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COMMISSION ANNOUNCEMENTSReserve Primary Fund Distributes Assets to InvestorsThe Reserve Primary Fund today completed distribution of $3.4 billion in assets to investors who held shares of the fund when its net asset value fell below $1 per share in September 2008. This distribution, which follows earlier distributions, represents the bulk of the fund's remaining assets. U.S. District Court Judge Paul Gardephe in Manhattan ordered the pro rata distribution last November at the request of the Securities and Exchange Commission. "Today's distribution is the product of significant efforts by the SEC to get money back to investors as quickly and fairly as possible," said SEC Chairman Mary Schapiro. With today's distribution, investors will have recovered more than 98 cents on the dollar. "The SEC will continue to seek the return of even more assets for investors in the coming months," added Schapiro. On Sept. 15, 2008, the Reserve Primary Fund, which held $785 million in Lehman-issued securities, became illiquid when the fund was unable to meet investor requests for redemptions. The following day, the Reserve Fund declared it had "broken the buck" because its net asset value had fallen below $1 per share. On May 5, 2009, the SEC filed fraud charges against entities and individuals who operate the Reserve Fund for failing to provide key material facts to, and affirmatively misleading, investors and trustees about the impact on the fund of the bankruptcy of Lehman Brothers Holdings, Inc. More significantly, in bringing the enforcement action, the SEC sought to expedite the distribution of the fund's remaining assets to investors by proposing a plan of liquidation. The SEC is continuing to pursue those claims and will seek to designate any further financial recovery for distribution. In its complaint, the agency asked the court to enter an order compelling a pro rata distribution of remaining fund assets, $3.5 billion of which the fund had withheld from investors pending the outcome of approximately 30 lawsuits against the Reserve Fund, the trustees and other officers and directors of the Reserve entities. In November, the court adopted the SEC's proposed distribution plan. Investors can find additional information relating to the Commission's action and the Court's orders on the Commission's Web site at http://www.sec.gov/spotlight/reserve_primary_fund_investors.htm. Investors also can find additional information on the Reserve's Web site at http://ther.com. (Press Rel. 2010-16) SEC and UK FSA Hold Fifth Meeting of the SEC-FSA Strategic DialogueSecurities and Exchange Commission Chairman Mary Schapiro and UK Financial Services Authority (FSA) Chairman Adair Turner and Chief Executive Hector Sants met in London today as part of the SEC-FSA Strategic Dialogue. The purpose of the Dialogue, established in 2006, is to engage at the senior levels of the two agencies on current matters affecting the U.S. and UK capital markets and areas of future collaboration. This was the fifth meeting of the Dialogue. Some of the areas of mutual interest discussed during today's meeting included:
At the meeting, Chairman Schapiro along with Turner and Sants agreed that, given the linkages between the U.S. and UK markets, enhanced supervisory cooperation is critical to market integrity. Cooperative efforts between the staffs of the two agencies are increasing in areas such as oversight of credit rating agencies, hedge fund advisers and the clearing of OTC derivatives. To facilitate this expanding cooperation, the two agencies plan to review the existing Memorandum of Understanding Concerning Consultation, Cooperation and the Exchange of Information Related to the Supervision of Financial Services Firms and Market Oversight, entered into by the SEC and the FSA in 2006. This memorandum of understanding is designed to promote the coordination of robust and sound supervision of cross-border financial institutions and markets. Today's Dialogue meeting also provided the opportunity for the SEC and the FSA to continue discussions in the areas of corporate governance, particularly board risk oversight, and executive compensation. Consistent with the emerging international consensus, both agencies' current efforts seek to address, among other things, the intrinsic links between the types and degree of risk a regulated entity/registrant assumes and their corporate governance and compensation policies. SEC Chairman Schapiro said, "This Dialogue has proven its utility again in allowing the SEC and FSA to share expertise and experiences regarding the rapid changes occurring in our capital markets. As regulatory reform advances on both sides of the Atlantic, we can feed this combined body of knowledge into the development of high-quality regulatory systems that take into account both national and international market dynamics." FSA Chief Executive Hector Sants said, "Global cooperation between regulators is central to tackling the reform agenda and the relationship between the FSA and the SEC is key for international markets. Our ongoing dialogue gives us the opportunity to widen the areas of cooperation between the FSA and the SEC, in particular progressing our