SEC News Digest

ENFORCEMENT PROCEEDINGS

In the Matter of M.G. Products, Inc.

An Administrative Law Judge has issued an Order Making Findings and Revoking Registrations by Default (Default Order) in M.G. Products, Inc., Administrative Proceeding No. 3-13660. The Order Instituting Proceedings (OIP) alleged that eight 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. It revokes the registrations of each class of registered securities of M.G. Products, Inc., Masstor Systems Corp., Matrix Concepts, Inc. (n/k/a Global Media Group Holdings, Inc.), MCB Financial Corp., Media888, Inc. (f/k/a DIT Ventures, Inc.), Medical Properties, Inc., Medtrak Electronics, Inc., and Metro Display Advertising, Inc., pursuant to Section 12(j) of the Securities Exchange Act of 1934. (Rel. 34-61082; File No. 3-13660)

Commission Revokes Registration of Securities of MBC Holding Co. for Failure to Make Required Periodic Filings

On Dec. 2, 2009, the Commission revoked the registration of each class of registered securities of MBC Holding Co. (MBC Holding) for failure to make required periodic filings with the Commission.

Without admitting or denying the findings in the Order, except as to jurisdiction, which it admitted, MBC Holding consented to the entry of an Order Making Findings and Revoking Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of 1934 as to Meisenheimer Capital, Inc. finding that it had failed to comply with Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 13a-1 and 13a-13 thereunder and revoking the registration of each class of MBC Holding's securities pursuant to Section 12(j) of the Exchange Act. This order settled the charges brought against MBC Holding in In the Matter of Masterpiece Technology Group, et al., Administrative Proceeding File No. 3-13680.

Brokers and dealers should be alert to the fact that Exchange Act Section 12(j) provides, in pertinent part, as follows:

No member of a national securities exchange, broker, or dealer shall make use of the mails or any means or instrumentality of interstate commerce to effect any transaction in, or to induce the purchase or sale of, any security the registration of which has been and is suspended or revoked . . . .

For further information see Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934, In the Matter of Masterpiece Technology Group, et al., Administrative Proceeding File No. 3-13680, Exchange Act Release No. 60972 (Nov. 9, 2009). (Rel. 34-61092; File No. 3-13680)

SEC Charges Whitney Lund with Securities Fraud, Unregistered Stock Distribution and Aiding and Abetting Transfer Agent Regulations

On Nov. 30, 2009, the Securities and Exchange Commission filed a civil injunctive action in the U.S. District Court for the District of Utah against Whitney D. Lund, Sr. and Standard Transfer & Trust, a registered transfer agent. In its Complaint, the SEC charges Lund with abusing the gate-keeping responsibility he had as president of Standard Transfer & Trust by improperly distributing restricted stock certificates of Mosaic Nutraceuticals Corp. after fraudulently issuing the certificates without the proper restrictive legends. He did this as part of a scheme to profit from the sale of Mosaic shares he owned and controlled, and, as a result of his actions, market participants were misled into treating these restricted securities as free trading. To cover his scheme and reap more than $700,000 in illicit profits, according to the Complaint, Lund falsified transfer agent records and obtained a materially false and misleading attorney opinion letter that was backdated at Lund's direction in an effort to make his distribution of Mosaic stock appear legitimate. In addition, according to the Complaint, Lund testified falsely during the SEC's investigation, claiming that he relied on this opinion letter when he made the distribution. The Complaint further charges Standard Transfer & Trust from violating multiple regulations governing the conduct of transfer agents and Lund with aiding and abetting those violations.

The Complaint alleges that Lund violated Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 (Exchange Act), and Sections 17(a), 5(a), and 5(c) of Securities Act of 1933 (Securities Act). The Complaint also alleges that Standard Transfer & Trust violated Sections 17(a)(3), 17A(c)(2) and 17A(d)(1) of the Exchange Act and Rules 17Ac2-1, 17Ac2-2, 17Ad-2, 17Ad-3, 17Ad-6, 17Ad-10, 17Ad-12, 17Ad-13, 17Ad-17, 17Ad-19 and 17f-1 thereunder and that, through his actions, Lund aided and abetted these violations. The Complaint requests that the court permanently enjoin the defendants from future violations of the federal securities laws, order the defendants to pay financial penalties, and order Lund to disgorge ill-gotten gains, plus prejudgment interest. The complaint also asks the court to bar Lund from participating in an offering of penny stock. [SEC v. Whitney D. Lund, Sr. and Standard Transfer & Trust Co., Civil Action No. 2:09-CV-1050 (D. Utah.)] (LR-21317)

Court Enters Default Judgment Against Anticevic in Widespread Insider Trading Scheme

On Nov. 30, 2009, the Honorable Kimba M. Wood, United States District Judge for the Southern District of New York, entered a default judgment against defendant Sonja Anticevic in an action filed in 2005 by the Commission, charging 17 defendants with collectively engaging in a widespread and brazen insider trading scheme, which netted almost $7 million in illicit gains, through trading in at least 26 stocks. Judge Wood ordered that Anticevic be permanently enjoined from future violations of the federal securities laws, and found Anticevic liable to pay disgorgement of $2,056,055.15, prejudgment interest of $578,223.25, and civil penalties of $3,084,082.73 (representing one-and-a-half times Anticevic's ill-gotten gains).

