SEC Orders a Suspension of Trading in the Stock of All Line, Inc.
The 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 All Line, Inc. (All Line), of Buena Park California at 9:30 a.m. on April 8, 2009, and terminating at 11:59 p.m. on April 22, 2009.
The Commission temporarily suspended trading in the securities of All Line because it appears to the Commission that there is a lack of current and accurate information concerning the securities of All Line, which is quoted on the Pink Sheets under the ticker symbol ALIN. Trading in the securities of All Line appears to be predicated on apparent misstatements. Certain persons appear to have usurped the identity of a defunct or inactive publicly-traded corporation by making false statements to a court and transfer agent, in order to gain control of the corporation. A new CUSIP and ticker symbol appear to have been obtained based on false representations regarding the identity of the corporation. The accuracy and adequacy of publicly disseminated information concerning, among other things, the corporate history and identity of All Line are questionable.
The Commission cautions broker 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 All Line'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 which 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 which may relate to this matter, the Denver Regional Office of the Securities and Exchange Commission should be telephoned at (303) 844-1000. (Rel. 34-59725)
SEC Seeks Comments on Short Sale Price Test and Circuit Breaker Restrictions
The Securities and Exchange Commission today voted unanimously to seek public comment on whether short sale price restrictions or circuit breaker restrictions should be imposed and whether such measures would help promote market stability and restore investor confidence. In June 2007, the SEC voted to eliminate price restrictions.
The Commission decided to re-evaluate the issue due to extreme market conditions and the resulting deterioration in investor confidence.
"Clearly, the practice of short selling has both strong supporters and detractors," said SEC Chairman Mary L. Schapiro. "Today, we begin what will be a very deliberative process to determine what is in the best interests of investors."
The Commission voted to propose two approaches to restrictions on short selling. One would apply on a market wide and permanent basis, while the other would apply only to a particular security during severe market declines in that security. They include:
Market Wide, Permanent Approach
Security-Specific, Temporary Approach
"Since the Commission eliminated short sale price tests two years ago, we have seen market conditions and events that differ sharply from those of previous years," said Erik Sirri, Director of the SEC's Division of Trading and Markets. "In that time, the Commission has received many requests to reinstate short sale price test restrictions. The proposals we have recommended today are part of an overall effort to seek comment and input from all market participants, analyze and if necessary modify our previous actions, and boost investor confidence."
In addition, the Commission proposed amendments to Regulation SHO to require that a broker-dealer mark a sell order "short exempt" if the seller is relying on an exception to a short sale price test restriction or a circuit breaker rule.
In 2004, the Commission initiated a year-long pilot that eliminated short sale price test restrictions from approximately one-third of the largest stocks. The purpose of the pilot was to study how the removal of such short sale price test restrictions impacted the market for those subject securities.
Short sale data was made publicly available during this pilot to allow the public and Commission staff to study the effects of eliminating short sale price test restrictions. Third-party researchers analyzed the publicly available data and presented their findings in a public Roundtable discussion in September 2006. The Commission staff also studied the pilot data extensively and made its findings available in draft form in September 2006, and final form in February 2007.
At the time the SEC acted in 2007, there were two different types of price tests in place, covering significant numbers of securities. The Nasdaq "bid" test, which was based on the national best bid, covered approximately 2,900 Nasdaq securities in 2005 (or 44 million short sales). The SEC's former uptick test (former Rule 10a-1), based on the last sale price, covered approximately 4,000 exchange-listed securities (or 68 million short sales).
In July 2008, when the restrictions were no longer in place, the SEC issued an emergency order imposing borrowing and delivery requirements on short sales of the equity securities of certain financial institutions. And in September 2008, the SEC issued another emergency order prohibiting short selling in the publicly traded securities of certain financial institutions.
Public comments on today's proposed amendments must be received by the Commission within 60 days after their publication in the Federal Register. (Press Rel. 2009-76)
In the Matter of Core Technologies Pennsylvania, Inc.