collaborative work on hedge funds and credit rating agencies." (Press Rel. 2010-17) Statement from Chairman Schapiro on Proposed Budget for SECThe following is a statement from SEC Chairman Mary L. Schapiro regarding the President's FY 2011 budget request of $1.258 billion for the SEC, which represents a 12 percent increase over its FY 2010 budget: "If enacted, the President's request will do a great deal to help us keep pace with the continuing growth of the markets and provide necessary resources to support important regulatory initiatives in 2011." (Press Rel. 2010-18) Commission MeetingsFollowing is a schedule of Commission meetings, which will be conducted under provisions of the Government in the Sunshine Act. Meetings will be scheduled according to the requirements of agenda items under consideration. Open meetings will be held in the Auditorium, Room L-002 at the Commission's headquarters building, 100 F Street, N.E., Washington, D.C. Visitors are welcome at all open meetings, insofar as space is available. Persons wishing to photograph or videotape Commission meetings must obtain permission in advance from the Secretary of the Commission. Persons wishing to tape record a Commission meeting should notify the Secretary's office 48 hours in advance of the meeting. Any member of the public who requires auxiliary aids such as a sign language interpreter or material on tape to attend a public meeting should contact SECInterpreter@SEC.gov at least three business days in advance. For any other reasonable accommodation related disability contact DisabilityProgramOfficer or call 202-551-4158. Open Meeting - February 8, 2010 - 10:00 a.m.The subject matter of the February 8, Open Meeting will be: The Commission will hear oral argument in an appeal by vFinance Investments, Inc., a registered broker-dealer (Firm), and Richard Campanella, the Firm's former chief compliance officer (together with the Firm, "Respondents") from the decision of an administrative law judge. The law judge found that the Firm willfully violated Section 17(a) of the Securities Exchange Act of 1934 and Rules 17a-4(b)(4) and 17a-4(j) thereunder, by failing to preserve and promptly produce electronic communications, and that Campanella willfully aided and abetted and caused these violations. The law judge ordered Respondents to cease and desist, censured Campanella, and fined the Firm $100,000 and Campanella $30,000. Closed Meeting - February 8, 2010 - 11:00 a.m.The subject matter of the February 8, Closed Meeting will be: post argument discussion 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 PROCEEDINGSCommission Sustains Disciplinary Action Taken By NYSE Against Janet Gurley KatzThe Commission sustained NYSE disciplinary action against Janet Gurley Katz, formerly a registered representative associated with Wachovia Securities, Inc., an NYSE member firm. The Commission found that Katz engaged in conduct that was inconsistent with just and equitable principles of trade in violation of NYSE Rule 476(a)(6) by (i) causing customer funds to be transferred to other customer accounts without authorization, (ii) making misstatements to a customer, (iii) effecting unsuitable transactions in customer accounts, and (iv) engaging in unauthorized trading in customer accounts. The Commission further found that Katz violated NYSE Rule 408(a) by exercising discretionary power in customer accounts without written authorization and that Katz violated NYSE Rule 405 by causing Wachovia to fail to learn essential facts about a customer. Finally, the Commission found that Katz caused or permitted violations of NYSE Rule 440 and Section 17(a) of the Securities Exchange Act of 1934, and Rules 17a-3 and 17a-4 thereunder, by entering (or causing to be entered) inaccurate information on a customer's new account forms. The Commission also sustained NYSE's censure of Katz and imposition of a permanent bar from membership, allied membership, and approved person status and from employment or association in any capacity with any member or member organization. (Rel. 34-61449; File No. 3-13279) In the Matter of Ronnie Eugene Bass Jr.On Feb. 1, 2010, the Securities and Exchange Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 203(f) of the Investment Advisers Act of 1940 and Notice of Hearing (Order) against Ronnie Eugene Bass Jr. The Division of Enforcement (Division) alleges that the United States District Court for the Southern District of Florida entered a permanent injunction by default against Bass on Dec. 21, 2009 in the civil action entitled Securities and Exchange Commission v. Ronnie Eugene Bass Jr., Civil Action Number 9:09-CV-81524. The injunction enjoined Bass from violating Sections 5(a) and (c) and 17(a) of the Securities Act of 1933 (Securities Act), Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, and Sections 206(1), (2), and (4) of the Investment Advisers Act of 1940 (Advisers Act) and Rule 206(4)-8 thereunder. The Division further alleges that the Commission's complaint in the civil action alleged that from April 2008 through March 2009, Bass and others raised at least $14.3 million from hundreds of Haitian-American investors by falsely promising to double their money every 90 days based on Bass' purported