Securities and Exchange Commission Suspends Trading in the Securities of Eight Issuers for Failure to Make Required Periodic Filings
The U.S. Securities and Exchange Commission announced the temporary suspension of trading in the securities of the following issuers, commencing at 9:30 a.m. EDT on April 5, 2010, and terminating at 11:59 p.m. EDT on April 16, 2010.
The Commission temporarily suspended trading in the securities of these eight issuers due to a lack of current and accurate information about the companies because they have not filed periodic reports with the Commission in over two years. This order was entered pursuant to Section 12(k) of the Securities Exchange Act of 1934 (Exchange Act).
The Commission cautions brokers, dealers, shareholders and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by these companies.
Brokers and dealers should be alert to the fact that, pursuant to Exchange Act Rule 15c2-11, at the termination of the trading suspensions, no quotation may be entered relating to the securities of the subject companies unless and until the broker or dealer has strictly complied with all of the provisions of the rule. If any broker or dealer is uncertain as to what is required by the rule, it should refrain from entering quotations relating to the securities of these companies that have been subject to a trading suspension until such time as it has familiarized itself with the rule and is certain that all of its provisions have been met. Any broker or dealer with questions regarding the rule should contact the staff of the Securities and Exchange Commission in Washington, DC at (202) 551-5720. If any broker or dealer enters any quotation which is in violation of the rule, the Commission will consider the need for prompt enforcement action.
If any broker, dealer or other person has any information which may relate to this matter, they should immediately communicate it to the Delinquent Filings Branch of the Division of Enforcement at (202) 551-5466, or by e-mail at DelinquentFilings@sec.gov. (Rel. 34-61835)
RULES AND RELATED MATTERS
Notice of a Revised Privacy Act System of Records
The Commission issued a notice requesting comments on a proposed revised Privacy Act system of records: "Pay and Leave System" (SEC-15)." The revisions reflect changes that have occurred since the notice was last published and will update the system name, system location, categories of individuals covered by the system, categories of records in the system, routine uses of records maintained in the system, retrievability of records, records' safeguards, retention and disposition of records, system manager and address, notification procedures, record access procedures, contesting records procedures, and record source categories. Publication of this notice is expected in the Federal Register during the week of April 5. (Rel. PA-42; File No.: S7-07-10)
In the Matter of Michael DeGennaro
The Securities and Exchange Commission announced the settlement of its enforcement action against Michael DeGennaro (DeGennaro), former Senior Vice President of Finance at Symbol Technologies, Inc. (Symbol).
On June 3, 2004, the Commission filed a complaint in the United States District Court for the Eastern District of New York alleging that Symbol and eleven former Symbol executives, including DeGennaro, committed and/or aided and abetted violations of various provisions of the Securities Exchange Act of 1934 (Exchange Act) in connection with Symbol's financial reporting from 1999 through 2002. As part of the settlement, DeGennaro has consented, without admitting or denying the allegations in the complaint, to the entry of a final judgment requiring him to pay a civil monetary penalty of $40,000. The entry of that judgment is subject to the Court's approval. In addition, the Commission has issued an administrative order, pursuant to Section 21C of the Exchange Act, directing DeGennaro to cease and desist from causing any violations and any future violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act (Order). DeGennaro consented to the issuance of the Order without admitting or denying the findings contained in the Order.
The Order finds, inter alia, as follows: Symbol, a public company during the relevant period that was later acquired by Motorola, Inc., recorded non-recurring charges in connection with, inter alia, Symbol's: (i) acquisition of Telxon Corporation, which resulted in a $185.9 million restructuring charge recorded in the fourth quarter of 2000; and (ii) relocation of manufacturing operations to new facilities, which resulted in a $59.7 million restructuring charge recorded in the third quarter of 2001 (the Charges). The Charges and certain associated reserves were not recorded in accordance with generally accepted accounting principles (GAAP) because, among other things, they misclassified certain expenses, included amounts unrelated to the purpose of the Charge and, in some cases, were used in later periods for unrelated purposes. As a result, Symbol violated the financial recordkeeping and internal control provisions embodied in Sections 13(b)(2)(A) and (B) of the Exchange Act.
DeGennaro, together with others, determined how the Charges were recorded and accounted for on Symbol's internal books and records and in its financial statements. DeGennaro failed to take requisite steps to ensure that Symbol's internal books and records and financial statements accurately reflected each element of the Charges and the uses of associated reserves, and that the Charges and the uses of associated reserves were accounted for in accordance with GAAP. As a result, DeGennaro was a cause of Symbol's violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act. (Rel. 34-61833; AAE Rel. 3124; File No. 3-13843)
Commission Orders Hearings on Registration Suspension or Revocation Against Nine Companies for Failure to Make Required Periodic Filings
In conjunction with today's trading suspension, the Commission also 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 nine companies for failure to make required periodic filings with the Commission:
In this Order, the Division of Enforcement (Division) alleges that the nine 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 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. 34-61836; File No. 3-13844
In the Matter of Qais R. Bhavnagari
On April 5, 2010, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 (Exchange Act) and Notice of Hearing (Order) against Qais R. Bhavnagari. The Division of Enforcement alleges that Bhavnagari, from May 2005 through May 2009, was a registered representative associated with Aura Financial Services, Inc. (Aura), a broker-dealer registered with the Commission. Additionally, the Division alleges that on March 15, 2010, a final judgment was entered against Bhavnagari, permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in the civil action entitled Securities and Exchange Commission v. Aura Financial Services, Inc., et al., Civil Action Number 09-CIV-21592, in the United States District Court for the Southern District of Florida. The Division alleges that the complaint in that civil action alleged that, between September 2007 and September 2008, Bhavnagari made false or misleading statements of material facts to Aura clients. Additionally, the Division alleges that the complaint alleged that from January 2008 through March 2009, Bhavnagari "churned" the accounts of Aura clients by engaging in excessive trading to generate commissions for himself rather than in the clients' interests. The complaint alleged that these actions operated as a fraud and deceit on the investors. (Rel. 34-61838; File No. 3-13846)
In the Matter of John M. Adams
On April 5, 2010, the Commission issued an Order Making Findings and Imposing Remedial Sanctions Pursuant to Section 15(b) of the Securities Exchange Act of 1934 (Order) against John M. Adams. The Order finds that, on Sept. 25, 2006, a judgment was entered against Adams, permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 promulgated thereunder in Securities and Exchange Commission v. U.S. Reservation Bank & Trust, et al., Civil Action No. 02-0581 PHX (EHC) in the United States District Court for the District of Arizona, Phoenix Division. The Commission's complaint alleged that, from at least September 2001 through at least April 2002, Adams engaged in a fraudulent securities offering that defrauded investors of approximately $10.6 million. Adams consented to the entry of the injunction without admitting or denying the allegations in the Commission's complaint.