An Administrative Law Judge has issued an Order Making Findings and Revoking Registrations by Default (Default Order) in Core Technologies Pennsylvania, Inc., Admin. Proc. 3-13384 (April 8, 2009). The Default Order finds that Respondents Imark Technologies, Inc., Molten Metal Technology, Inc., and MRS Technology, Inc., failed to comply with Section 13(a) of the Securities Exchange Act of 1934 and Exchange Act Rules 13a-1 and 13a-13 by failing to file required periodic reports over a period of several years. Based on these findings, the Default Order revokes the registration of the registered securities of these three Respondents. (Rel. 34-59727; File No. 3-13384)
Commission Bars Scott B. Gann Following Entry of Permanent Injunction
The Commission barred Scott B. Gann of Dallas, Texas, a former registered representative of Southwest Securities, Inc., a registered broker-dealer and investment adviser, from association with a broker or dealer or investment adviser following the entry of a permanent injunction against him by the United States District Court for the Northern District of Texas in April 2008. The Commission found that Gann had been enjoined for fraud involving deceptive trading with mutual funds and that the public interest required that Gibson be barred. In imposing the bar, the Commission found, as had the district court, that Gann had used fraudulent devices to facilitate thousands of deceptive market-timing trades with an aggregate value of $650 million, targeting 165 mutual funds in fifty-six mutual fund families. (Rel. 34-59729; IA-2684; File No. 3-13009)
In the Matter of Carlyle Gaming & Entertainment Ltd., et al.
An Administrative Law Judge has issued an Order Making Findings and Revoking Registrations by Default as to Three Respondents (Default Order) in Carlyle Gaming & Entertainment Ltd., Administrative Proceeding No. 3-13371. The Order Instituting Proceedings (OIP) alleged that five Respondents failed repeatedly to file required annual and quarterly reports while their securities were registered with the Securities and Exchange Commission (Commission). The Default Order finds these allegations to be true and revokes the registrations of each class of registered securities of Daleigh Holdings Corp., Pegasus Gold, Inc., and Storm Technology, Inc., pursuant to Section 12(j) of the Securities Exchange Act of 1934.
The Commission has previously accepted offers of settlement from Carlyle Gaming & Entertainment Ltd. and Guy F. Atkinson Co. of California, Inc., n/k/a ATKN Co. of California, the other two Respondents named in the OIP. (Rel. 34-59731; File No. 3-13371)
SEC Brings Fraud Charges and Requests Emergency Relief Against a Colorado Advisor for Conducting Multi-Million Dollar Ponzi Scheme
The Securities and Exchange Commission charged Shawn R. Merriman of Aurora, Colorado, and his firm, Market Street Advisors, for conducting a multi-million dollar Ponzi scheme through the sale of interests in at least four investment funds. The SEC also charged the funds that issued the securities. The Commission alleges that Merriman raised at least $17 to $20 million from at least 38 investors residing in such states as Colorado, Minnesota and Utah.
According to the Commission's complaint, filed April 7, 2009, in federal district court in Denver, Colorado, Merriman told investors that he would invest their funds in stocks and options, and he reported impressive and consistent annual returns to investors. Merriman repeatedly deceived investors, many of whom considered him a personal friend, by sending them fictitious account statements showing annual rates of return of 7 to 20 percent. Instead, Merriman did not trade stocks and options after his first year of operations, during which he suffered trading losses, and he used millions of dollars in investor funds to support his lavish lifestyle and pay out withdrawals by other investors. He also offered "rebates" to existing investors to entice them to invest additional money with him. Contrary to his representations to investors, the SEC alleges that Merriman used investor funds to repay other investors and for his own personal purchases of classic cars, motorcycles, motor homes, a cabin in Idaho, and fine art collections, including works by Rembrandt that are worth millions of dollars.
