Securities and Exchange Commission Suspends Trading in Poseidis, Inc. for Failure to Make Required Periodic Filings
The U.S. Securities and Exchange Commission announced the temporary suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934 (the Exchange Act), of trading of the securities of Poseidis, Inc. (Poseidis), of West Palm Beach, Florida at 9:30 a.m. EDT on April 14, 2009, and terminating at 11:59 p.m. EDT on April 27, 2009.
The Commission temporarily suspended trading in the securities of Poseidis because of questions that have been raised about the lack of current and accurate information concerning the securities of Poseidis because it has not filed a periodic report since its 10-QSB/A for the quarterly period ended May 31, 2006, filed on Nov. 21, 2007.
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 Poseidis' 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, they should immediately contact Chedly C. Dumornay, Assistant Regional Director, Miami Regional Office of the Securities and Exchange Commission at (305) 982-6377. (Rel. 34-59760)
Meredith Cross Named New Director of SEC Division of Corporation Finance
On April 13, Securities and Exchange Commission Chairman Mary L. Schapiro announced that former SEC official Meredith B. Cross will return to the agency as its new Director of the Division of Corporation Finance.
Ms. Cross will come to the SEC from the Washington D.C. office of WilmerHale LLP, a law firm she joined in 1998 and where she is currently a partner in the Corporate Practice Group. She previously served at the SEC for several years in the 1990s, ascending to the position of Deputy Director in the Division of Corporation Finance while playing a key role in disclosure-related rulemakings and plain English initiatives for investors.
"Meredith has clearly established herself as a sensible problem solver and a brilliant mind on corporate securities law. Her prior work both at the SEC and in the private sector has been consistently focused on advocating clear and sufficient disclosure to investors about the companies they own," said Chairman Schapiro. "We are so pleased that Meredith has agreed to leave the private sector and return to the SEC at such a critical time to serve investors and advise the Commission. She will be instrumental as we consider important issues as shareholders' access to the proxy to nominate directors, and ways to improve the overall quality and clarity of disclosure provided to investors."
Ms. Cross said, "I am honored and grateful that Chairman Schapiro has given me the opportunity to come back to the SEC at this challenging time. Investors need to be confident that publicly-held companies provide high-quality, understandable and fair disclosure, and I have tremendous respect for the talented Division of Corporation Finance staff who work tirelessly to make sure companies live up to the full disclosure mandate on which our markets depend. I look forward to working with Chairman Schapiro, the Commission and the staff as we consider important improvements to the SEC's proxy and disclosure requirements in order to enhance investor confidence."
The SEC's Division of Corporation Finance oversees the disclosures made to investors by more than 12,500 public companies, including registration statements for newly-offered securities, annual and quarterly filings, and proxy materials sent to shareholders before an annual meeting.
Ms. Cross began her previous tenure at the SEC in September 1990 as an Attorney Fellow in the Office of Chief Counsel in the Division of Corporation Finance. She became the Division's Deputy Chief Counsel in 1992 and Chief Counsel in 1993, and was responsible for no-action letters and legal interpretations in the Division on a wide range of matters. Ms. Cross then served as Associate Director of the Division's sections on Small Business and International Corporate Finance, playing an integral role in international disclosure issues and accounting standards for use in cross-border offerings. She became Deputy Director in the Division of Corporation Finance in 1994, a position she held until she left the SEC in January 1998. Ms. Cross received the SEC's Law and Policy Award in 1993 and 1997.
At WilmerHale, Ms. Cross has been advising clients on corporate and securities matters and has been involved with the full range of issues faced by public and private companies in capital raising and financial reporting. She has served as chair or co-chair of WilmerHale's corporate practice group for more than seven years, first at Wilmer Cutler & Pickering and, following the firm's merger with Hale and Dorr, at the combined firm.
Before her previous tenure at the SEC, Ms. Cross worked in private practice in the securities department of King & Spalding in Atlanta. Upon graduation from law school, she clerked for the Hon. Albert J. Henderson of the U.S. Court of Appeals for the Eleventh Circuit. She earned her undergraduate degree, cum laude, from Duke University in 1979, and her law degree in 1982 from Vanderbilt University Law School, where she was a member of the Vanderbilt Law Review and Order of the Coif. (Press Rel. 2009-78)
SEC Announces 100 Percent Return of Funds to Defrauded Concorde America and Absolute Health Investors
Investors who were defrauded by schemes involving Concorde America, Inc. and Absolute Health and Fitness, Inc. will be receiving all of their money back due to the efforts of the Securities and Exchange Commission.
