SEC Conducts Major Securities Market Oversight Training Program in Africa
The Securities and Exchange Commission announced today that it has completed a major regional Capital Market Development and Oversight Training Program in Accra, Ghana, that took place from September 14 to September 18.
SEC staff conducted intensive training for foreign officials on methods for conducting investigations of insider trading, financial accounting fraud, market manipulation, pyramid schemes, and broker-dealer abuses. The training also included instruction on broker-dealer examinations, compliance, and anti-money laundering, market development strategies, and the causes of the global financial crisis.
In addition to the SEC instructors, each day also featured sessions led by market experts from Cameroon, Ethiopia, Ghana, and Nigeria regarding the challenges of capital and commodities market development in Africa. The discussions emphasized the potential that commodities and capital markets have to transform African economies.
The regional African program was the SEC's largest to date in Africa, featuring 99 delegates from 10 African countries: Cameroon, Cote D' Ivoire, Ghana, Guinea, Kenya, Nigeria, Sierra Leone, South Africa, Tanzania, and Zambia. The program was hosted by the Ghana Securities and Exchange Commission, and included financial sponsorship from the United States Agency for International Development.
Professor E.V.O Danquah, Chairman of the Ghana SEC said, "The Ghana SEC is proud and honored to have hosted this invaluable opportunity for key officials from so many African markets to come together with the U.S. SEC to discuss how we may work together to build African capital markets and combat market abuse. This week-long program featured an incredible exchange of best practices, practical experience, and an intense dialogue among participants on how we may all work together to ensure that our markets develop with a reputation for integrity that will attract both local and international capital."
Ethiopis Tafara, Director of the SEC's Office of International Affairs, said, "We are honored to be invited to work with so many market leaders who, while facing many challenges, have the potential to grow transparent, high-quality capital markets that will ultimately serve to support infrastructure, create jobs, and reduce poverty. Our growing partnerships with African regulators will help us better protect our own market, as well as create new opportunities for all investors. Moreover, building high-quality capital and commodities markets in Africa is among the most powerful development strategies ever employed - and it has the benefit of being self-sustaining."
The SEC's technical assistance training program consists of bilateral and regional training programs, assessments, consultations, and review and comment on statutory and regulatory initiatives. The SEC has thus far provided training for more than 1,800 foreign capital market officials from more than 100 foreign jurisdictions in fiscal year 2009.
For more information on the SEC's technical assistance program, contact Dr. Robert M. Fisher or Z. Scott Birdwell in the Office of International Affairs at 202-551-6690 or OIA@SEC.gov. (Press Rel. 2009-204)
Gregg Berman Named Senior Policy Advisor in SEC Division of Risk, Strategy, and Financial Innovation
The Securities and Exchange Commission today announced that Gregg Berman has been named a Senior Policy Advisor in its newly-established Division of Risk, Strategy, and Financial Innovation.
Mr. Berman comes to the SEC from the RiskMetrics Group, a company that focuses on risk management, corporate governance, and financial research and analysis. Mr. Berman held several senior positions during his 11-year tenure at RiskMetrics Group, most recently serving as the head of the global risk business. He also held positions in strategic development, and earlier served as the company's head of market risk. Mr. Berman will begin his work at the SEC next week.
"I am pleased that Gregg has agreed to accept this senior position," said Henry Hu, Director of the SEC's Division of Risk, Strategy, and Financial Innovation. "With a Ph.D. in Physics from Princeton and experience in nuclear research, hedge fund management, and financial modeling and analysis, Gregg has much to contribute. I anticipate benefiting in many ways from his insights."
Mr. Berman said, "I am honored to have been asked by Professor Hu to join this new division. The Commission's work could not be more important at this critical time. I much look forward to using an interdisciplinary approach, one involving economics, finance, and law, in a way that fairly addresses the needs of Main Street as well as Wall Street."
Prior to his work at RiskMetrics Group, Mr. Berman co-managed a private hedge fund, worked for an investment management company, and conducted research in experimental nuclear physics.
Mr. Berman earned a B.S. in Physics from M.I.T. in 1987, and earned a Ph.D. in Physics from Princeton University in 1994.
The newly-created Division of Risk, Strategy, and Financial Innovation combines the Office of Economic Analysis, the Office of Risk Assessment, and other functions to provide the Commission with sophisticated analysis that integrates economic, financial, and legal disciplines. The division's responsibilities cover three broad areas: risk and economic analysis; strategic research; and financial innovation. With the creation of the Division of Risk, Strategy, and Financial Innovation, the SEC now has five divisions, including the Division of Corporation Finance, the Division of Enforcement, the Division of Investment Management, and the Division of Trading and Markets. (Press Rel. 2009-205)
Brian Bussey Named Associate Director for Trading Practices and Processing in Division of Trading and Markets
The Securities and Exchange Commission today announced that Brian A. Bussey has been named Associate Director for Trading Practices and Processing in the Division of Trading and Markets.