As alleged in the Fourth Amended Complaint, Anticevic, a retired seamstress who lives in Croatia, is the aunt of co-defendant, David Pajcin, one of the ringleaders of three insider trading schemes. Anticevic gave Pajcin permission to execute trades through two domestic brokerage accounts held in her name, and Pajcin repeatedly did so, while promising Anticevic proceeds from his trading in exchange for use of the accounts.

Judge Wood found that Anticevic failed to answer the original Complaint, as well as the Second and Third Amended Complaints. Although Anticevic's counsel filed an answer to the Fourth Amended Complaint, he represented to the Court that he had not been able to contact his client for some time. Judge Wood subsequently granted counsel's request to be relieved as Anticevic's counsel and ordered Anticevic to have a new attorney file a notice of appearance on her behalf by Aug. 31, 2009, noting that in the event she failed to do so, the Court could enter a default judgment. After Anticevic failed to do so, the Court entered the default judgment.

For further information, see Litigation Release No. 19327 (Aug. 5, 2005), Litigation Release No. 19340 (Aug. 19, 2005), Litigation Release No. 19374 (Sept. 14, 2005), Litigation Release No. 19775 (July 26, 2006), Litigation Release No. 19696 (May 11, 2006), Litigation Release No. 19650 (April 11, 2006), Litigation Release No. 19966 (Jan. 12, 2007), Litigation Release No. 20607 (June 2, 2008), Litigation Release No. 20976 (March 27, 2009). [SEC v. Sonja Anticevic, et al., 05 Civ. 6991 (KMW) (S.D.N.Y.)] (LR-21318)

Mark Lefkowitz and Compass Capital Group to Pay $800,000 in Settlement of SEC Charges of Conducting an Unlawful Public Offering, Aiding and Abetting Securities Fraud, Acting as Unregistered Broker Dealer, and Failing to Report Holdings

The Commission today announced that the U.S. District Court for the District of Nevada has entered a final judgment against Mark A. Lefkowitz and Compass Capital Group, Inc., two defendants in the Commission's pending civil action concerning an unlawful offering of unregistered stock by 21st Century Technologies, Inc. Without admitting or denying the allegations of the Commission's complaint, Lefkowitz and Compass Capital consented to the entry of permanent injunctions and penny stock bars, and to pay disgorgement of $750,000 of illicit trading profits and a civil penalty of $50,000.

The Commission's complaint alleged that Lefkowitz and Compass Capital, an entity that he controls, aided and abetted a scheme to defraud investors of 21st Century, by engaging in a public offering of millions of shares of 21st Century's common stock while posing as a Wall Street financing source for the company. Investors were not told that 21st Century, a now-defunct business development company, had sold to Lefkowitz and Compass Capital, and entities introduced by them, millions of shares of its stock in unregistered transactions, at a discount to market prices, and that the defendants and the other entities immediately resold the shares to public market investors for almost-guaranteed profits. By acting as statutory underwriters of 21st Century's unregistered offering, Lefkowitz and Compass Capital also violated the securities registration provisions of the federal securities laws, and acted as unregistered broker dealers by inducing others to purchase the shares. The complaint also alleged that Lefkowitz and Compass Capital failed to report their ownership of more than five percent of the outstanding shares of 21st Century in 2003 and 2004.

The final judgment enjoins Lefkowitz and Compass Capital from violating Sections 5(a) and 5(c) of the Securities Act of 1933, Sections 10(b), 13(d), and 15(a) of the Securities Exchange Act of 1934, and Rules 10b-5 and 13d-1 thereunder. Lefkowitz and Compass Capital were ordered to disgorge $750,000 of trading profits, are barred from participating in any offering of penny stock for a period of five years. Additionally, Lefkowitz was ordered to pay a civil money penalty in the amount of $50,000. The Commission's litigation against the one remaining defendant, John Hopf, is ongoing. For further information, please see LR-20695 (Aug. 28, 2008) and LR-20525 (April 10, 2008). [SEC v. Compass Capital Group, Inc., Mark A. Lefkowitz, Alvin L. Dahl, John R. Dumble, John C. Hopf, Kevin D. Romney, and Shane H. Traveller, Case No. 2:08-CV-00457-ECR-PAL (USDC, D. Nev.)] (LR-21319)

