RULES AND RELATED MATTERS
Credit Ratings and Rating Shopping Disclosure
The Commission is proposing amendments to Regulation S-K, and rules and forms under the Securities Act of 1933 (Securities Act), the Securities Exchange Act of 1934 and the Investment Company Act of 1940 to require disclosure regarding credit ratings that a registrant uses in connection with a registered offering. The full text of the release proposing the rule and form amendments is available on the SEC website. (Rels. 33-9070; 34-60797; IC-28942; File No. S7-20-09)
The Commission is issuing a concept release and soliciting comment on whether the Commission should propose to rescind Rule 436(g) under the Securities Act, in light of the disclosure regarding credit ratings being proposed in a companion release. The full text of the concept release is available on the SEC website. (Rels. 33-9071; 34-60798; IC-28943; File No. S7-21-09)
In the Matter of Keevin H. Leonard
An Administrative Law Judge has issued an Order Making Findings and Imposing Remedial Sanction by Default as to Respondent Keevin H. Leonard (Default Order) in Administrative Proceeding No. 3-13512, Keevin H. Leonard. The Order Instituting Proceedings (OIP) alleged that, on April 22, 2009, Leonard was found guilty of one count of conspiracy to commit securities fraud, a felony, in the U.S. District Court for the Eastern District of New York.
The Default Order finds the allegation to be true. It concludes that, pursuant to Section 15(b) of the Securities Exchange Act of 1934, it is in the public interest to bar Keevin H. Leonard from association with any broker or dealer.
The Securities and Exchange Commission previously accepted the settlement offer of Robert F. Malin, the other Respondent named in the OIP. (Rel. 34-60795; File No. 3-13512)
Former Executive of Massachusetts Public Company Sentenced to Three Years for Lying and Obstructing Justice in an SEC Action
The Commission announced today that on Oct. 5, 2009, Howard Richman, the former head of regulatory affairs of Biopure Corporation was sentenced to three years incarceration, three years of supervised release, a $50,000 fine, and a $100 mandatory special assessment. Richman, who was a defendant in a previously-filed Commission enforcement action, was indicted on Sept. 24, 2008 by a grand jury convened by the United States Attorney for the District of Massachusetts. He pleaded guilty on March 11, 2009 for among other things lying and obstructing justice in an SEC action against him.
According to the Indictment, from Oct. 26, 2006 through July 17, 2007, Richman represented to a federal judge that he was terminally ill with colon cancer and could not participate in an ongoing civil case that was brought against him by the Commission. The Indictment alleged that in reality, Richman did not have cancer. Rather, according to the Indictment, he falsely claimed to be terminally ill in order to avoid discovery and a scheduled trial in the SEC's case against him and to obtain a favorable settlement. The Indictment alleged that, to perpetuate his lie, Richman provided the Court with false affidavits and fabricated letters from a physician.
Previously, in September 2005, the Commission filed an enforcement action against Biopure, Richman and three other executives alleging that beginning in April 2003, Biopure received negative information from the FDA regarding its efforts to obtain FDA approval of its synthetic blood product Hemopure but failed to disclose the information, or falsely described it as positive developments in its filings with the Commission.
After Richman's lie was revealed, the Commission reached a settlement of its case with him, and the Court entered a final judgment by consent against Richman on Aug. 6, 2008, permanently enjoining Richman from violating the antifraud and other provisions of the federal securities laws, permanently barring Richman from serving as an officer or director of any public company and ordering him to pay a $150,000 civil penalty. As a condition of his supervised release, Richman must enter into a payment plan with the Commission to pay the remainder of his $150,000 civil penalty. Biopure and three others previously settled SEC charges.
For further information, see Litigation Release No. 20947 (March 12, 2009), Litigation Release No. 20744 (Sept. 25, 2008), Litigation Release No. 20672 (Aug. 7, 2008)( SEC Settles Civil Injunctive Action with Former Executive of Massachusetts Public Company), Litigation Release No. 20010 (Feb. 21, 2007)(SEC Settles Civil Injunctive Action Against Former CEO of Biopure Corporation), Litigation Release No.19825 (Sept. 12, 2006) (SEC Settles Civil Injunctive Action Against Biopure Corporation and Its General Counsel), Litigation Release No. 19651 (April 11, 2006) (SEC Settles with Former Biopure Executive) and Litigation Release No. 19376 (Sept. 14, 2005) (Biopure and Others Charged by the Commission). [U.S. v. Howard P. Richman, Criminal Action No. 08-10282-MLW (D. Mass.); SEC v. Biopure Corporation et al., Civil Action No. 05-11853-PBS (D. Mass.)] (LR-21238)
Court Enters Permanent Injunctions Against Peter Moulinos
The Commission announced that on Oct. 6, 2009, the Honorable Nicholas G. Garaufis, United States District Judge for the Eastern District of New York entered a Final Judgment by consent against defendant Peter Moulinos. The Final Judgment enjoins Moulinos from future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The Final Judgment also orders Moulinos to pay a $50,000 civil money penalty. Moulinos consented to the entry of the Final Judgment without admitting or denying any of the allegations in the Commission's complaint. [SEC v. Syndicated Food Services International, Inc., et al., Civil Action No. 04-CV-1303 (NGG) (E.D.N.Y.)] (LR-21239)
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed by International Securities Exchange to adopt an Intermarket Sweep Order credit (SR-ISE-2009-74) 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 October 5. (Rel. 34-60791)
A proposed rule change filed by the NASDAQ Stock Market to modify potential payment amounts available under Nasdaq Rule 4626 (SR-NASDAQ-2009-084) has become 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 October 5. (Rel. 34-60794)
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