The checks, which will be distributed beginning as early as April 15, will total nearly $3.5 million and go to 1,355 investors who were harmed by the fraudulent promotion of the stock of the two companies.
In February 2005, the Commission sued the two companies and several individuals in U.S. District Court in Miami in connection with related pump-and-dump schemes. At the time, the Commission obtained emergency restraining orders to freeze the defendants' assets.
In addition to the funds that the Commission obtained as a result of the asset freeze, the Fair Fund distribution includes subsequent disgorgement and civil money penalties paid by some of the defendants. Proceeds of fraudulent trading by some of the parties were traced to accounts in a bank in the Netherlands Antilles and repatriated.
"We have been able to return all of the investors' losses because our emergency actions allowed us to quickly freeze assets and trace the funds to offshore accounts," said David Nelson, Director of the SEC's Miami Regional Office.
"The SEC is committed to pursuing wrongdoers and returning lost funds to harmed investors to the greatest extent possible," said Dick D'Anna, Director of the SEC's Office of Collections and Distributions.
In the Fair Funds provisions of the Sarbanes-Oxley Act of 2002, Congress gave the SEC increased authority to distribute ill-gotten gains and civil money penalties to harmed investors. To date, the Commission has returned more than $4 billion to investors through Fair Fund distributions.
In the SEC's enforcement action against Concorde America and Absolute Health and Fitness, the Commission obtained permanent injunctions by consent, default, or summary judgment against all of the defendants, including both companies. The Commission also obtained final judgments of disgorgement, prejudgment interest, and civil penalties against some of the defendants, and continues to pursue final judgments against Concorde America and its president.
The investors receiving distributions today bought Concorde America and Absolute Health stock during fraudulent touting periods from June to December 2004.
Questions regarding the Fair Fund distribution may be directed to the court-appointed distribution agent, Melanie E. Damian, Esq. by:
Visiting the Fair Fund's Web site at http://www.concordeabsolutehealthfund.com
Calling toll-free 1-877-523-6365
Writing to Melanie E. Damian, Esq. at either Damian & Valori LLP, 1000 Brickell Avenue, Suite 1020, Miami, FL 33131 or c/o Global Risk Solutions, Inc., P.O. Box 310130, Miami, FL 33231.
(Press Rel. 2009-81)
Roundtable on Oversight of Credit Rating Agencies - Wednesday, April 15 - 10:00 a.m.
The Commission will hold a Roundtable on April 15 relating to its oversight of credit rating agencies.
The Roundtable will take place in the Auditorium of the Commission's headquarters at 100 F Street, NE, Washington DC. The Roundtable will be open to the public with seating on a first-come, first-served basis. Doors will open at 9:30 a.m. Visitors will be subject to security checks.
The roundtable will consist of an open discussion on the oversight of credit rating agencies, as it relates to both the Commission's pending proposals and more broadly. The roundtable will be organized as four panels, each consisting of leaders from investor organizations, financial services associations, credit rating agencies, and academia.
The Commission welcomes feedback regarding any of the topics to be addressed at the roundtable. The information that is submitted will become part of the public record of the roundtable. Submissions to the Commission may be provided by any of the following methods:
All submissions should refer to File Number 4-579. For comments specifically related to the proposed amendments, such submissions also should refer to File Number S7-04-09. This file number(s) should be included on the subject line if e-mail is used. To help us process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/spotlight/cra-oversight-roundtable.htm). Comments are also available for public inspection and copying in the Commission's Public Reference Room, 100 F Street, NE, Washington, DC 20549, on official business days between the hours of 10:00 am and 3:00 pm.
Please note that all submissions received will be posted without change; the SEC does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly.
