bua the privilege of appearing or practicing before the Commission. Carmine J. Bua consented to the issuance of the Order without admitting or denying any of the findings in the Order, except he admitted the entry of the injunction. (Rel. 34-58919; File No. 3-13288)
In the Matter of InPhonic, Inc.
On November 10, the Commission instituted and settled an administrative proceeding pursuant to Section 12(j) of the Securities Exchange Act of 1934 (Exchange Act) revoking the registration of each class of registered securities of InPhonic, Inc. (InPhonic) for failure to make required periodic filings with the Commission. InPhonic's ticker symbol is "INPC".
Without admitting or denying the findings in the Order, except as to jurisdiction, which it admitted, InPhonic consented to the entry of an Order Instituting Proceedings, Making Findings, and Revoking Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of 1934 finding that it had failed to comply with Exchange Act Section 13(a) and Exchange Act Rules 13a-1 and 13a-13 and revoking the registration of each class of InPhonic's securities pursuant to Exchange Act Section 12(j).
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 . . . .
(Rel. 34-58922, File No. 3-13289)
SEC Charges Phony Investment Adviser Jeffrey Laumbattus for Defrauding Investors and Obtains Emergency Asset Freeze
On November 7, the Commission filed an emergency action in the United States District Court for the Southern District of Illinois against Jeffrey Laumbattus. The Commission's complaint alleges that Jeffrey Laumbattus fraudulently obtained approximately $150,000 from at least twelve individuals who believed, based on Laumbattus' false and misleading statements, that he would invest their monies in the U.S. stock market for their benefit. In fact, Laumbattus never invested in the stock market any of the monies he received from those investors.
The Commission also filed an application for a temporary restraining order in order to freeze Jeffrey Laumbattus' assets. The Honorable Michael J. Reagan, United States District Judge in the Southern District of Illinois, issued a temporary restraining order freezing Laumbattus' assets.
The complaint alleges that after receiving monies from the unsuspecting investors, Laumbattus commingled those funds in a single bank account he controlled, and failed to invest those funds as promised or directed. Instead, he delivered counterfeit stock certificates and phony account statements and misappropriated all of his investors' monies to fund his lifestyle, using their money to pay personal living expenses. The complaint also names Laumbattus' wife, Joni Laumbattus, as a relief defendant, alleging that she received at least $65,000 of investor funds from Laumbattus.
By virtue of the conduct described above, the Commission alleges in its complaint that Jeffrey Laumbattus violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and (2) of the Investment Advisers Act of 1940. The complaint seeks a permanent injunction, disgorgement of ill-gotten gains with prejudgment interest, and civil money penalties.
On Nov. 4, 2008, in the Southern District of Illinois, Laumbattus was indicted and charged with one count of securities fraud, six counts of mail fraud, one count of wire fraud, and one count of aggravated identity theft. US v. Jeffrey Laumbattus, Case 3:08-cr-30237-MJR-PMR.
The Commission acknowledges the assistance of the U.S. Attorney's Office for the Southern District of Illinois and the U. S. Postal Inspection Service. [SEC v. Jeffrey Laumbattus, and Joni Laumbattus, relief defendant, United States District Court for the Southern District of Illinois, Civil Action No. 3:08-CV-00787-MJR-CJP (S.D. Ill.)] (LR-20800)
Immediate Effectiveness of Proposed Rule Change
A proposed rule change filed by NASDAQ OMX PHLX (SR-Phlx-2008-76) relating to an increase in the maximum number of quoters permitted in an option 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 November 10. (Rel. 34-58906)
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