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ENFORCEMENT PROCEEDINGSSecurities and Exchange Commission Orders Hearing on Registration Revocation Against Seven Public Companies for Failure to Make Required Periodic FilingsOn February 3, the Commission instituted public administrative proceedings to determine whether to revoke or suspend for a period not exceeding twelve months the registrations of each class of the securities of seven companies for failure to make required periodic filings with the Commission:
In this Order, the Division of Enforcement (Division) alleges that the seven issuers are delinquent in their required periodic filings with the Commission. In this proceeding, instituted pursuant to Exchange Act Section 12(j), a hearing will be scheduled before an Administrative Law Judge. At the hearing, the judge will hear evidence from the Division and the respondents to determine whether the allegations of the Division contained in the Order, which the Division alleges constitute failures to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 or 13a-16 thereunder, are true. The judge in the proceeding will then determine whether the registrations pursuant to Exchange Act Section 12 of each class of the securities of these respondents should be revoked or suspended for a period not exceeding twelve months. The Commission ordered that the Administrative Law Judge in this proceeding issue an initial decision not later than 120 days from the date of service of the order instituting proceedings. (Rel. 34-59351; File No. 3-13360) Securities and Exchange Commission Orders Hearing on Registration Revocation Against Seven Public Companies for Failure to Make Required Periodic FilingsOn February 3, the Commission instituted public administrative proceedings to determine whether to revoke or suspend for a period not exceeding twelve months the registrations of each class of the securities of seven companies for failure to make required periodic filings with the Commission:
In this Order, the Division of Enforcement (Division) alleges that the seven issuers are delinquent in their required periodic filings with the Commission. In this proceeding, instituted pursuant to Exchange Act Section 12(j), a hearing will be scheduled before an Administrative Law Judge. At the hearing, the judge will hear evidence from the Division and the respondents to determine whether the allegations of the Division contained in the Order, which the Division alleges constitute failures to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 or 13a-16 thereunder, are true. The judge in the proceeding will then determine whether the registrations pursuant to Exchange Act Section 12 of each class of the securities of these respondents should be revoked or suspended for a period not exceeding twelve months. The Commission ordered that the Administrative Law Judge in this proceeding issue an initial decision not later than 120 days from the date of service of the order instituting proceedings. (Rel. 34-59352; File No. 3-13361) SEC v. Scott M. RossThe Commission today filed an emergency enforcement action against Scott M. Ross, a resident of Gilberts, Illinois, charging that Ross fraudulently obtained at least $10 million from approximately 300 investors. The SEC has obtained an emergency court order freezing Ross's assets and appointing a receiver. The SEC's complaint alleges that, beginning in 2007, Ross solicited investments in three purported private investment funds that Ross managed. Specifically, according to the complaint, Ross raised approximately $2 million from investors for the Elucido Fund LP (Elucido), telling investors that Elucido would invest in life settlement contracts. In connection with the second fund, the SEC alleges that Ross raised approximately $2 million from investors that was to be used to purchase stock in a company called Moondoggie Technologies. Finally, the complaint alleges that Ross raised between $6 million and $7 million for the Maize Fund LP, telling investors that their money would be pooled and invested in a Forex Account in which traders would engage in arbitrage currency trading. The SEC complaint alleges that, in reality, Ross misappropriated approximately $2 million from Elucido and an undetermined sum in connection with the Moondoggie Technology stock purchases. Among other things, Ross used misappropriated funds to purchase a skybox at the Indianapolis Colts stadium, and pay purported returns to investors. The SEC's complaint alleges that Ross violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition to emergency relief, the Commission's complaint seeks disgorgement of Ross's ill-gotten gains, prejudgment interest and a civil penalty. Ross consented to the emergency relief sought by the SEC and the Honorable James B. Zagel, United States District Court, Northern District of Illinois, issued an order permanently enjoining Ross from further violations, freezing his assets and appointing Philip L. Stern of the law firm of Neal Gerber & Eisenberg LLP as Receiver in the matter. [SEC v. Scott M. Ross, Civil Action No. 09 -CV-683 (N.D. Ill.)