SEC News Digest

ENFORCEMENT PROCEEDINGS

In the Matter of Martech USA, Inc.

An Administrative Law Judge has issued an Order Making Findings and Revoking Registrations by Default (Default Order) in Martech USA, Inc., Administrative Proceeding No. 3-13814. The Order Instituting Proceedings alleged that two Respondents repeatedly failed 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 and revokes the registrations of each class of registered securities of Martech USA, Inc., and Mexican Patio Cafes, Inc., pursuant to Section 12(j) of the Securities Exchange Act of 1934. (Rel. 34-61886; File No. 3-13814)

In the Matter of Richard G. Pacheco

On April 12, 2010, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions (Order) against Richard G. Pacheco, a resident of Colorado Springs, Colorado. In the Order, the Commission finds that Pacheco offered and sold fractional undivided interests in oil and gas rights in four projects for which he received commissions of twenty percent of the funds invested by investors that he solicited. He was engaged in the business of effecting transactions in securities for the account of others. However, during the time period from September 2007 through June 2009, Pacheco was not registered with the Commission as a broker or dealer and was not associated with a broker-dealer registered with the Commission. The Order also finds that a final judgment was entered on March 25, 2010 against Pacheco, permanently enjoining him from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, in the civil action entitled Securities and Exchange Commission v. Wellco Energy LLC, et al., Civil Action Number 1:09-CV-1114, in the United States District Court for the District of Colorado. The Order finds that the complaint in the civil action alleged, that in connection with Pacheco's sale of fractional undivided interests in oil and gas rights, misrepresentations were made to investors that Wellco was the operator of the four oil and gas projects. The complaint alleged that, in fact, Wellco did not operate the well and purchased fractional undivided interests from another company, which interests if further divided and resold to investors. The Order also finds that the complaint further alleged it was misrepresented that Wellco's principal, Justin William Rifkin, had extensive experience operating oil and gas prospects. The Order finds that in fact Rifkin's experience was limited to raising money through sales of other oil and gas projects, and he had no experience operating oil and gas wells. The Order also finds that the complaint further alleges that, in connection with Pacheco's offers and sales, misrepresentations were made about how investors' funds would be used, and investors were not told that Pacheco would receive a twenty percent commission. The Order also finds that the complaint also alleged that Pacheco sold securities when no registration statement was in effect or filed with the Commission.

Based on the above, the Order barred Pacheco from association with any broker or dealer with the right to reapply for association after five years. Pacheco consented to issuance of the Order without admitting or denying of the findings in the Order except the entry of the final judgment. (Rel. 34-61888; File No. 3-13855)

In the Matter of Patrick V. Looper

On April 12, 2010, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions (Order) against Patrick V. Looper of Colorado Springs, Colorado. In the Order, the Commission finds that a final judgment was entered on March 25, 2010, against Looper, permanently enjoining him from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, in the civil action entitled Securities and Exchange Commission v. Wellco Energy LLC, et al., Civil Action Number 1:09-CV-1114, in the United States District Court for the District of Colorado. The Order finds that the complaint in the civil action alleged, that in connection with Looper's sale of fractional undivided interests in oil and gas rights, misrepresentations were made to investors that Wellco was the operator of the four oil and gas projects. The Order finds that the complaint alleged that, in fact, Wellco did not operate the well and purchased fractional undivided interests from another company, which interests if further divided and resold to investors. The Order finds that the complaint further alleged it was misrepresented that Wellco's principal, Justin William Rifkin, had extensive experience operating oil and gas prospects. The Order finds that the in fact Rifkin's experience was limited to raising money through sales of other oil and gas projects, and he had no experience operating oil and gas wells. The Order finds that the complaint further alleges that, in connection with Looper's offers and sales, misrepresentations were made about how investors' funds would be used, and investors were not told that Looper would receive a twenty percent commission. The Order finds that the complaint also alleged that Looper sold securities when no registration statement was in effect or filed with the Commission.

