SEC Suspends Trading In Securities of BIH Corporation
The U.S. Securities and Exchange Commission announced the temporary suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934 (Exchange Act), of trading of the securities of BIH Corporation (BIH), of Fort Myers, Florida at 9:30 a.m. EST on Feb. 6, 2009, and terminating at 11:59 p.m. EST on Feb. 20, 2009.
The Commission temporarily suspended trading in the securities of BIH because of questions that have been raised about the accuracy and adequacy of publicly disseminated information concerning, among other things the identity of the person or persons in control of the operation and management of the company, and contracts entered into by one of BIH’s subsidiaries.
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 BIH’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 that 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 that may relate to this matter, they should immediately contact Eric R. Busto, Assistant Regional Director, Miami Regional Office of the Securities and Exchange Commission at (305) 982-6362. (Rel. 34-59365)
David M. Becker Named SEC General Counsel and Senior Policy Director
Securities and Exchange Commission Chairman Mary L. Schapiro announced today that David M. Becker will return to the agency as its General Counsel and Senior Policy Director.
Mr. Becker previously served as SEC General Counsel from January 2000 to May 2002 after joining the SEC staff as Deputy General Counsel in 1998. He will again serve as the Commission’s chief legal officer and additionally as the senior staff person responsible for coordinating development and implementation of Commission policies.
“I’m delighted that David has agreed to leave the private sector to return to the SEC and coordinate the Commission’s efforts at revitalization and reform,” said Chairman Schapiro. “Investors will benefit tremendously from his commitment, experience and wisdom, and his warm disposition and careful judgment have him well-suited to play this dual leadership role. Throughout his career both inside and outside the SEC, David has distinguished himself as one of the leading experts on financial services regulation and securities law, and he will now help shape the SEC’s future as an ever-stronger regulator.”
Mr. Becker said, “These are challenging times for investors and the Commission. It is a great honor and opportunity to work with Chairman Schapiro, the Commission, and its talented and dedicated staff in meeting these challenges.”
Mr. Becker, 61, comes to the SEC from Cleary Gottlieb Steen & Hamilton LLP, where was a partner in the firm’s Washington D.C. office. During his previous tenure at the SEC, when Mr. Becker was appointed General Counsel by then-SEC Chairman Arthur Levitt, he helped shape most of the Commission’s major policy and regulatory initiatives in those years. He counseled the Commission on virtually every matter that came before it.
Mr. Becker began his legal career as law clerk to Judge Harold Leventhal of the Court of Appeals for the District of Columbia and for Associate Justice (Retired) Stanley Reed of the Supreme Court. He is a graduate of Columbia College and Columbia Law School, where he was editor-in-chief of the Columbia Law Review. (Press Rel. 2009-20)
SEC Announces Start of $321 Million Fair Fund Distribution To Investors Harmed By Alliance Capital Market Timing
The Securities and Exchange Commission announced today that it has completed the first in a series of disbursements from a Fair Fund that will return approximately $321 million to more than two million investors who were harmed by undisclosed market timing in the Alliance mutual funds complex.
The Fair Fund resulted from an SEC enforcement action charging Alliance Capital Management, L.P. with unlawful conduct for allowing widespread market timing trading between January 2001 and September 2003 in Alliance mutual funds, contrary to those funds’ public disclosures. During this period, Alliance Capital, now known as AllianceBernstein, L.P., served as the investment adviser to the Alliance mutual funds. This first Fair Fund disbursement totaled more than $46 million to approximately 300,000 investors.
“This Fair Fund distribution further demonstrates the SEC’s commitment to distributing disgorgement and penalties from those who violate the securities laws to the investors they harmed,” said Kay Lackey, Associate Regional Director at the SEC’s New York Regional Office.
Dick D’Anna, Director of the SEC’s Office of Collections and Distributions, added, “This distribution adds to the more than $4 billion already returned to harmed investors since 2002 and will be followed by the remaining tranches. The SEC staff remains focused and committed to returning Fair Funds to harmed investors.”
The Sarbanes-Oxley Act of 2002 gave the SEC authority to increase the amount of money returned to injured investors by allowing civil penalties to be included in Fair Fund distributions. Prior to SOX, only disgorgement could be returned to investors.