successful options and commodities trading. The complaint alleged that Bass and the others issued unsecured notes not registered with the Commission to investors, and assured them that their principal was never at risk because they had obtained a $25 million insurance policy to protect every investment. The complaint also alleged that Bass misappropriated investor funds for personal use. Based on the above, the Order institutes administrative proceedings to determine what, if any, remedial sanctions against Bass are appropriate pursuant to Section 203(f) of the Advisers Act. The Order directs an Administrative Law Judge to issue an initial decision no later than 210 days of service of the Order. (Rel. IA-2982; File No. 3-13771) In the Matter of Pacific Acquisition Corp.An Administrative Law Judge has issued an Order Making Findings and Revoking Registrations by Default as to Seven Respondents (Default Order) in Pacific Acquisition Corp., Administrative Proceeding No. 3-13700. 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 (Commission). The Default Order finds these allegations to be true as to seven Respondents. It revokes the registrations of each class of registered securities of Pacific Acquisition Corp. (a/k/a Pacific Aquisition Corp.), Pan Smak Pizza, Inc., Parkcrest Explorations, Ltd. (n/k/a Fossil Bay Resources, Ltd.), Payline Systems, Inc., PentaStar Communications, Inc., Peruvian Gold, Ltd., and Pinnacle Property Group, Inc. (n/k/a Ontus Corporation), pursuant to Section 12(j) of the Securities Exchange Act of 1934. The Commission has previously accepted an Offer of Settlement from Petromin Resources, Ltd., the other Respondent named in the OIP. (Rel. 34-61450; File No. 3-13700) Securities and Exchange Commission Orders Hearing on Registration Revocation or Suspension Against Eight Public Companies for Failure to Make Required Periodic FilingsThe Commission today 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 eight companies for failure to make required periodic filings with the Commission:
In this Order, the Division of Enforcement (Division) alleges that the eight 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 or 13a-16 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. 34-61453; File No.3-13772) Court Enters Final Consent Judgment Against Vincent Montagna and Claims Against Christine Palmer Montagna DismissedThe Securities and Exchange Commission announced that on Jan. 8, 2010, the Honorable Deborah A. Batts of the United States District Court for the Southern District of New York entered a Final Consent Judgment against defendant Vincent Montagna (Montagna), the former investment advisor for Quantus Holding Company, Inc. Also on Jan. 8, 2010, Judge Batts approved a stipulation of dismissal as to all claims against Relief Defendant Christine Palmer Montagna. The final judgment against Montagna permanently enjoins him from violating Section 17(a) 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) and 206(2) of the Investment Advisers Act of 1940. Based upon the restitution ordered against him in a parallel criminal case, no disgorgement was ordered, and no civil penalty was imposed, in the final judgment. Montagna consented to the entry of the final judgment without admitting or denying the allegations in the Commission's complaint. The Commission's complaint, filed on May 2, 2005, alleged that from at least August 2001 until at least Aug. 5, 2002, Montagna defrauded investors and prospective investors in two hedge funds he managed through Quantus - Tiburon Asset Management LLC and Tiburon Partners, Ltd. (collectively, the Funds). Montagna allegedly defrauded the investors and prospective investors by: repeatedly causing extremely positive - and false - performance claims to be disseminated to them; failing to disclose to investors the declining value and increased risk of Fund holdings; failing to disclose conflicts of interest he had with respect to certain investments; converting Fund income and assets for his own (or his wife's) benefit; and causing the Funds to make payments to him and his associates in excess of the amounts to which they were entitled. On Feb. 9, 2007, in a criminal case based on some of the same conduct that underlies the Commission's complaint, Montagna pleaded guilty to one count of mail fraud. United States v. Vincent Montagna, Crim. Indictment No. 1:05-CR-0457) (DAB) (S.D.N.Y.). On Dec. 22, 2008, Montagna was sentenced to a prison term of 40 months and ordered to pay $7,716,390 in restitution. On July 25, 2007, in an administrative proceeding based on Montagna's guilty plea, 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 against Montagna, barring Montagna from associating with an investment adviser. (Rel. 2621; File No. 3-12709). [SEC v. Vincent Montagna et al., Civil Action No. 1:05-cv-04303 (S.D.N.Y)] (LR-21398) SEC Files Settled Offering Fraud Case Against Annapolis, Maryland Escrow AgentOn Feb. 1, 2010, the Securities and Exchange Commission filed a civil action in the United States District Court for the District of Maryland against David W. Wehrs (Wehrs) and Maryland Title and Escrow Co., Inc. (MTE), a title and escrow company Wehrs owns and operates, alleging an offering fraud in which Wehrs