For further information, please contact John Heine at (202) 551-4120. (Rels. 34-59753; File Nos. 4-579 and S7-04-09)
Staff Accounting Bulletin No. 111
The U.S. Securities and Exchange Commission's Office of the Chief Accountant and Division of Corporation Finance announced today the release of Staff Accounting Bulletin (SAB) No. 111. This SAB amends Topic 5.M. in the Staff Accounting Bulletin Series entitled Other Than Temporary Impairment of Certain Investments in Debt and Equity Securities (Topic 5.M.). On April 9, 2009, the FASB issued FASB Staff Position No. 115-2 and 124-2, Recognition and Presentation of Other-Than-Temporary Impairments to provide guidance for assessing whether an impairment of a debt security is other than temporary, as well as how such impairments are presented and disclosed in the financial statements. This SAB maintains the staff's previous views related to equity securities. It also amends Topic 5.M. to exclude debt securities from its scope.
For further information, please contact Robert Malhotra or Adam Brown in the Office of the Chief Accountant at (202) 551-5300, or Stephanie Hunsaker in the Division of Corporation Finance at (202) 551-3400.
In the Matter of Antonio Canova (CPA)
On April 13, the Commission issued 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 Antonio Canova. The Order finds that on April 6, 2009, a final judgment was entered by consent against Canova, permanently enjoining him from future violations of Sections 17(a)(2) and (3) of the Securities Act of 1933 (Securities Act) and Section 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 13b2-1, 13b2-2, and 13a-14 thereunder, and from aiding and abetting future violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder, in the civil action entitled Securities and Exchange Commission v. Gregory L. Reyes, et al., No. 3:06-cv-04435-CRB, in the United States District Court for the Northern District of California. The Commission's complaint in that action alleged that Canova received information calling into question the integrity of Brocade's financial statements based on its options granting process carried out by Brocade's then chief executive officer, and Canova did not review or investigate that information. The complaint further alleged that Canova signed and certified materially misleading financial statements included in annual and quarterly reports filed with the Commission during the company's fiscal years 2001 through 2004, which should have recorded a compensation expense for the in-the-money options grants but did not.
Based on the above, the Order suspends Canova from appearing or practicing before the Commission as an accountant, and after three years he may request that the Commission consider his reinstatement. Antonio Canova consented to the issuance of the Order without admitting or denying any of the finding in the Order, except that he admitted the entry of the injunction. (Rel. 34-59758; AAE Rel. 2961; File No. 3-13441)
In the Matter of Poseidis, Inc.
On April 14, the Commission announced the institution of an administrative proceeding against Poseidis, Inc. (Poseidis) pursuant to Section 12(j) of the Securities Exchange Act of 1934 (Exchange Act). Poseidis is a Florida corporation headquartered in West Palm Beach, Florida. The purpose of the proceeding is to determine whether the registration of Poseidis' common stock should be suspended or revoked. The Division of Enforcement (Division) alleges that Poseidis failed to comply with Section 13(a) of the Exchange Act and Exchange Act Rules 13a-1 and 13a-13, by not filing any periodic reports since Nov. 21, 2007, when it filed an amended Form 10-QSB for the quarterly period ended May 31, 2006.
A hearing will be scheduled to take evidence on the Division's allegations, to afford Poseidis the opportunity to establish defenses to the allegations, and to determine whether the registration of Poseidis' common stock should be suspended or revoked.
The Commission ordered that the Administrative Law Judge in these proceedings issue an initial decision not later than 120 days from the date of service of the order instituting proceedings. (Rel. 34-59761; File No. 3-13442)
In the Matter of GLB Trading, Inc. and Robert A. Lechman
On April 14, the Commission issued an Order Instituting Administrative and Cease-And-Desist Proceedings Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 (Order) against GLB Trading, Inc., a broker-dealer registered with the Commission, and Robert A. Lechman, GLB Trading's owner and former president, CEO, and chief compliance officer (collectively, Respondents).
The Division of Enforcement (Division) alleges in the Order that from 2006 to March 2008, Respondents knowingly and substantially assisted Tuco Trading, LLC, a firm that provided day-trading capability to its customers and that was run by a registered representative of GLB Trading. The Division also alleges that through Tuco's accounts at GLB Trading, Tuco effected its customers' securities transactions and received commissions on such trading but that it was not registered with the Commission as a broker-dealer. The Division additionally alleges that Respondents knew of Tuco's activities and provided it with substantial assistance by allowing Tuco to operate through GLB Trading; helping Tuco solicit new customers; structuring Tuco's operations; and loaning funds so that Tuco could meet day-trading calls. The Division further alleges that as a result of the conduct described above, Respondents willfully aided and abetted and caused Tuco's violations of Section 15(a) of the Securities Exchange Act of 1934 (Exchange Act).
