SEC News Digest
Issue 2009-249
December 31, 2009
COMMISSION ANNOUNCEMENTS
Commission Meetings
Closed Meeting — Thursday, January 7, 2010 — 2:00 p.m.
The subject matter of the Closed Meeting scheduled for Thursday, January 7, will be: institution and settlement of injunctive actions; institution and settlement of administrative proceedings; a litigation matter; and other matters relating 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 Stephen C. Gingrich (CPA)
On December 30, the Securities and Exchange 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 Stephen C. Gingrich. The Order finds that Gingrich, age 41, possesses a certificate of certified public accountant and that his license to practice has voluntarily been on inactive status since April 2002. Gingrich has been employed by Home Solutions of America, Inc. (HSOA) since July 2006. From July 2006 through July 2008, he also served as controller of HSOA’s subsidiary Fireline Restoration, Inc. (Fireline).
The Order further finds that, on Dec. 10, 2009, a final judgment by consent was entered against Gingrich by the United States District Court for the Northern District of Texas in SEC v. Home Solutions of America, Inc., et al., Civil Action Number 3:09-CV-02269-N (N.D. Tex). The final judgment permanently enjoins him from future violations of Sections 17(a)(2) and (3) of the Securities Act of 1933 and from aiding and abetting violations of Sections 13(a) and 13(b)(2)(A) of the Securities Exchange Act of 1934 and Rules 12b-20, 13a-1, and 13a-13 thereunder. Gingrich was also ordered to pay a $25,000 civil monetary penalty.
The Commission’s complaint alleged, among other things, that Gingrich instructed Fireline employees to sign documents that materially misrepresented the progress of certain construction projects and that Gingrich provided those documents to HSOA’s auditor. The complaint further alleged that, at the direction of HSOA’s chief financial officer, Gingrich made accounting entries on Fireline’s books that materially misrepresented HSOA’s revenues.
Based on the above, the Order suspends Gingrich from appearing or practicing before the Commission as an accountant, with the right to apply for reinstatement after three years from the date of the Order. Gingrich consented to the issuance of the Order without admitting or denying any of the findings in the order, except as to the entry of the injunction, which he admitted. (Rels. 34-61262; AAER-3092; File No. 3-13732)
In the Matter of UTStarcom, Inc.
The Securities and Exchange Commission today charged Alameda, Calif.-based telecommunications company UTStarcom, Inc. with violations of the Foreign Corrupt Practices Act (FCPA) for authorizing unlawful payments to foreign government officials in Asia.
UTStarcom agreed to settle the SEC’s charges and pay a $1.5 million penalty among other remedies. In a related criminal case, the U.S. Department of Justice announced today that UTStarcom agreed to pay an additional $1.5 million fine.
The SEC’s complaint, filed in the U.S. District Court for the Northern District of California, alleges that UTStarcom’s wholly-owned subsidiary in China paid nearly $7 million between 2002 and 2007 for hundreds of overseas trips by employees of Chinese government-controlled telecommunications companies that were customers of UTStarcom, purportedly to provide customer training. In reality, the trips were entirely or primarily for sightseeing.
The SEC further alleges that UTStarcom provided lavish gifts and all-expenses paid executive training programs in the U.S. for existing and potential foreign government customers in China and Thailand. UTStarcom also purported to hire individuals affiliated with foreign government customers to work in the U.S. and provided them with work visas, when in reality the individuals did no work for UTStarcom. According to the SEC, UTStarcom also made improper payments to sham consultants in China and Mongolia while knowing that they would pay bribes to foreign government officials.
The SEC’s complaint charges UTStarcom with violations of the anti-bribery, books and records, and internal controls provisions of the FCPA, Sections 30A, 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934, respectively. UTStarcom agreed, without admitting or denying the charges, to the entry of a permanent injunction against FCPA violations and to provide the SEC with annual FCPA compliance reports and certifications for four years, in addition to paying the $1.5 million penalty.
The SEC acknowledges the assistance of the Department of Justice during the investigation. [SEC v. UTStarcom, Inc., Case No. CV-09-6094 (JSW) (N.D. Cal. filed Dec. 31, 2009)] (LR-21357) (Press Rel. 2009-277)
INVESTMENT COMPANY ACT RELEASES
PNC Bank, National Association
An order has been issued on an application filed by PNC Bank, National Association (PNC Bank) under Section 6(c) of the Investment Company Act for an exemption from Section 18(f)(1) of the Act. The order permits registered open-end management investment companies to participate as borrowers in loan facilities to be administered by PNC Bank. (Rel. IC-29100 - December 29)
SELF-REGULATORY ORGANIZATIONS
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed by the Chicago Board Options Exchange (SR-CBOE-2009-097) to adopt reserve orders has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication of the notice is expected in the Federal Register during the week of December 28. (Rel. 34-61248)
A proposed rule change (SR-Phlx-2009-107) filed by NASDAQ OMX PHLX to eliminate the National Best Bid or Offer protection feature of its automated complex order program has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication of the proposal is expected in the Federal Register during the week of December 28. (Rel. 34-61258)
Proposed Rule Change
The Financial Industry Regulatory Authority has filed a proposed rule change (SR-FINRA-2009-081) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 to adopt FINRA Rule 2261 (Disclosure of Financial Condition) in the Consolidated FINRA Rulebook. Publication in expected in the Federal Register during the week of December 28. (Rel. 34-61253)
Approval of Proposed Rule Changes
The Commission approved a proposed rule change submitted by New York Stock Exchange (SR-NYSE-2009-116) to increase the ceiling on its equity ownership interest in BIDS Holdings L.P. to less than 10%. Publication is expected in the Federal Register during the week of December 28. (Rel. 34-61257)
The Commission approved a proposed rule change (SR-CBOE-2009-025), as modified by Amendment No. 1, submitted pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 and Rule 19b-4 thereunder by the Chicago Board Options Exchange related to the Simple Auction Liaison (SAL). Publication in the Federal Register is expected during the week of December 28. (Rel. 34-61259)
SECURITIES ACT REGISTRATIONS
RECENT 8K FILINGS
http://www.sec.gov/news/digest/2009/dig123109.htm
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