Based on the above, the Order barred Looper from association with any broker or dealer with the right to reapply for association after five years. Looper consented to issuance of the Order without admitting or denying of the findings in the Order except the entry of the final judgment. (Rel. 34-61889; File No. 3-13856)

In the Matter of Kevin H. Blood

On April 12, 2010, 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 Kevin H. Blood. The Order finds that on April 2, 2010, a final judgment was entered against Blood enjoining him from future violations of 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 and Rule 206(4)-8 thereunder, in the civil action entitled Securities and Exchange Commission v. Kevin H. Blood, Civil Action No. CV10-0731-PHX-SRB, in the United States District Court for the District of Arizona. The Order finds that the Commission's complaint alleged that Blood, while serving as president of former registered investment adviser, Capital Wealth Management, Inc., engaged in fraud and breached his fiduciary duty to clients when he misrepresented investment risks and failed to disclose a side compensation agreement.

Based on the above, the Order bars Blood from association with any investment adviser. Blood 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 final judgment, which he admitted. (Rel. IA-3013; File No. 3-13857)

SEC Charges Minnesota Investment Advisor With Fraud

On April 8, 2010, the Honorable Donovan W. Frank of the United States District Court for the District of Minnesota issued a temporary restraining order and asset freeze against Renee Marie Brown (Brown), a Minnesota-based investment adviser, and Investors Income Fund X, LLC (Fund X), a company formed and controlled by Brown.

The SEC alleges that Brown misappropriated advisory clients' money. The SEC alleges that from July 2009 through March 2010, Brown fraudulently raised more than $1.1 million from six investors by convincing them to transfer their money to Fund X. The SEC alleges that Brown told her investors that Fund X is a "bond fund" with fixed annual returns of 8% or 9%. The SEC alleges that she distributed fictitious "returns" to investors, furthering the fiction that Fund X was a legitimate and successful investment opportunity. The SEC alleges that, unbeknownst to her victims, Fund X is a sham - Brown's alter ego. The SEC alleges that Brown misappropriated most of the $1.1 million she raised from investors to, among other things, purchase a condominium for herself and build-out office space for her new business.

The SEC's complaint charges Brown and Fund X with violating Sections 17(a) of the Securities Act of 1933 and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint also charges Brown with violating Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act and Rule 206(4)-8 thereunder.

The SEC's complaint seeks permanent injunctive relief and disgorgement from the Defendants, and civil penalties from Brown. [SEC v. Renee Marie Brown and Investors Income Fund X, LLC, Civil Action No. 10-CV-1207 (D. Minn.)] (LR-21483)

INVESTMENT COMPANY ACT RELEASES

SeaCo Ltd.

An order has been issued on an application filed by SeaCo Ltd. under Section 3(b)(2) of the Investment Company Act declaring it to be primarily engaged in a business other than that of investing, reinvesting, owning, holding or trading in securities. (Rel. IC-29206 - April 9)

SELF-REGULATORY ORGANIZATIONS

Immediate Effectiveness of Proposed Rule Changes

A proposed rule change filed by International Securities Exchange (SR-ISE-2010-26) relating to Intermarket Sweep Orders has become immediately 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 12. (Rel. 34-61855)

A proposed rule change filed by NYSE Amex to establish fees for professional customers and to make certain other changes to its options fee schedule (SR-NYSEAmex-2010-36) 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 12. (Rel. 34-61864)

A proposed rule change filed by the International Securities Exchange relating to amending Direct Edge ECN fee schedule (SR-ISE-2010-29) 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 12. (Rel. 34-61865)

A proposed rule change filed by International Securities Exchange relating to fees and rebates for adding and removing liquidity (SR-ISE-2010-25) 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 12. (Rel. 34-61869)

A proposed rule change filed by The Depository Trust Company (SR-DTC-2010-06) to provide various technical updates to DTC's Elective Dividend service has become immediately effective under Section 19(b)(3)(A)(iii) of the Securities Exchange Act of 1934. Publication of this notice is expected in the Federal Register during the week of April 12. (Rel. 34-61877)

Proposed Rule Change

Chicago Board Options Exchange filed a proposed rule change (SR-CBOE-2010-018) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 to list and trade CBOE Gold ETF Volatility Index Options. Publication of this notice is expected in the Federal Register during the week of April 12. (Rel. 34-61859)

Accelerated Approval of Proposed Rule Changes

The Commission granted accelerated approval to a proposed rule change (SR-ISE-2010-31) 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 12. (Rel. 34-61866)

The Commission granted accelerated approval to a proposed rule change as amended (SR-NASDAQ-2010-045) submitted by The NASDAQ Stock Market pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 to extend the NASDAQ Last Sale Data Feeds pilot program. Publication of this notice is expected in the Federal Register during the week of April 12. (Rel. 34-61872)

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