SEC News Digest

COMMISSION ANNOUNCEMENTS

SEC Announces $78 Million Fair Fund Distribution to Harmed Investors in Aim Mutual Funds

The Securities and Exchange Commission today announced the Fair Fund distribution of more than $78 million to more than 590,000 investors who were affected by undisclosed market timing in certain AIM mutual funds.

The Fair Fund distribution stems from a prior SEC enforcement action against AIM Advisors, Inc., which advised the funds, and AIM Distributors, Inc. (ADI), which distributed the funds. In addition, this distribution includes money from two other Fair Funds, which are related to separate unlawful market timing enforcement actions that affected AIM investors.

Specifically, the AIM Fair Fund includes $50 million in disgorgement and penalties collected from AIM Advisors and ADI after the Commission brought settled administrative and cease-and-desist proceedings against them in 2004, as well as accrued interest. This distribution also includes approximately $11 million in disgorgement, penalties and accumulated interest from the Banc of America Capital Management LLC, BACAP Distributors LLC, and Banc of America Securities LLC Fair Fund; and approximately $12.4 million in disgorgement, penalties and accumulated interest from the Bear, Stearns & Co., Inc. and Bear, Stearns Securities Corp. Fair Fund.

The Sarbanes-Oxley Act of 2002 (SOX) 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. The SEC has returned more than $5 billion in Fair Funds to investors since gaining this authority after the passage of SOX.

The Fair Fund Administrator responsible for this distribution is Boston Financial Data Services, Inc. (BFDS). Investor questions regarding the distribution may be directed to BFDS at (866) 700-0226. Information regarding the distribution can also be obtained at http://www.aimfairfund.com.

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Additional materials:

Modified Plan of Distribution:
http://www.sec.gov/litigation/admin/2008/34-57859-mdp.pdf

May 23, 2008 Order Approving the Modified Plan of Distribution:
http://www.sec.gov/litigation/admin/2008/34-57859.pdf

October 8, 2004 Order Instituting Administrative and Cease-and-Desist Proceedings:
http://www.sec.gov/litigation/admin/34-50506.htm

(Press Rel. 2009-124)

Commission Meetings

Closed Meeting - Thursday, June 4, 2009 - 2:00 p.m.

The subject matter of the Closed Meeting scheduled for Thursday, June 4, 2009. will be: institution and settlement of injunctive actions; institution and settlement of administrative proceedings; consideration of amicus participation; and other matters related 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.

ENFORCEMENT PROCEEDINGS

In the Matter of American Investors Network

On May 29, the Commission issued an Order Instituting Administrative and Cease-and-Desist Proceedings, Pursuant to Section 8A of the Securities Act of 1933 and Sections 15(b) and 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (Order) against Thomas S. Blackwell.

The Order finds that Blackwell, a resident of Tempe, Arizona, willfully violated Section 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, when he offered and sold interests in two investment programs outside of his association with a registered broker-dealer. Blackwell promised to pay at least 5% in monthly returns but never performed the diligence to determine if there was a reasonable basis for his representations. Blackwell also failed to disclose the increasingly troubling signs he encountered demonstrating that the intended investment for one of these programs was nothing more than a Ponzi scheme.

Based on the above, the Order directs Blackwell to cease and desist from committing or causing any violations and any future violations of Section 17(a) of the Securities Act and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder, bars Blackwell from association with any broker or dealer, with the right to reapply for association after five years, and orders Blackwell to pay disgorgement of $122,465.89 plus prejudgment interest of 4,015.62, but waives the payment of such amounts and does not impose a penalty based on Blackwell's sworn financial statements. Blackwell consented to the issuance of the Order without admitting or denying any of the findings therein. (Rel. 33-9035; 34-60009; File No. 3-13497)

In the Matter of American Investors Network

On May 29, the Commission issued an Order Instituting Administrative and Cease-and-Desist Proceedings, Pursuant to Section 8A of the Securities Act of 1933 and Sections 15(b) and 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (Order) against Dustin J. Lunt.