persuaded at least 13 investors to participate in a purported FDIC-insured fund. Simultaneous with the filing of the SEC action, the U.S. Attorney's Office for the District of Maryland filed a criminal information charging Wehrs with wire fraud arising out of the same conduct that is the subject of the Commission's Complaint. The Complaint alleges that Wehrs and MTE violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The Complaint also alleges that Wehrs and MTE violated Sections 206(1), (2), and (4) of the Advisers Act and Rule 206(4)-8 thereunder. The Commission seeks a permanent injunction, disgorgement of ill-gotten gains plus prejudgment interest, and civil money penalties. Without admitting or denying the Commission's allegations, Wehrs consented to entry of a permanent injunction from violating Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1), (2), and (4) of the Advisers Act and Rule 206(4)-8 thereunder. Wehrs has also consented to the entry of a follow-on administrative order in a separate administrative proceeding by the Commission, without admitting or denying the findings therein, that will permanently bar him from association with an investment adviser based on the anticipated entry of the injunction. This proposed settlement, which has been submitted to the Court for its consideration, does not include disgorgement, prejudgment interest, or civil money penalties based upon the federal criminal forfeiture or restitution orders and federal criminal statutory penalties that Wehrs is subject to in the parallel criminal proceeding. The Commission acknowledges the assistance and cooperation of the United States Attorney's Office for the District of Maryland, the Federal Bureau of Investigation, the Maryland Attorney General's Office, and the Maryland Insurance Administration. [SEC v. David W. Wehrs and Maryland Title and Escrow Co., Inc., Case No.: 10-CV-0242-BEL] (LR-21399) INVESTMENT COMPANY ACT RELEASESShariahShares Exchange-Traded Fund Trust, et al.A notice has been issued giving interested persons until Feb. 19, 2010, to request a hearing on an application filed by ShariahShares Exchange-Traded Fund Trust, et al. for an order to permit (a) certain open-end management investment companies and their series, to issue shares (Fund Shares) that can be redeemed only in large aggregations (Creation Unit Aggregations); (b) secondary market transactions in Fund Shares to occur at negotiated prices; (c) certain series to pay redemption proceeds, under certain circumstances, more than seven days after the tender of Fund 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 Fund Shares. (Rel. IC-29127 - January 29) SELF-REGULATORY ORGANIZATIONSImmediate Effectiveness of Proposed Rule ChangesA proposed rule change filed by The NASDAQ Stock Market to clarify Nasdaq Rule 7023 (SR-NASDAQ-2010-010) 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 February 1. (Rel. 34-61416) A proposed rule change (SR-FINRA-2010-002) filed by the Financial Industry Regulatory Authority to update certain cross-references and make other various non-substantive technical changes to certain FINRA rules has become immediately 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 February 1. (Rel. 34-61427) A proposed rule change filed by the NASDAQ Stock Market (SR-NASDAQ-2010-009), as modified by Amendment No. 1, relating to amendments to its financial responsibility rules to reflect changes to corresponding FINRA Rules 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 February 1. (Rel. 34-61429) A proposed rule change (SR-CBOE-2010-003) filed by the Chicago Board Options Exchange relating to temporary waiver of certain fees 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 February 1. (Rel. 34-61431) A proposed rule change filed by the International Securities Exchange (SR-ISE-2010-04) to correct inconsistencies in certain execution rules 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 February 1. (Rel. 34-61433) A proposed rule change filed by the International Securities Exchange (SR-ISE-2010-06), as modified by Amendment No. 2, relating to fee changes 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 February 1. (Rel. 34-61434) A proposed rule change filed by the NASDAQ OMX PHLX amending rule 1092, Obvious Errors and Catastrophic Errors (SR-Phlx-2010-13) 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 February 1. (Rel. 34-61438) Approval of Proposed Rule ChangeThe Commission approved a proposed rule change (SR-CBOE-2009-087) submitted by Chicago Board Options Exchange to establish a pilot program to modify FLEX Option exercise settlement values and minimum value sizes. Publication is expected in the Federal Register during the week of February 1. (Rel. 34-61439) Proposed Rule ChangeThe NASDAQ Stock Market filed a proposed rule change, as modified by Amendment No. 1 (SR-NASDAQ-2010-007), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 relating to elimination of market maker requirement for each option series. Publication is expected in the Federal Register during the week of February 1. (Rel. 34-61443) SECURITIES ACT REGISTRATIONSRECENT 8K FILINGS
http://www.sec.gov/news/digest/2010/dig020110.htm
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