A hearing will be scheduled before an Administrative Law Judge to determine whether the allegations contained in the Order are true, what, if any, remedial action is appropriate and in the public interest, and whether Respondents should be ordered to cease and desist from committing or causing future violations of Section 15(a) of the Exchange Act. The Order requires the Administrative Law Judge to issue an initial decision no later than 300 days from the date of service of this Order, pursuant to Rule 360(a)(2) of the Commission's Rules of Practice. (Rel. 34-59765; File No. 3-13443)
In the Matter of Stephen P. Corso, Jr., CPA
On April 14, the Commission announced the issuance of an Order of Forthwith Suspension Pursuant to Rule 102(e)(2) of the Commission's Rules of Practice against Stephen P. Corso, Jr., CPA (Order). The Order finds that Stephen P. Corso, Jr. (Corso) was licensed as a certified public accountant in New Jersey from April 1992 to June 2005, that he was licensed as a certified public accountant in New York from June 1993 to July 2007, and that he was licensed as a certified public accountant in California from November 1995 to July 2005. The Order also finds that on Feb. 20, 2009, Corso was convicted of one count of wire fraud and one count of attempted income tax evasion before the United States District Court for the District of Connecticut, in United States v. Stephen P. Corso, No. 3:05-cr-00105-JCH. In addition, the Order finds that Corso was sentenced to serve 12 months and one day imprisonment, followed by three years of supervised release, and to pay restitution in the amount of $5,446,735 and a special assessment of $200.
Based on the above, the Commission forthwith suspended Corso from appearing or practicing before the Commission. (Rel. 34-59766; AAE Rel. 2962; File No. 3-13444)
In the Matter of Stratum Holdings, Inc.
On April 14, the Commission issued an Order Instituting Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order (Order) as to Stratum Holdings, Inc. (Stratum). The Order finds that Stratum, a Nevada corporation headquartered in Houston, Texas which owns two subsidiaries operating in the energy sector and whose common stock (symbol STTH) is quoted on the OTC Bulletin Board and the Pink Sheets operated by Pink OTC Markets Inc., failed to comply with Items 307 and 308T of Regulation S-B in its Form 10-KSB report filed on April 8, 2008 for the fiscal year ended December 31, 2007. The Order further finds that as a result of the foregoing, Stratum violated Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 13a-1 and 13a-15 thereunder.
Based on the above, the Order orders Stratum to cease and desist from committing or causing any violations and any future violations of Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-15 thereunder. Stratum Holdings, Inc. consented to the issuance of the Order without admitting or denying any of the findings in the Order, except as to the Commission's jurisdiction over the company and the subject matter of the proceedings, which are admitted. (Rels. 34-59767; AAE Rel. 2963; File No. 3-13445)
SEC Charges Promoter and Firm With Operating a Multi-Million Dollar Ponzi Scheme Targeting the Hispanic-American Community
The Securities and Exchange Commission today filed securities fraud charges against a promoter and her firm for operating a $23 million investment scheme that primarily targeted California's Hispanic-American community.
The SEC's complaint, filed in U.S. District Court in Los Angeles, charges Clelia A. Flores, 42, of El Segundo, Calif., and her El Segundo, Calif.-based company Maximum Return Investments, Inc. (MRI) for operating a fraudulent investment scheme that attracted more than 150 investors in seven states between late 2006 and early 2008. According to the complaint, the scheme purported to use investor funds to invest in risk-free, high-yield investment programs in real estate, commodities, and bank instrument trading. Flores and MRI raised approximately $23 million from investors while promising returns of up to 25 percent within 30 to 45 days. The SEC alleges, however, that Flores and MRI were operating a Ponzi-like scheme that used approximately $13 million from new investors to pay principal and returns due to earlier investors. The complaint further alleges that Flores also misappropriated more than $3.5 million of investor funds for personal expenses, including $443,000 to purchase a home, and almost $1.5 million of investor money to finance MRI's operations, most of which was used to pay for a lavish party celebrating MRI's alleged financial success.