In 2004, the SEC brought and settled public administrative and cease-and-desist proceedings against Alliance Capital for violations of the federal securities laws in connection with market timing in the Alliance mutual funds. Among other things, the Commission ordered Alliance Capital to pay $250 million in disgorgement and civil penalties for distribution through a Fair Fund. In addition to disgorgement and civil penalties, Alliance Capital also consented to a cease-and-desist order and a censure, and agreed to undertake certain compliance and mutual fund governance reforms. In 2005, the SEC brought and settled public administrative and cease-and-desist proceedings against former Alliance Capital officers, Gerald T. Malone, John D. Carifa and Michael J. Laughlin, for their roles in the “timing capacity” arrangements at Alliance. Each was found to have aided and abetted Alliance Capital’s unlawful conduct and consented to pay a penalty. Penalties from these three officers totaled $850,003, which was added to the Fair Fund.
In 2006, the SEC settled a civil injunctive action filed in 2003 against Daniel Calugar and Securities Brokerage, Inc., alleging that the defendants defrauded mutual funds investors, including Alliance mutual funds investors, through late trading and market timing. As part of the settlement, Calugar agreed to pay $153 million in disgorgement and civil penalties, of which the $70.38 million representing harm to Alliance mutual funds investors was transferred to the Alliance Capital Fair Fund for distribution. Thus, the total assets for distribution under the Fair Fund are approximately $321 million.
The Fair Fund Administrator responsible for distribution is Rust Consulting, Inc. Investor questions regarding the distribution may be directed to Rust at (888) 222-8536. Information regarding the distribution can also be obtained at http://www.abfairfund.com.
Order Approving the Distribution Plan:
Jan. 15, 2004 Amended Order Instituting Administrative and Cease-and-Desist Proceedings against Alliance: http://www.sec.gov/litigation/admin/ia-2205a.htm
April 28, 2005 Order Instituting Administrative and Cease-and-Desist Proceedings against John D. Carifa: http://www.sec.gov/litigation/admin/ia-2379.pdf
April 28, 2005 Order Instituting Administrative and Cease-and-Desist Proceedings against Gerald T. Malone: http://www.sec.gov/litigation/admin/ia-2378.pdf
April 28, 2005 Order Instituting Administrative and Cease-and-Desist Proceedings against Michael J. Laughlin: http://www.sec.gov/litigation/admin/34-51624.pdf
Dec. 24, 2003 SEC Litigation Release Announcing Civil-Injunctive Action against Daniel Calugar and Securities Brokerage, Inc.:
Complaint in the above-referenced matter:
Jan. 10, 2006 SEC Litigation Release Announcing Settlement with Daniel Calugar:
(Press Rel. 2009-21)
Closed Meeting - Thursday, February 12, 2009 - 2:00 p.m.
The subject matter of the closed meeting scheduled for February 12 will be: formal orders of investigation; institution and settlement of injunctive actions; institution and settlement of administrative proceedings of an enforcement nature; an adjudicatory matter; and other matters relating to enforcement proceedings.
At times, changes in Commission priorities require alterations in the scheduling of meeting items. For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact: The Office of the Secretary at (202) 551-5400.
Notice of Proposed Distribution Plan and Opportunity for Comment in the Matter of J. Michael Scarborough and Royal Alliance Associates, Inc.
On February 6, the Commission gave notice that, pursuant to Rule 1103 of the Commission’s Rules on Fair Fund and Disgorgement Plans, the Division of Enforcement has submitted to the Commission a proposed plan (Distribution Plan) for the distribution of monies placed into a Fair Fund in the Matter of J. Michael Scarborough and Royal Alliance Associates, Inc., Administrative Proceeding File No. 3-11538. The Distribution Plan provides for the distribution of the $2,311,085 in disgorgement, prejudgment interest and civil penalties paid by Scarborough and Royal Alliance Associates, Inc. in this matter, plus accumulated interest, less any federal, state, or local taxes on the interest. The Distribution Plan provides for the distribution of the Fair Fund to customers of Royal Alliance Associates’ branch office in Annapolis, Maryland, managed by Scarborough, who were affected by Scarborough’s improper sales of Class B shares of mutual funds, and Royal Alliance Associates’ deficient supervision of Scarborough and others.
Any interested persons may print a copy of the proposed Distribution Plan from the Commission’s public website, http://www.sec.gov. Interested parties may also obtain a written copy of the proposed Distribution Plan by submitting a written request to David S. Horowitz, Assistant Regional Director, United States Securities and Exchange Commission, 701 Market Street, Suite 2000, Philadelphia, PA 19106. All persons who desire to comment on the Distribution Plan may submit their comments, in writing, by no later than March 9, 2009: (1) by sending a letter to the Office of the Secretary, United States Securities and Exchange Commission, 100 F Street, N.E., Washington, DC 20549-2090; (2) by using the Commission’s Internet comment form (http://www.sec.gov/litigation/admin.shtml); or (3) by sending an e-mail to email@example.com.