The Order finds that Lunt, a resident of Mesa, Arizona, willfully violated Section 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, and finds that Lunt failed reasonably to supervise a registered representative under his supervision. The Order finds that Lunt offered and sold interests in an investment program outside of his association with a registered broker-dealer, and promised to pay investors at least 5% in monthly returns. However, Lunt never performed the diligence to determine if there was a reasonable basis for his representations. Lunt also failed to disclose the increasingly troubling signs he encountered demonstrating that the intended investment for the program was nothing more than a Ponzi scheme. Lunt further failed reasonably to supervise a registered representative under his supervision who solicited investors for a similar investment program.

Based on the above, the Order directs Lunt to cease and desist from committing or causing any violations and any future violations of Section 17(a) of the Securities Act and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder, bars Lunt from association with any broker or dealer, with the right to reapply for association after five years, bars Lunt from association in a supervisory capacity with any broker or dealer, and does not impose a penalty based on Lunt's sworn financial statements. Lunt consented to the issuance of the Order without admitting or denying any of the findings therein. (Rels. 33-9036; 34-60010; File No. 3-13498)

SEC Issues Notice of Proposed Distribution Plan and Opportunity for Comment in the Matter of BISYS Fund Services, Inc.

The Securities and Exchange Commission (Commission) announced today that it has given notice, pursuant to Rule 1103 of the Securities and Exchange Commission's Rules on Fair Fund and Disgorgement Plans, 17 C.F.R. S 201.1103, that the Division of Enforcement has filed a proposed plan (Distribution Plan) for the distribution of monies in the matter of BISYS Fund Services, Inc.

The Distribution Plan provides for distribution of disgorgement in the amount of $9,698,835, prejudgment interest in the amount of $1,703,981.66, and penalty in the amount of $10,000,000, paid by BISYS Fund Services, Inc. (BISYS), plus any accumulated interest, less any federal, state, or local taxes on the interest. The proposed plan provides for distribution of the monies among the mutual funds that had marketing arrangements with BISYS that are the subject of the Order during the period from July 1, 1999 through June 30, 2004; or, in the case of mutual funds that have been merged into other mutual funds, to their successors in interest. The Fair Fund is to be allocated in proportion to (i) in the case of the disgorgement and prejudgment interest components of the Fair Fund, the portion (if any) of the disgorgement amount attributable to each Fund Family; and (ii) in the case of the penalty, the amount of administration fees paid by each Fund Family that were allocated to marketing during the Measurement Period (the period beginning on July 1, 1999 and ending on the earlier of (i) the date on which the Marketing Arrangement for that Fund Family was terminated, or (ii) June 30, 2004). Amounts allocated to each Fund Family are to be further allocated among the Funds in proportion to the Marketing Support Payments attributable to each Fund within each Fund Family from July 1, 1999 through June 30, 2004.

A copy of the Distribution Plan may be obtained by submitting a written request to Lorraine B. Echavarria, Esq., Assistant Regional Director, United States Securities and Exchange Commission, 5670 Wilshire Blvd, 11th Floor, Los Angeles, CA 90036. Interested parties may also print a copy of the proposed Distribution Plan from the Commission's public website, http://www.sec.gov. Any person or entity wishing to comment on the Distribution Plan must do so in writing by submitting their comments within 30 days of the date of the Notice (i) to the Office of the Secretary, United States Securities and Exchange Commission, 100 F Street, N.E., Washington, DC 20549-1090; or (ii) via the Commission's Internet comment form (www.sec.gov/litigation/admin.shtml); or (iii) by sending an e-mail to rule-comments@sec.gov. Comments submitted by e-mail or via the Commission's website should include the Administrative Proceeding File Number (Admin. Proc. File No. 3-12432) in the subject line. Comments received will be publicly available. Persons should submit only information that they wish to make publicly available. (Rel. 34-60011; File No. 3-12432)

In the Matter of I Incubator.com, Inc.