The Office of Trading Practices and Processing oversees the Division’s work under Regulation SHO and other rules related to short selling and market manipulation. The Office also oversees the Division’s clearance and settlement program, as well as its enforcement liaison function.
“Brian’s keen legal analysis is matched only by his total dedication to the Commission’s mission,” said James Brigagliano, Co-Acting Director of the Division of Trading and Markets. “Investors will benefit from Brian’s new role in a key leadership position in the Division of Trading and Markets.”
Mr. Bussey said, “I look forward to working with my colleagues in the Division and throughout the Commission to protect investors and maintain fair, orderly, and efficient markets during this time of significant challenges and opportunities.”
Mr. Bussey has served as Assistant Chief Counsel in the Division of Trading and Markets since 2003. From 2001 to 2003, he served as counsel to former SEC chairmen William Donaldson and Harvey Pitt and former Acting Chairman Laura Unger. He came to the SEC in 1998, first working as Senior Counsel in the Office of General Counsel and then as Special Counsel in the Office of Chief Counsel in the Division of Trading and Markets.
Mr. Bussey has received numerous awards during his 10 years at the SEC, including most recently the Chairman’s Award for Excellence for his efforts to promote the use of central counterparties to clear transactions in credit default swaps. He also has received the Jay Manning Award, the Arthur F. Mathews Award, three Law and Policy Awards for representing the Commission on a variety of legislative matters, and the Supervisory Excellence Award.
Prior to joining the Commission, Mr. Bussey was a corporate associate at Kirkland & Ellis in Chicago. Mr. Bussey began his legal career in 1995 as a law clerk to Judge E. Grady Jolly, U.S. Court of Appeals for the Fifth Circuit.Mr. Bussey received his J.D. from the University of Chicago Law School and his B.A. from Pomona College. (Press Rel. 2009-206)
Securities and Exchange Commission Suspends Trading in the Securities of Twelve Issuers for Failure to Make Required Periodic Filings
The U.S. Securities and Exchange Commission announced the temporary suspension of trading in the securities of the following issuers, commencing at 9:30 a.m. EDT on Sept. 24, 2009, and terminating at 11:59 p.m. EDT on Oct. 7, 2009.
The Commission temporarily suspended trading in the securities of these twelve issuers due to a lack of current and accurate information about the companies because they have not filed periodic reports with the Commission in over two years. This order was entered pursuant to Section 12(k) of the Securities Exchange Act of 1934 (Exchange Act).
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 these companies.
Brokers and dealers should be alert to the fact that, pursuant to Exchange Act Rule 15c2-11, at the termination of the trading suspensions, no quotation may be entered relating to the securities of the subject companies unless and until the broker or dealer has strictly complied with all of the provisions of the rule. If any broker or dealer is uncertain as to what is required by the rule, it should refrain from entering quotations relating to the securities of these companies that have been subject to a trading suspension until such time as it has familiarized itself with the rule and is certain that all of its provisions have been met. Any broker or dealer with questions regarding the rule should contact the staff of the Securities and Exchange Commission in Washington, DC at (202) 551-5720. 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 communicate it to the Delinquent Filings Branch of the Division of Enforcement at (202) 551-5466, or by e-mail at DelinquentFilings@sec.gov. (Rel. 34-60713)
Commission Orders Hearings on Registration Suspension or Revocation Against Thirteen Companies for Failure to Make Required Periodic FilingsIn conjunction with today's trading suspension, the Commission today also instituted public administrative proceedings to determine whether to revoke or suspend for a period not exceeding twelve months the registration of each class of the securities of thirteen companies for failure to make required periodic filings with the Commission:
In this Order, the Division of Enforcement (Division) alleges that the thirteen 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 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. 34-60714; File No. 3-13624)
In the Matter of in Frederick J. Barton
An Administrative Law Judge issued an Initial Decision in Frederick J. Barton (Barton), Admin. Proc. 3-13548 (Sept. 24, 2009), in which she found that Barton and companies he controlled had been enjoined from any future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act), Exchange Act Rules 10b-5 and 10b-9, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. Barton was found to have made fraudulent transfers from the account of a client suffering from Alzheimer's disease that caused the account to go from $1.3 million to $95. Barton was ordered to: (1) disgorge $3,170,000, of which about $1.7 million is joint and several with companies Barton controlled; (2) pay prejudgment interest of $945,111, of which about $373,000 is joint and several with companies Barton controlled; and (3) pay a civil penalty of $120,000. The court found that Barton did not have the ability to pay a fine and cost of incarceration.