According to the SEC's complaint, Flores and MRI solicited investors in the Hispanic-American community through word of mouth, referrals, and testimonials by investors. As alleged in the complaint, Flores claimed all investor funds would be used to invest in MRI's risk-free, high-yield investment programs and touted to investors that their principal would be "guaranteed safe." Promotional materials falsely represented that an investor's principal would be fully secured by a bank-endorsed guarantee and MRI's promissory notes claimed the investment was insured. However, the SEC alleges that Flores and MRI neither guaranteed nor insured the $23 million raised from investors and only used $5.6 million of this amount to invest in high-risk ventures and start-up companies that had never paid MRI any returns.
The SEC's complaint charges Flores and MRI with violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and seeks permanent injunctions, disgorgement of ill-gotten gains, and civil penalties.
MRI investors seeking more information about this case should contact the SEC's hotline that is in English, at 323-965-3313, or in Spanish, at 323-965-3314. [SEC v. Maximum Return Investments, Inc. and Clelia A. Flores, Civil Action No. CV 09-2536 ODW (SHx) (USDC, C.D. Cal.)] (LR-20997)
SEC Charges Seven Church Leaders in Fraudulent Investment Scheme that Targeted Parishioners
On April 14, the Securities and Exchange Commission filed civil injunctive actions in the United States District Court for the Eastern District of New York charging seven leading members of a church in Queens, N.Y. for orchestrating a fraudulent investment scheme that targeted mostly elderly parishioners. The seven individuals defrauded scores of investors of more than $12 million by making numerous misrepresentations, including promises of returns as high as 75 percent, to encourage them to invest in two hedge funds - the Logos Fund and the Donum Fund. Instead of investing the money as promised, the defendants misappropriated millions of dollars to furnish their own lavish lifestyles with purchases of luxury cars, jewelry, clothing, meals, and expensive foreign travel.
According to the Commission's complaint, filed in federal court in Brooklyn, NY, the fraudulent scheme was orchestrated by seven individuals who were active members and leaders of the church: Isaac I. Ovid; Aaron Riddle; J. Jonathan Coleman; Stephen Cina; Cory A. Martin; Timothy Smith; and Robert J. Riddle. The Complaint alleges that these individuals used two entities to carry out the fraudulent scheme: Jadis Capital, Inc. - the hedge fund manager of the Logos Fund and the Donum Fund - and Jadis Capital's subsidiary, Jadis Investments, LLC, a registered investment adviser and the investment manager of the funds.
The SEC's complaint alleges that between January and November 2005, the defendants raised more than $12 million from more than 80 investors in the two funds by making material misrepresentations including promises of incredible returns. The defendants misrepresented the performance of the Logos Fund, the amount of assets under management, the identity and skill of the portfolio managers, and the level of supervision of the portfolio managers. The defendants also misrepresented the registration status of the Donum Fund by falsely claiming to investors that the fund was registered with the SEC.
The SEC's complaint further alleges that instead of investing the investor funds as promised, the defendants misappropriated investor funds almost as soon as they were obtained, using the money to buy luxury items including a Bentley automobile and expensive watches. They also used investor assets to pay for unauthorized operating expenses incurred by Jadis Capital and Jadis Investments, such as the construction of lavish offices, and to satisfy prior debts owed by Ovid.