Based on the above, the Order bars Adams from association with any broker or dealer. Adams consented to the issuance of the Order without admitting or denying any of the findings in the Order, except he admitted the entry of the injunction. (Rel. 34-61839; File No. 3-13744)
Sale of Stanford Entities in Panama Secures More Than $14.2 Million for Benefit of Stanford Victims
The Securities and Exchange Commission has announced that approximately $14.2 million has been secured for the benefit of the worldwide victims of R. Allen Stanford's alleged multi-billion dollar fraud scheme. The Receiver expects these funds to be returned to the receivership estate by June 2010.
This recovery was accomplished by the extensive cooperation between SEC staff and other regulatory authorities in multiple jurisdictions and the court-appointed Receiver in the Commission's enforcement action against R. Allen Stanford and others. As a result of these efforts, the Receiver was able to close on a sales contract of certain Stanford-related entities located in Republic of Panama to third party purchasers, with the sale proceeds provided to the receivership estate.
R. Allen Stanford is the sole stockholder of an entity that wholly owned a bank and brokerage business in Panama City, Republic of Panama, known as Stanford Bank (Panama) S.A. (SPB) and Stanford Casa de Valores, S.A. (SCV). On Feb. 17, 2009, after the Commission filed its enforcement action against R. Allan Stanford and others, the Superintendencia de Bancos de Panamá, the Panamanian banking regulator, and the Comisión Nacional de Valores, the Panamanian securities regulator, assumed control, operation and subsequent reorganization of SBP and SCV, with a perspective of bringing those entities under new ownership and reopening them
Ultimately, with the approval of the Superintendencia de Bancos de Panamá, the Receiver negotiated and concluded a contract to sell SBP, SCV and certain other assets in Panama to the third party purchasers. This contract specifically conditioned the sale on the approval of the U.S. Court, and the unfreezing of SBP accounts in foreign jurisdictions in which SBP depositor accounts were located. In order to help ensure that the sale would be made possible, Commission staff in the Office of International Affairs and in the Division of Enforcement worked closely with the Receiver and with authorities in Panama and other jurisdictions, including Switzerland and the United Kingdom.
The sale of SBP and SCV was approved by United States District Judge David C. Godbey, Northern District of Texas, on Feb. 10, 2010 and the sales contract was closed on March 31, 2010. The Commission acknowledges the assistance and cooperation of the Superintendencia de Bancos de Panamá, Comisión Nacional de Valores, the Federal Office of Justice of Switzerland, the Federal Prosecutor's Office of Switzerland, the Financial Services Authority of the United Kingdom and the U.S. Department of Justice in connection with this matter.
The SEC's investigation is continuing.
See also Litigation Release No. 20901 (Feb. 17, 2009) and Litigation Release No. 21092 (June 19, 2009). [SEC v. Stanford International Bank, et al., Case No. 3-09CV0298-L (N.D.TX.)] (LR-21476)
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed by the International Securities Exchange (SR-ISE-2010-23) relating to amending the Direct Edge ECN Fee Schedule has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication of this notice is expected in the Federal Register during the week of April 5. (Rel. 34-61825)
A proposed rule change filed by NASDAQ OMX PHLX relating to order price protection (SR-Phlx-2010-52) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication of this notice is expected in the Federal Register during the week of April 5. (Rel. 34-61828)
A proposed rule change filed by NASDAQ OMX BX (SR-BX-2010-023) relating to Market Maker quoting obligations has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication of this notice is expected in the Federal Register during the week of April 5. (Rel. 34-61829)
A proposed rule change filed by BATS Exchange to Amend BATS Rule 11.9(c)(12), entitled "Destination Specific Order" (SR-BATS-2010-006) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication of this notice is expected in the Federal Register during the week of April 5. (Rel. 34-61834)
Accelerated Approval of Proposed Rule Change
The Commission granted accelerated approval to a proposed rule change (SR-ISE-2010-24) submitted by the International Securities Exchange pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 relating to the amounts that Direct Edge ECN, in its capacity as an introducing broker for non-ISE Members, passes through to such non-ISE Members. Publication of this notice is expected in the Federal Register during the week of April 5. (Rel. 34-61826)
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