In a criminal action based on the same facts, Barton was sentenced to seventy-eight months incarceration and ordered to pay $878,100 in restitution to twelve people and to serve three years of supervised release. The State of Georgia ordered Barton to cease and desist all offers for sale and sales of securities in violation of the Georgia Securities Act of 1973, as amended, and permanently barred him from associating with a registered dealer, limited dealer, or investment adviser in Georgia.
Based on these findings, the Administrative Law Judge, barred Barton from association with any broker, dealer, or investment adviser. (Initial Decision No. 388; File No. 3-13548)
SEC Files Settled Regulation FD Charges Against Former Chief Financial Officer
On September 24, the Securities and Exchange Commission filed a civil action against Christopher A. Black (Black), the former chief financial officer of American Commercial Lines, Inc. (ACL), a Delaware marine transportation and manufacturing company headquartered in Jeffersonville, Indiana. In its complaint, the Commission alleges that Black aided and abetted ACL's violation of Regulation FD and Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act). The complaint further alleges that Black, while acting in his capacity as the company's designated investor relations contact and without informing anyone at ACL, selectively disclosed material, nonpublic information regarding ACL's second quarter 2007 earnings forecast to a limited number of analysts without simultaneously making that information available to the public. More specifically, the complaint alleged that on Monday, June 11, 2007, ACL issued a press release projecting second quarter earnings in line with ACL's first quarter earnings of approximately $.20 per share. The complaint further alleges that on Saturday, June 16, 2007, Black sent an e-mail from his home to the eight sell-side analysts who covered the company. In addition, the complaint alleges that Black's e-mail stated that ACL's earnings per share for the second quarter "will likely be in the neighborhood of about a dime below that of the first quarter," effectively cutting in half ACL's second quarter earnings guidance. The complaint also alleged that Black's selective disclosure and resulting analysts' reports triggered a significant drop in ACL's stock price. Lastly, the complaint alleged that on Monday, June 18, the first trading day after Black's e-mail to analysts, ACL's stock price dropped 9.7% on unusually heavy volume.
Without admitting or denying the allegations in the complaint, Black consented to the entry of a final judgment requiring him to pay a $25,000 penalty.
Black also consented to the entry of an order in a follow-on administrative proceeding directing him to cease and desist from violating Regulation FD and Section 13(a) of the Securities Exchange Act of 1934.
In determining not to bring an enforcement action against ACL, the Commission considered several factors. Prior to the June 16, 2007 disclosure by Black, ACL cultivated an environment of compliance by providing training regarding the requirements of Regulation FD and by adopting policies that implemented controls to prevent violations. Further, Black alone was responsible for the violation and he acted outside the control systems established by ACL to prevent improper disclosures. Moreover, once the illegal disclosure was discovered by ACL, it promptly and publicly disclosed the information by filing a Form 8-K with the Commission the same day. In addition, ACL self-reported the conduct to the staff the day after it was discovered and the company provided extraordinary cooperation with the staff's investigation. Finally, the company took remedial measures to address the improper conduct, including the adoption of additional controls to prevent such conduct in the future. (Rel. 34-60715; File No. 3-13625)
SEC Sues Air Travel Company, its President and Others Involved in Pump and Dump Scheme
The Securities and Exchange Commission announced today that on Sept. 18, 2009, it sued several individuals and entities, including ConnectAJet.com, Inc., its president and chief executive officer, Martin Cantu, Cantu's father Martin M. Cantu, registered representative Stephen Fayette, and stock promoter Timothy Page. The SEC alleged that the defendants implemented a scheme to funnel ConnectAJet.com, Inc. shares into the public market at great profit to themselves when no registration statement was filed or in effect.
According to the complaint, ConnectAJet.com, Inc., of Austin, Texas, issued 30 million shares of stock in an illegal, unregistered offering to certain penny stock promoters, including Testre LP and Verona Funds LLC, companies owned and controlled by Page, a resident of Malibu, California. To pump up demand for the stock, Cantu and ConnectAJet.com, Inc. launched a nationwide advertising campaign, issued false press releases and published misleading web content. The complaint further alleges that the press releases falsely stated that ConnectAJet.com. Inc. had created a real-time, online booking system for private jet travel. Testre LP, Verona Funds LLC, and an entity owned by Martin M. Cantu, Firenze Funds, LLC, then allegedly sold their stock into the public market at grossly inflated prices for millions of dollars in profits. Fayette, of Sarasota, Florida, allegedly facilitated the scheme by liquidating ConnectAJet.com, Inc. shares on behalf of multiple clients.
