In the Matter of Philip G. Barry
On Oct. 16, 2009, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 203(f) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions (Order) against Philip G. Barry (Barry).
The Order finds that Barry acted as an unregistered investment adviser who operated Leverage Group, Leverage Option Management Co., Inc. and North American Financial Services, which in turn purported to operate investment funds. On Sept. 8, 2009, the Commission filed suit against Barry based in part on admissions Barry made directly to the Commission's staff. The Commission's complaint alleged, among other things, that, after raising at least $40 million from approximately 800 investors, Barry misappropriated investors' money for his personal use, made misrepresentations to investors concerning their investment performance and the risks associated with their investments, and prepared and issued phony account statements to investors that purportedly showed lofty, but false, investment returns. On Sept. 23, 2009, the District Court for the Eastern District of New York ordered that the Consent of Philip G. Barry to settle the Commission's complaint be approved. The Court's Order permanently enjoins Barry from future violations of Sections 17(a)(1), 17(a)(2), and 17(a)(3) 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.
Based on the above, the Order bars Barry from association with any investment adviser. Barry consented to the issuance of the Order without admitting or denying any of the findings contained in the Order. (Rel. IA-2937; File No. 3-13654)
In the Matter of Theodore W. Urban
On Oct. 19, 2009, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Section 203(f) of the Investment Advisers Act of 1940 against Theodore W. Urban.
In the Order, the Division of Enforcement alleges that Urban was the General Counsel and a member of the Board of Directors and Credit Committee of Ferris Baker Watts, Inc. (Ferris), a registered broker-dealer and investment adviser. The Division of Enforcement also alleges that from at least August 2002 through November 2005, Ferris registered representative Stephen J. Glantz (Glantz), David A. Dadante (Dadante), who was one of Glantz's customers, and a registered representative at another brokerage firm, all participated in a scheme to manipulate the market for the stock of Innotrac Corp. (Innotrac). The Division of Enforcement further alleges that all three pled guilty to violations of Section 10(b) of the Securities Exchange Act of 1934 and in their plea agreements, they all admitted that they artificially inflated and maintained the price for Innotrac stock. The Division of Enforcement further alleges that, acting in concert, Glantz, Dadante, and the other registered representative employed a variety of manipulative trading practices, including marking the closing price for Innotrac stock, engaging in matched and wash trades, and attempting to artificially create downbids to suppress short selling of Innotrac. Division of Enforcement further alleges that to perpetrate the manipulative scheme, and to generate income for himself, Glantz also engaged in unauthorized and unsuitable trading in Innotrac and certain other securities in the accounts of his customers.
The Division of Enforcement alleges that Urban had the requisite degree of responsibility, ability or authority at Ferris to affect the conduct of Glantz and, thus, was a supervisor of Glantz. The Division of Enforcement alleges that Urban failed to respond reasonably to red flags regarding Glantz's misconduct and lack of supervision, including, among others, those raised in a May 23, 2003 Ferris Compliance Department memorandum and in numerous communications from Compliance Department and other Ferris personnel. As a result of this conduct, the Division of Enforcement alleges that Urban failed reasonably to supervise Glantz with a view to detecting and preventing Glantz's violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide Urban an opportunity to establish any defense to these allegations, and to determine what, if any, remedial action is appropriate in the public interest against Urban. The Order directs the administrative law judge to issue an initial decision within 300 days from the date of service of the Order. (Rels. 34-60837, IA-2938; File No. 3-13655)
Delinquent Filers' Stock Registrations Revoked
The registrations of the registered securities of National Venture Capital Fund, Inc., Nationsmart Corp., Nationwide Capital Corp., NeoStar Retail Group, Inc., Nesco, Inc., Netship Fulfillment, Inc., and Nexiq Technologies, Inc. (f/k/a WPI Termiflex, Inc.), have been revoked. Each had repeatedly failed to file required annual and quarterly reports with the Securities and Exchange Commission. Thus, each violated a crucial provision of the federal securities laws that requires public corporations to publicly disclose current, accurate financial information so that investors may make informed decisions. The revocations were ordered in an administrative proceeding before an administrative law judge. (Rel. 34-60838; File No. 3-13632)
Immediate Effectiveness of Proposed Rule Change
A proposed rule change filed by the International Securities Exchange to adopt a fee for ISE market maker orders sent to the Exchange by Electronic Access Members (SR-ISE-2009-76) 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 19. (Rel. 34-60817)
Approval of Proposed Rule Changes
The Commission approved a proposed rule change (SR-BX-2009-048) submitted by NASDAQ OMX BX pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 to amend the Grandfathered Rules of the Exchange. Publication is expected in the Federal Register during the week of October 19. (Rel. 34-60818)
The Commission approved a proposed rule change (SR-NYSEArca-2009-77) submitted by NYSE Arca pursuant to Rule 19b-4 under the Securities Exchange Act of 1934, amending NYSE Arca Options Rule 5.3(j). Publication is expected in the Federal Register during the week of October 19. (Rel. 34-60822)
The Commission approved a proposed rule change (SR-NYSEAmex-2009-59) submitted by NYSE Amex pursuant to Rule 19b-4 under the Securities Exchange Act of 1934, amending NYSE Amex Options Rule 915. Publication is expected in the Federal Register during the week of October 19. (Rel. 34-60823)
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