An Administrative Law Judge has issued an Order Making Findings and Revoking Registrations by Default (Default Order) in I Incubator.com, Inc., Administrative Proceeding No. 3-13448. The Order Instituting Proceedings alleged that six Respondents 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 and revokes the registrations of each class of registered securities of I Incubator.com, Inc., I Storm, Inc., iBeam Broadcasting Corp., I.C.H. Corp., Idream.ws, Inc., and Images of Life, Inc., pursuant to Section 12(j) of the Securities Exchange Act of 1934. (Rel. 34-60013; File No. 3-13448)

In the Matter of David B. Stocker

On June 1, 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 David B. Stocker. The Order finds that Stocker, an Arizona attorney, was enjoined in three separate civil actions from violating Sections 5(a) and 5(c) of the Securities Act of 1933 related to his participation in unregistered distributions of securities by issuing legal opinions that inaccurately represented that the shares were being sold to accredited investors who intended to purchase the shares for investment. The Commission's complaints allege that the investors and Stocker, directly or indirectly, resold the securities as underwriters in unregistered distributions. Stocker was also enjoined in the third civil action from violating the anti-fraud provisions of Section 17(a) of the Securities Act, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder for making false and misleading statements to acquire control of defunct companies that were formerly publicly traded.

Based on the above, the Order suspends Stocker from appearing or practicing before the Commission as an attorney. Stocker consented to the issuance of the Order without admitting or denying the findings, except as to jurisdiction and entry of the injunctions in the three civil cases which he admitted. [SEC v. Fisher, et al., No. 07-cv-12552 (E.D. Mich.)] (LR 20154, June 14, 2007); [SEC v. Offill, et al., No. 07-cv-1643 (N.D. Tex.)] (LR 20302, Sept. 27, 2007; LR 21049, May 18, 2009); [SEC v. Stocker, et al., No. CIV-08-1475 (D. Ariz.)] (LR 20681, Aug. 12, 2008; LR 21050, May 18, 2009) [U.S. v. Stocker, No. 1:09CR118 (E.D. Va.)] (LR 20944, Mar. 11, 2009) (Rel. 34-60016; File No. 3-13499)

In the Matter of Sharlene Abrams, CPA

On June 1, 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 against Sharlene Abrams (Order), who was the Chief Financial Officer, Vice-President of Finance and Administration, and Secretary of Mercury Interactive Corporation. The Order finds that on March 24, 2009, a final judgment was entered against Abrams in the civil action entitled United States Securities and Exchange Commission v. Mercury Interactive, et. al, Civil Action Number C 07-2822 (JF), in the United States District Court for the Northern District of California. The final judgment permanently enjoined Abrams from future violations of Section 17(a) of the Securities Act of 1933, Sections 10(b), 13(b)(5), 14(a), and 16(a) of the Securities Exchange Act of 1934 (Exchange Act), and Exchange Act Rules 10b-5, 13a-14, 13b2-1, 13b2-2, 14a-9, and 16a-3, and from aiding and abetting violations of Section 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1, and 13a-13. The final judgment also prohibited Abrams from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act or that is required to file reports pursuant to Section 15(d) of the Exchange Act, and ordered her to pay disgorgement of $2,287,914, prejudgment interest in the amount of $112,086, and a $425,000 civil penalty.