SEC Obtains Preliminary Injunction in Affinity Fraud Case Targeting the Somali Community

The Securities and Exchange Commission announced that it obtained a preliminary injunction in an affinity fraud case targeting investors in the Somali immigrant community. On Nov. 30, 2009, the United States District Court for the Southern District of California entered a preliminary injunction against Mohamud A. Ahmed (Ahmed), age 45, of Spring Valley, Calif., who perpetrated the fraud through his company, Shidaal Express, Inc. (Shidaal Express), which operated in the San Diego area. The preliminary injunction enjoins Ahmed and Shidaal Express from violating the antifraud provisions of the federal securities laws and the Court granted additional relief sought by the Commission including orders freezing the assets of Ahmed and Shidaal Express, and appointing Thomas Hebrank as permanent receiver over Shidaal Express.

The Commission's complaint, filed November 19, alleged that Ahmed raised at least $3 million from more than 40 investors in the Somali community by promising guaranteed returns of 5% per month, or 60% annually, and promised investors they could get their money back anytime. The Commission alleged that although Ahmed initially paid investors monthly returns, the payments eventually stopped. The Commission charged Ahmed and Shidaal Express with committing securities fraud by making false and misleading statements to persuade people to invest.

The Commission's complaint charges defendants with violating the antifraud provisions, 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, of the federal securities laws. In addition to the relief already obtained, the Commission's complaint seeks permanent injunctions, disgorgement, prejudgment interest, and financial penalties against Ahmed and Shidaal Express.

The Commission acknowledges the assistance of the California Department of Financial Institutions, the Federal Bureau of Investigation, and the U.S. Attorney's Office for the Southern District of California. [SEC v. Shidaal Express, Inc. and Mohamud Abdi Ahmed, United States District Court for the Southern District of California, Case No. 09 CV 2610 JM (POR)] (LR-21320)

SELF-REGULATORY ORGANIZATIONS

Immediate Effectiveness of Proposed Rule Changes

A proposed rule change (SR-NASDAQ-2009-100) filed by The NASDAQ Stock Market to modify pricing for NASDAQ's Portal Reference Database 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 December 7. (Rel. 34-61070)

A proposed rule change filed by NASDAQ OMX BX to clarify the definition of material changes in business operations found in the membership rules and to make a technical correction (SR-BX-2009-075) 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 December 7. (Rel. 34-61073)

A proposed rule change filed by The NASDAQ Stock Market to clarify the definition of material changes in business operations found in the membership rules and to make a technical correction (SR-NASDAQ-2009-102) 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 December 7. (Rel. 34-61074)

A proposed rule change filed by the New York Stock Exchange (SR-NYSE-2009-119) to extend the operation of its Supplemental Liquidity Providers pilot program 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 December 7. (Rel. 34-61075)

Approval of Proposed Rule Changes

The Commission approved a proposed rule change (SR-FINRA-2009-067) submitted by the Financial Industry Regulatory Authority to adopt FINRA Rules 2060 (Use of Information Obtained in Fiduciary Capacity) and 5290 (Order Entry and Execution Practices) in the consolidated FINRA rulebook. Publication is expected in the Federal Register during the week of December 7. (Rel. 34-61071)

The Commission approved a proposed rule change submitted by the Financial Industry Regulatory Authority relating to FINRA's rules governing clearly erroneous executions (SR-FINRA-2009-068) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of December 7. (Rel. 34-61080)

Accelerated Approval of Proposed Rule Changes

The New York Stock Exchange filed Amendment No. 1 to a proposed rule change (SR-NYSE-2009-106) to update d-Quote functionality and provide for e-Quotes to peg to the National Best Bid or Offer, and the Commission granted accelerated approval to the proposal, as modified by Amendment No. 1. Publication is expected in the Federal Register during the week of December 7. (Rel. 34-61072)

NYSE Amex filed Amendment No. 1 to a proposed rule change (SR-NYSEAmex-2009-76) to update d-Quote functionality and provide for e-Quotes to peg to the National Best Bid or Offer, and the Commission granted accelerated approval to the proposal, as modified by Amendment No. 1. Publication is expected in the Federal Register during the week of December 7. (Rel. 34-61081)

Proposed Rule Change

The Options Clearing Corporation filed a proposed rule change (SR-OCC-2009-18) under Section 19(b)(1) of the Exchange Act that would allow members to deposit customer fully paid or excess margin securities to the extent permitted by no-action relief or interpretive guidance from the Securities and Exchange Commission or interpretive guidance from a self-regulatory organization. Publication is expected in the Federal Register during the week of December 7. (Rel. 34-61078)

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http://www.sec.gov/news/digest/2009/dig120209.htm