The SEC's complaint alleges that the defendants 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), 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. In addition to seeking emergency relief, including an asset freeze, the Commission seeks disgorgement of the defendants' ill-gotten gains plus pre-judgment interest, financial penalties, and permanent injunctions barring future violations of the antifraud provisions of the federal securities laws. [SEC v. Market Street Advisors, Shawn R. Merriman, LLC-1, LLC-2, Marque LLC-3, and LLC-4 , Civ. No. 09-CV-00786-PAB-KMT (D. Colo.)] (LR-20992)
Court Enters Final Judgment Against Massachusetts Hedge Fund Manager in Fraud Scheme
The Securities and Exchange Commission announced today that the Massachusetts federal district court entered a Final Judgment on April 8, 2009, against defendant Glenn Manterfield, a citizen of the United Kingdom, in connection with a civil injunctive action filed in April 2007 by the Commission against Manterfield, his business partner, and Lydia Capital, LLC, a registered investment adviser based in Boston, Massachusetts. The Final Judgment enjoined Manterfield, a principal of Lydia, from engaging in future violations of the antifraud provisions of the federal securities laws and holds him liable for $2,350,000 in disgorgement of profits from the conduct alleged in the Commission's complaint, plus prejudgment interest of $425,998, and a civil penalty in the amount of $130,000.
The Commission originally filed its action against Manterfield on April 12, 2007, in the U.S. District Court in Massachusetts and filed an Amended Complaint on May 1, 2007. The Amended Complaint alleged that from June 2006 through April 2007, Manterfield and his business partner, Evan K. Andersen, acting through Lydia, engaged in a scheme to defraud more than 60 investors, who invested approximately $34 million in Lydia Capital Alternative Investment Fund LP, a hedge fund managed by Lydia. The Amended Complaint alleges that defendants told investors that they intended to use the hedge fund's assets to acquire a portfolio of life insurance polices in the life settlement market. According to the Amended Complaint, Manterfield, Andersen, and Lydia made a series of material misrepresentations and omissions, including: (1) materially overstating, and in some instances completely fabricating the hedge fund's performance; (2) inventing business partners, offices, and investors in an attempt to legitimatize the firm and concealing the truth as to why key vendors and banks ceased relationships with the defendants; (3) lying about Manterfield's significant criminal history, and failing to disclose a February 2007 criminal asset freeze against him in England; (4) lying about how the hedge fund planned to address certain material risks and failing to disclose others; and (5) misstating the nature of the hedge fund's assets and its investment process. In addition, the Amended Complaint alleges that Manterfield and Andersen took millions of dollars of investors' funds by withdrawing investor monies to which they were not entitled.
On April 12, 2007, the U.S. District Court issued a temporary restraining order that, among other things, froze the three defendants' assets. On May 3, 2007, the Court issued a consented-to preliminary injunction and ordered a continuation of an asset freeze of the defendants' assets.
In a related action in the United Kingdom, on Feb. 29, 2008, the Commission filed a limited notice application with the High Court of Justice, Queen's Bench Division seeking an emergency order freezing approximately $1 million in assets held by Manterfield in the United Kingdom. The Commission filed the application after learning that a separate freeze order previously obtained by British authorities against Manterfield's assets might be lifted. After a hearing on the Commission's application on Feb. 29, 2008, the High Court of Justice issued an order freezing the assets until March 6, 2008. Manterfield consented to continue the freeze until the court held an evidentiary hearing to determine whether the freeze should be extended. An evidentiary hearing was held in the High Court of Justice on April 30, 2008, and May 1, 2008. On May 16, 2008, the High Court of Justice issued an order continuing the freeze of Manterfield's assets until the resolution of the Commission's pending enforcement action in the United States. Manterfield appealed the order to the Supreme Court of Judicature Court of Appeal. On Nov. 26, 2008, the Court of Appeal held a hearing and, on Jan. 28, 2009, the three-judge panel unanimously dismissed Manterfield's appeal.
The Final Judgment entered against Manterfield by the Massachusetts federal district court permanently enjoined Manterfield from violating 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 206(2) of the Investment Advisers Act of 1940. The Final Judgment further holds Manterfield liable for $2,350,000 in disgorgement, plus prejudgment interest of $425,998, and a civil penalty in the amount of $130,000. Andersen has settled the Commission's action against him, and the action is still pending against Lydia. [SEC v. Lydia Capital, LLC et al., U.S. District Court for the District of Massachusetts, 07-CV-10712-RGS] (LR-20993A)
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