The SEC alleges that by the above-mentioned conduct, the defendants violated the registration provisions of the Securities laws, Section 5 of the Securities Act of 1933. In addition, the SEC alleges that Cantu and ConnectAJet.com, Inc. committed securities fraud, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The SEC is seeking permanent injunctions, civil penalties, disgorgement of ill-gotten gains and penny stock bars. Additionally, the complaint seeks an officer and director bar against Cantu, and the return of "ill-gotten gains" from four relief defendants: John Coutris and Edward Spahiu, of Texas, and Reagan Rowland and Rodney Rowland of Los Angeles, California. Timothy Page is a defendant in two other actions filed by the SEC: Securities and Exchange Commission v. Offill, et al. No. 3:07cv-1643-D and SEC v. Reynolds, et al., No. 3:08-cv-01687-M, both in the U.S. District Court for the Northern District of Texas. John Coutris is a defendant in one other SEC action: SEC v. The Regency Group, et al., No. 09-cv-00497, in the U.S. District Court for the District of Colorado. [SEC v. ConnectAJet.com, Inc., et al., Case No. 3-09 CV-01742-B (N.D. Tex.)] (LR-21220)
SEC Charges Perot Company Employee in $8.6 Million Insider Trading Scheme
On September 23, the Commission filed a civil action in the U.S. District Court for the Northern District of Texas charging Reza Saleh of Richardson, Texas with insider trading around the public announcement of Dell Inc.'s tender offer for Perot Systems earlier this week. In the SEC's complaint, the SEC alleges that Saleh made increasingly large purchases of Perot Systems call options contracts based on material, non-public information that he learned in the course of his employment with, or duties for, two Perot-related private companies and Perot Systems. Immediately following the tender offer announcement on Monday, September 21, Saleh sold all of the call option contracts in the accounts and reaped approximately $8.6 million in illicit profits.
The SEC's complaint alleges that Saleh violated Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder. The SEC has sought an emergency asset freeze, a preliminary injunction and a final judgment permanently enjoining Saleh from future violations of these provisions of the federal securities laws and ordering him to pay financial penalties and disgorgement of ill-gotten gains with prejudgment interest. The SEC's complaint also names Amir Saleh of Richardson, Texas, as a relief defendant, in order to recover trading profits he received as a co-account holder on one of Reza Saleh's brokerage accounts. [SEC v. Reza Saleh and Amir Saleh, Case No. 3:09-cv-01778-M (BMGL) (N.D. Tx.)] (LR-21221)
INVESTMENT COMPANY ACT RELEASES
Arrow Investment Advisers, LLC, et al.
An order has been issued on an application filed by Arrow Investment Advisers, LLC, et al. The order permits (a) certain open-end management investment companies and their series to issue shares (Shares) redeemable in large aggregations (Creation Unit Aggregations) only; (b) secondary market transactions in Shares to occur at negotiated prices; (c) certain series to pay redemption proceeds, under certain circumstances, more than seven days after the tender of Shares for redemption; (d) certain affiliated persons of the series to deposit securities into, and receive securities from, the series in connection with the purchase and redemption of Creation Unit Aggregations; and (e) certain registered management investment companies and unit investment trusts outside of the same group of investment companies as the series to acquire Shares. (Rel. IC-28910 - September 22)
Orders of Deregistration Under the Investment Company ActOrders have been issued under Section 8(f) of the Investment Company Act declaring that each of the following has ceased to be an investment company:
Accelerated Approval of Proposed Rule Change
The Commission published notice of filing of Amendment No. 1 and granted accelerated approval to a proposed rule change submitted by NYSE Arca relating to NYSE Arca Equities Rule 7.10 governing clearly erroneous executions (SR-NYSEArca-2009-36) as modified by Amendment No. 1 pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of September 21. (Rel. 34-60709)
Approval of Proposed Rule Change
A proposed rule change, as modified by Amendment Nos. 1 and 3 thereto, (SR-NYSEArca-2009-44), filed by NYSE Arca to amend NYSE Arca Rule 6.72 and expand the Penny Pilot Program has been partially approved on an accelerated basis pursuant to Section 19(b)(2) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of September 21. (Rel. 34-60711)
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