The SEC's complaint charges each of the defendants (except Logos Fund) with violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and with aiding and abetting each other's violation of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Further, the SEC's complaint charges Jadis Investments and Jadis Capital with violations of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940, and each of the defendants (except Logos Fund and Robert J. Riddle) with aiding and abetting Jadis Investments' and Jadis Capital's violation of Sections 206(1) and 206(2) of the Advisers Act. Finally, the complaint charges Jadis Investments with a violation of Section 203A of the Advisers Act, and Logos Fund with a violation of Section 7(a) of the Investment Company Act of 1940. The SEC's complaint seeks a final judgment permanently enjoining the defendants from future violations of the above provisions of the federal securities laws, ordering them to disgorge their ill-gotten gains plus prejudgment interest, and ordering them to pay civil monetary penalties. [SEC v. Isaac I. Ovid, Aaron Riddle, J. Jonathan Coleman, Stephen Cina, Cory A. Martin, Timothy Smith, Robert J. Riddle, Jadis Capital, Inc., Jadis Investments, LLC, and Logos Multi-Strategy Hedge Fund I, LP, Civil Action No. 09-1521 (EDNY)] (LR-20998)
SEC v. Osvaldo Pitters, Terrell J. Kuykendall and Steven M. Ivester
The Securities and Exchange Commission announced that on April 13, 2009, it filed a civil injunctive action against Osvaldo Pitters, Terrell J. Kuykendall, and Steven M. Ivester in connection with a financial fraud involving VoIP, Inc., a defunct Internet telecommunications provider formerly located in Altamonte Springs, Florida. The Commission's complaint, filed in the United States District Court for the Southern District of Florida, alleges that Pitters, VoIP's former Chief Financial Officer, and Kuykendall, the former General Manager of a VoIP subsidiary, recorded fictitious sales when it became apparent that the subsidiary would not meet VoIP's revenue projections in 2004 and the first quarter of 2005. Pitters and Kuykendall recorded sham transactions with third parties, thereby inflating the subsidiary's revenues. Pitters further provided false sales journals and fictitious invoices to VoIP's auditors during its audit for fiscal year 2004. As a result, VoIP filed a Form 10-K and two Forms 10-Q with the Commission that overstated the company's revenues by more than 40%.
The complaint further alleges that Ivester, VoIP's former Chief Executive Officer, was aware the subsidiary was struggling financially, but did not question the suspiciously high revenue figures. By November 2004, Ivester knew the subsidiary had generated $400,000 or less in revenues since its acquisition by VoIP, and that unpaid vendor bills and technical problems with VoIP's voice-over-Internet systems were hindering sales. Yet Ivester did not question the consolidated figures showing the subsidiary had generated over $790,000 in additional revenues before the end of 2004, and that its revenues had increased again substantially in the first quarter of 2005. In addition, the Complaint alleges in 2004 and 2005, Ivester sold more than four million shares of VoIP stock and that he failed to report the sales transactions with the Commission by filing the required Forms 4 until December 2005.
The Commission's complaint charges Pitters and Kuykendall with violating the anti-fraud provisions of the federal securities laws, specifically, Section 17(a) of the Securities Act of 1933 (Securities Act), Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, and charges Ivester with violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act. The complaint further charges Pitters and Kuykendall with aiding and abetting VoIP's violations of the reporting, books and records, and internal control provisions under Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13; charges Pitters and Kuykendall with direct violations of Section 13(b)(5) of the Exchange Act and Rule 13b2-1; and further charges Pitters with knowingly making false statements to VoIP's auditors, in violation of Rule 3b2-2 under the Exchange Act. Finally, the complaint charges Ivester and Pitters with violations of the officer certification provisions under Rule 13a-14 under the Exchange Act, and charges Ivester with violations of the beneficial ownership reporting provisions under Section 16(a) of the Exchange Act and Rule 16a-3 thereunder. The Commission's complaint seeks permanent injunctive relief against all defendants, enjoining them from future violations of the provisions charged, and an order requiring them to disgorge their ill-gotten gains, with prejudgment interest, and imposing civil penalties against each of them.
On April 13, 2009, the Commission also suspended trading in VoIP's securities for ten days and instituted public administrative proceedings to determine whether the registration of its securities should be suspended or revoked. The Commission also entered an order against VoIP's former independent auditor, Jesus A. Lago, denying him the privilege of practicing before the Commission as an accountant with the right to reapply in one year. Lago consented to the order without admitting or denying the Commission's findings.
[SEC v. Osvaldo Pitters, Terrell J. Kuykendall and Steven M. Ivester, Civil Action No. 09-20957 CIV-GRAHAM (S.D. Fla.,)] (LR-20999)
Approval of Proposed Rule Change
The Commission approved a proposed rule change submitted under Section 19(b)(1) of the Securities Exchange Act of 1934 by NASDAQ OMX BX (SR-BX-2009-014) relating to Zero Bid Orders on the Boston Options Exchange Facility. Publication is expected in the Federal Register during the week of April 13. (Rel. 34-59742)
Proposed Rule Change
The New York Stock Exchange filed a proposed rule change (SR-NYSE-2009-08) rescinding NYSE Rule 110, which establishes the role of Competitive Traders, and Exchange Rule 107A, which establishes the role of the Registered Competitive Market Makers. Publication is expected in the Federal Register during the week of April 13. (Rel. 34-59746)
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