Comments submitted by e-mail or via the Commission’s website should include “Administrative Proceeding File Number 3-11538” on the subject line. Comments received will be publicly available. Persons should only submit information that they wish to make publicly available. For further information see Rels. 33-8438; 34-49982; and File No. 3-11538. (Rel. 34-59368; File No. 3-11538)
SEC v. Ross Owen Haugen
The Commission announced today that the Honorable Orinda D. Evans, United States District Judge for the Northern District of Georgia, entered an order permanently enjoining Ross Owen Haugen (Haugen). The order restrained and enjoined Haugen from future violations of Section 17(a) of the Securities Act of 1933, and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Haugen was also ordered to pay disgorgement, pre-judgment interest and a civil penalty in amounts to be resolved upon motion of the Commission at a later date, and directed that for purposes of that motion, the allegations of the Commission’s Complaint shall be deemed true. Haugen consented to the entry of the order without admitting or denying the allegations of the Commission’s Complaint.
The Complaint, filed on Jan. 16, 2009, alleged fraud against Haugen in connection with sales of securities interests in four offerings identified as Coadum Capital Fund 1, LLC (Coadum 1), Coadum Capital Fund II, LP (Coadum II), Coadum Capital Fund III, LP (Coadum III) and Mansell Acquisition Company LP (MAC). Approximately $30 million was raised from investors in the four offerings from early 2006 through January 2008. The Complaint alleged that Haugen served as vice president of sales and marketing for Coadum Advisors, Inc. (Coadum), and conducted the offerings along with Mansell Capital Partners III, LLC (Mansell). The Complaint alleged that Haugen directly solicited and sold more than 50% of the Coadum securities in the offerings. The private placement memoranda for the four offerings (PPMs), all of which made similar representations, described an investment objective involving “risk-controlled” strategies consisting of purchasing AA or better rated securities at one price, and simultaneously selling the securities at a higher price, generating a profit on the price difference, which Coadum and Mansell referred to as "commercial trading programs." Coadum and Mansell invested the majority of the funds through a Malta based “investment platform” which in turn invested the funds in related entities which never began operation or provided any returns. Further, Coadum and Mansell falsely represented in monthly account statements to investors that the investors had been earning approximately four percent per month and that all or most of the investors’ principal was in escrow. Haugen told investors, falsely, that their investment principal was risk free, insured and never left the escrow account or was otherwise guaranteed against loss. In fact, Haugen knew that investors’ funds were being invested in off-shore trading programs. Although the PPMs represented that no commissions would be paid on the investments, and that the promoters would be compensated based on a percentage of earnings, Haugen received substantial commissions from investor funds prior to earnings on those funds, which never occurred.
The Haugen matter is a companion case to SEC v. Coadum Advisors, Inc., et al., Civil Action File No. 1:08-CV-0011-ODE (N.D. Ga.), a civil action filed on an emergency basis on Jan.3, 2008. [SEC v. Ross Owen Haugen, Civil Action No. 1:09-CV-0129 (ND Ga.)] (LR-20886)
SEC Files Application for Order to Show Cause Against Andrew S. Mackey and Inger L. Jensen
On February 6, the Commission filed an Application for Order to Show Cause why defendants Andrew S. Mackey (Mackey) and Inger L. Jensen (Jensen) should not be held in civil contempt for their failure to comply with the Court’s order of Sept. 22, 2008 and its amended order of Sept. 24, 2008. The orders required Mackey and Jensen to comply with the Commission’s subpoenas for documents and appear for testimony before Commission staff.
On Feb. 21, 2008, the Commission issued an Order Directing Private Investigation and Designating Officers to Take Testimony (Formal Order) in the ASM Financial Funding Corporation investigation (ASM). The Formal Order authorizes the staff to conduct an investigation into whether, among other things, Mackey and Jensen, or certain other persons and entities associated with ASM, violated the anti-fraud and securities registration provisions of the federal securities laws.
On June 20, 2008, the Commission filed a subpoena enforcement action in the U.S. District Court for the Northern District of Georgia against Mackey and Jensen. Pursuant to subpoenas issued on March 6, 2008, Mackey and Jensen were obligated to produce documents to the staff by March 14, 2008, and appear for testimony at the Atlanta Regional Office of the Commission on April 1, 2008. Neither Mackey nor Jensen produced any documents pursuant to the subpoenas, and neither appeared for testimony as required, despite being ordered to comply by the Court. [SEC v. Andrew S. Mackey and Inger L. Jensen, Civil Action No. 1:08-CV-2068 (N.D. Ga.)] (LR-20887)
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