According to the Order, the Commission's Complaint alleged, among other things, that no later than 1997, Abrams engaged in a fraudulent scheme with Mercury's former Chief Executive Officer, former General Counsel and others to grant undisclosed, in-the-money stock options to themselves and others, by backdating stock option grants to coincide with historically low closing prices for Mercury's stock. According to the Complaint, Abrams' fraudulent misconduct caused Mercury, between 1997 and 2005, (i) to file materially false and misleading financial statements that materially understated its compensation expenses and materially overstated its quarterly and annual net income and earnings per share, and (ii) to make disclosures in its periodic filings and proxy statements that falsely portrayed Mercury's options as having been granted at exercise prices equal to the fair market value of Mercury's common stock on the date of the grant. According to the Complaint, Abrams also misled Mercury's outside auditors in an attempt to hide the scheme. The Complaint alleged that Abrams, and others, filed Forms 3 and 4 with the Commission that contained false or misleading statements with regard to the options' grant dates and the exercise prices. The Complaint also alleged that from 1998 through 2001, Abrams and others fraudulently backdated the dates of option exercises of certain senior Mercury officers, including Abrams, to low-points of the company's stock price, in order to minimize the officers' taxable gain on exercise or receive more favorable long-term capital gains treatment on profits they earned upon the later sale of the stock acquired through exercise. The benefits reaped from the backdated exercises were concealed through fraudulent proxy disclosures and in Forms 4 filed with the Commission. The Complaint further alleged that during at least 1997 through 2001, Abrams participated in a scheme to manipulate Mercury's reported earnings per share (EPS) by holding shipping of its products once revenue targets for a period had been achieved, pushing the recognition of the revenue into subsequent periods, while concealing these practices from the public through fraudulent and misleading disclosures and omissions. The Complaint additionally alleged that between 1999 and 2005, Abrams and others participated in the fraudulent structuring of overseas employee stock option exercise transactions to conceal the variable accounting consequences of those transactions, causing the company to fail to report the approximately $24 million in compensation expense required under variable accounting.

Based on the above, the Order suspends Abrams from appearing or practice before the Commission as an accountant. Abrams 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 her and the subject matter of the proceeding, and the fact that the federal court entered the injunction against her. (Rel. 34-60017; AAE Rel. 2983; File No. 3-13500)

INVESTMENT COMPANY ACT RELEASES

The Managers Funds, et al.

A notice has been issued giving interested persons until June 22, 2009, to request a hearing on an application filed by The Managers Funds, et al. for an order under Section 6(c) of the Investment Company Act for an exemption from Sections 18(f) and 21(b) of the Act, under Section 12(d)(1)(J) of the Act for an exemption from Section 12(d)(1) of the Act, under Sections 6(c) and 17(b) of the Act for an exemption from Sections 17(a)(1), 17(a)(2) and 17(a)(3) of the Act, and under Section 17(d) of the Act and Rule 17d-1 under the Act to permit certain joint arrangements. The order would permit certain registered open-end management investment companies to participate in a joint lending and borrowing facility. (Rel. IC-28748 - May 28)

SELF-REGULATORY ORGANIZATIONS

Accelerated Approval of Proposed Rule Change

The Commission published notice of filing of Amendment No. 3 and granted accelerated approval to a proposed rule change submitted by NASDAQ OMX PHLX (SR-Phlx-2009-32), as modified by Amendment Nos. 1, 2, and 3, relating to Phlx's enhanced electronic trading platform for options, Phlx XL II, pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of June 1. (Rel. 34-59995)

Immediate Effectiveness of Proposed Rule Changes

A proposed rule change filed by New York Stock Exchange (SR-NYSE-2009-48) amending the Exchange's continued listing standards on a pilot program basis 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 June 1. (Rel. 34-59996)

A proposed rule change filed by NYSE Amex (SR-NYSEAmex-2009-21) amending NYSE Amex Equities Rule 123E ("DMM Combination Review Policy") to be more consistent with the Exchange's current Designated Market Maker system has become immediately effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of June 1. (Rel. 34-60001)

Approving Proposed Rule Change

The Commission approved a proposed rule change submitted by the New York Stock Exchange (SR-NYSE-2009-42) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 implementing the NYSE Realtime Reference Prices service on a permanent basis. Publication is expected in the Federal Register during the week of June 1. (Rel. 34-60004)

SECURITIES ACT REGISTRATIONS

• Latest Securities Act registrations (TXT)

RECENT 8K FILINGS

• Latest 8-K filings (TXT)

http://www.sec.gov/news/digest/2009/dig060109.htm