(Zagel, J.)] (LR-20879) SEC Obtains Stipulated Judgment Against Former Biovail CEO on Stock Accumulation Disclosure ChargesThe Commission announced that the United States District Court has entered a stipulated judgment against Eugene Melnyk, Biovail Corporation's former chairman and chief executive officer, with respect to violations of the stock accumulation disclosure provisions of the federal securities laws alleged by the Commission in a civil enforcement action filed in March 2008. The stipulated judgment permanently enjoins Melnyk from future violations of Section 13(d) of the Exchange Act and Rules 13d-1 and 13d-2 and imposes a civil penalty in the amount of $1,000,001. The Commission's securities fraud charges against Melnyk in that action remain pending. The Commission's complaint alleges, among other things, that Melnyk violated the stock accumulation disclosure provisions by failing to include in his Schedule 13D filings Biovail shares held in several off-shore trusts that Melnyk controlled. The complaint also alleges that Biovail, Melnyk, former chief financial officer Brian Crombie, former controller John Miszuk, and former chief financial officer Kenneth G. Howling violated the antifraud and other provisions of the federal securities laws. These claims remain pending against all defendants except Biovail. Biovail previously settled with the Commission by consenting to a judgment that, among other things, imposed a $10 million civil penalty. [SEC v. Biovail Corporation, Eugene Melnyk, Brian Crombie, John Miszuk, and Kenneth G. Howling, 08 Civ. 02979 (LAK) (S.D.N.Y.)] (LR-20880) Commission Halts Massive International Boiler Room SchemeThe Commission has taken emergency action to stop a massive and ongoing international boiler room scheme that allegedly sold shares of U.S. penny stock issuers to investors located in Europe by misrepresenting that investors paid no sales commissions. The SEC alleges that, in fact, investors paid commissions exceeding 60 percent of the amount invested, and the fraudulent scheme raised at least $44.2 million from 1,400 investors since March 2007. The SEC's complaint alleges that four Chicago residents and their entities have worked in concert with sales agents based in Europe who make fraudulent cold calls to solicit investors. The SEC charged Chicago residents Stefan H. Benger, Jason B. Meyers, Frank I. Reinschreiber, and Philip T. Powers as well as four entities through which they operated the boiler room scheme: SHB Capital Inc., International Capital Financial Resources LLC, Global Financial Management LLC, and Handler, Thayer & Duggan, LLC. Handler Thayer is a Chicago law firm that employs Powers. The SEC alleges that the multi-faceted boiler room scheme victimized residents of the United Kingdom, Germany, and other European countries. According to the SEC's complaint, Benger, Meyers, SHB Capital, and International Capital acted as distribution agents for at least eight different U.S. penny stock issuers, agreeing to solicit foreign investors in exchange for commissions that collectively exceed 60 percent of the investor proceeds. The SEC alleges that Benger, Meyers, SHB Capital, and International Capital, in turn, retained foreign sales agents to solicit investors. The foreign sales agents worked for boiler room operations and made cold calls to investors utilizing high pressure sales tactics. The SEC alleges that in connection with these sales, investors were not informed of the exorbitant commissions being collected or were told that no commissions would be charged. The SEC further alleges that Powers, Reinschreiber and Global Financial provided knowing and substantial assistance to the scheme by acting as escrow agents in exchange for a share of the commissions. The escrow agents took custody of approximately $44.2 million in investor funds, disbursed nearly $29 million in investor funds as undisclosed commissions and the remainder to the stock issuers. The SEC also alleges that Handler Thayer acted as an unregistered broker-dealer in connection with its activities as an escrow agent. The SEC filed its emergency action in the U.S. District Court for the Northern District of Illinois alleging that: Benger, Meyers, SHB Capital and International Capital violated Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder; Powers, Reinschreiber and Global Financial aided and abetted violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and violated Section 15(a) of the Exchange Act; and Handler Thayer violated Section 15(a) of the Exchange Act. The SEC seeks in its action, among other things, a temporary restraining order, preliminary and permanent injunctions, disgorgement plus prejudgment interest, penny stock bars and civil penalties. On February 3, U.S. District Judge Joan Lefkow granted, on an ex parte basis, all of the emergency relief requested by the SEC, including a temporary restraining order, asset freeze, repatriation order, temporary penny stock bar, an order requiring an accounting and an order prohibiting Benger, Meyers, Powers and Reinshcreiber from traveling outside the United States until they comply with the accounting and repatriation order. Judge Lefkow scheduled a preliminary injunction hearing for Feb. 13, 2009. The SEC wishes to acknowledge the assistance of the United Kingdom's Financial Services Authority, City of London Police's Financial Intelligence Development Team, U.S. Attorney's Office for the Middle District of Florida, U.S. Secret Service, and U.S. Immigration and Customs Enforcement. The SEC's investigation is continuing. [SEC v. Stefan H. Benger, et al., Civil Action No. 09-CV-00676 (N.D. Ill.] (LR-20881) SELF-REGULATORY ORGANIZATIONSImmediate Effectiveness of Proposed Rule ChangeA proposed rule change filed by NASDAQ OMX BX (SR-BX-2009-004) to establish fees for members has become immediately 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 February 2. (Rel. 34-59337) A proposed rule change filed by NASDAQ OMX BX (SR-BX-2009-006) to eliminate the Market Hours Day Time-in-Force has become immediately 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 February 2. (Rel. 34-59341) A proposed rule change filed by the NYSE Alternext US (SR-NYSEALTR-2009-03) making changes to certain NYSE Alternext Equities Rules to conform with amendments to corresponding rules recently filed for immediate effectiveness by the New York Stock Exchange LLC and to make other technical changes 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 February 2. (Rel. 34-59344) SECURITIES ACT REGISTRATIONSRECENT 8K FILINGS
http://www.sec.gov/news/digest/2009/dig020409.htm
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