RULES AND RELATED MATTERS
Indexed Annuities and Certain Other Insurance Contracts
The Commission has issued a release adopting a new rule that defines the terms "annuity contract" and "optional annuity contract" under the Securities Act of 1933. The rule is intended to clarify the status under the federal securities laws of indexed annuities, under which payments to the purchaser are dependent on the performance of a securities index. The rule applies on a prospective basis to contracts issued on or after January 12, 2011. The release also adopts a new rule that exempts insurance companies from filing reports under the Securities Exchange Act of 1934 with respect to indexed annuities and other securities that are registered under the Securities Act, provided that certain conditions are satisfied, including that the securities are regulated under state insurance law, the issuing insurance company and its financial condition are subject to supervision and examination by a state insurance regulator, and the securities are not publicly traded. (Rels. 33-8996, 34-59221; File No. S7-14-08)
In the Matter of Baldwin Piano & Organ Co., et. al.
An Administrative Law Judge has issued an Order Making Findings and Revoking Registrations by Default (Default Order) in Baldwin Piano & Organ Co., Administrative Proceeding No. 3-13291. 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.
The Default Order finds these allegations to be true as to all Respondents. It revokes the registrations of each class of registered securities of Baldwin Piano & Organ Co., Banner Holding Corp., Be Safe Services, Inc., Belmoral Mines Ltd., Benefund, Inc., Benz Energy Ltd. (n/k/a Benz Energy, Inc.), and Beyond Belief, Inc., pursuant to Section 12(j) of the Securities Exchange Act of 1934. (Rel. 34-59215; File No. 3-13291)
In the Matter Of Jason A. Kolakowski
Today, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions (Order) against Jason A. Kolakowski.
The Order finds that on Dec. 19, 2008, a final judgment was entered by consent against Kolakowski, a resident of Denver, Colorado, permanently enjoining him from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 (Securities Act) and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, in the civil action SEC v. Jarrod McMillin, et al., Civil Action No. 07-cv-2636-REB-MEH, in the United States District Court for the District of Colorado. The Commission's complaint alleged that, in connection with the sale of advertising program interests in American Investors Network ("AIN") and Fairweather Management ("Fairweather"), Kolakowski solicited funds from investors as part of the operation of an illegal Ponzi scheme; made false and misleading statements to investors about AIN and Fairweather's business, profits, and use of investor funds; continued to solicit investors after learning of the Commission's investigation of AIN; and otherwise engaged in a variety of conduct which operated as a fraud and deceit on investors. The complaint also alleged that Kolakowski sold unregistered securities.
Based on the above, the Order bars Kolakowski from association with any broker or dealer, with the right to reapply for association after three years. Kolakowski consented to the issuance of the Order without admitting or denying any of the findings in the order. (Rel. 34-59220; File No. 3-313328)
Commission Sustains NYSE Disciplinary Action Against Thomas W. Heath, III
The Commission has sustained New York Stock Exchange disciplinary action against Thomas W. Heath, a former registered representative of J.P. Morgan Securities Inc., an NYSE member firm. The Exchange found that Heath engaged in conduct inconsistent with just and equitable principles of trade, in violation of NYSE Rule 476(a)(6), when he disclosed material non-public information regarding a pending merger. The Exchange censured Heath and imposed a $100,000 fine. The Commission sustained the NYSE decision, finding that Heath's conduct "violated the ethical standards to which all members of the industry must adhere." (Rel. 34-59223; File No. 3-12890)
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change (SR-FINRA-2008-065) filed by Financial Industry Regulatory Authority to extend a TRACE pilot program 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 January 12. (Rel. 34-59216)
A proposed rule change (SR-NYSE-2008-138) filed by the New York Stock Exchange to memorialize an interpretation of the Listed Company Manual concerning shareholder approval requirements and to describe a certain application of its audit committee rule 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 January 12. (Rel. 34-59217)
A proposed rule change (SR-FINRA-2009-002) filed by Financial Industry Regulatory Authority to make conforming changes to FINRA Rules 6380B and 6730 to reflect amendments proposed pursuant to SR-FINRA-2008-060 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 January 12. (Rel. 34-59222)
Accelerated Approval of Proposed Rule Change
The Commission granted accelerated approval to a proposed rule change (SR-NASDAQ-2008-096) submitted under Rule 19b-4 by the NASDAQ Stock Market relating to the generic listing standards for Index Multiple Exchange Traded Fund Shares and Index Inverse Exchange Traded Fund Shares. Publication is expected in the Federal Register during the week of January 12. (Rel. 34-59214)
JOINT INDUSTRY PLAN RELEASES
Order Approving and Declaring Effective a Proposed Plan for the Allocation of Regulatory Responsibilities Pursuant to Rule 17d-2 Between the Financial Industry Regulatory Authority, Inc. and Boston Stock Exchange, Incorporated
The Commission approved and declared effective a proposed plan between the Financial Industry Regulatory Authority and the Boston Stock Exchange for the allocation of regulatory responsibilities pursuant to Rule 17d-2 under the Securities Exchange Act of 1934 (File No. 4-575). Publication is expected in the Federal Register during the week of January 12. (Rel. 34-59218)
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