Securities and Exchange Commission Suspends Trading in the Securities of Four 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 21, 2010, and terminating at 11:59 p.m. EDT on May 4, 2010.
The Commission temporarily suspended trading in the securities of these four 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 eight 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. 34-61949)
Commission Orders Hearings on Registration Suspension or Revocation Against Four 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 four companies for failure to make required periodic filings with the Commission:
In the Matter of ULH Corp. (n/k/a UniHolding Corp.), et al., Administrative Proceeding File No. 3-13866
In this Order, the Division of Enforcement (Division) alleges that the four 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. 34-61950; File No. 3-13866)
In the Matter of Planet Earth Recycling, Inc.
An Administrative Law Judge has issued an Order Making Findings and Revoking Registrations by Default as to Eight Respondents (Default Order) in Planet Earth Recycling, Inc., Administrative Proceeding No. 3-13803. The Order Instituting Proceedings (OIP) alleged that nine 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 eight Respondents. It revokes the registrations of each class of registered securities of Planet Earth Recycling, Inc., Potomac Energy Corp., Power Plus Corp. (n/k/a PPC Capital Corp.), Precision Plastics Molding, Inc., Press Realty Advisors Corp., Prism Group, Inc., Promotional Concepts, Inc. (a/k/a Tartam, Inc.), and Purcell Energy Ltd. (n/k/a Point North Energy Ltd. and f/k/a Belair Energy Corp.), pursuant to Section 12(j) of the Securities Exchange Act of 1934.
The Commission previously accepted a settlement offer from Presidio Oil Co. (n/k/a Encana Oil & Gas (USA), Inc.), the ninth Respondent named in the OIP. (Rel. 34-61951; File No. 3-13803)
SEC Charges Prominent Miami Beach Businessman Nevin K. Shapiro With Operating a $900 Million Fraud and Ponzi Scheme
The Securities and Exchange Commission announced today that it has filed an injunctive action against Nevin K. Shapiro, alleging that he conducted a $900 million offering fraud and Ponzi scheme targeting more than 60 investors nationwide.
The SEC's complaint alleges that from February 2003 through November 2009, Shapiro, the president, Chief Executive Officer and sole shareholder of Capitol Investments USA Inc., (Capitol), a Miami Beach, Florida-based grocery diverter, offered promissory notes claiming annual returns of 10 to 26% purportedly backed by purchase orders and receivables generated by Capitol's food brokerage business. In reality, Capitol was operating at a loss since late 2004 with virtually no operations by 2005. Beginning in January 2005 through November 2009, Shapiro operated a Ponzi scheme using new investor funds to pay principal and interest to earlier investors.
Grocery diverters like Capitol purchase lower-priced groceries in one region and re-sell them for a profit to another region, where prices are higher. According to the SEC's complaint, filed in U.S. District Court for the Southern District of Florida, Shapiro used his business relationships and word of mouth to solicit investors by selling them short term promissory notes, telling them that he would use their funds as short term financing to purchase and resell groceries for Capitol's business. Shapiro falsely touted Capitol's financial success (as well as his own) and assured investors that their principal was secure because Capitol would not broker the sale of the goods without first obtaining a purchase order from a buyer. Shapiro also falsely told investors that Capitol would pay the principal and interest from the profits it received when it resold the goods. When investors raised questions about Capitol's business, Shapiro showed them fabricated invoices and purchase orders for nonexistent sales.
The SEC's Complaint further alleges that Shapiro also misappropriated at least $38 million of investor funds to finance outside business ventures unrelated to the grocery business, including a sport representation business and real estate ventures, and to fund his lavish lifestyle. He also used investor funds to pay large commissions to individuals who attracted additional investors.
The SEC's complaint charges Shapiro with 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. The SEC seeks a permanent injunction, sworn accounting, disgorgement of ill-gotten gains with prejudgment interest, and a civil money penalty against the defendant.
The SEC coordinated the filing of these charges with the United States Attorney for the District of New Jersey who charged Shapiro today with securities fraud and money laundering. Shapiro surrendered this morning to special agents of the Federal Bureau of Investigation and the Internal Revenue Service criminal investigation unit.
The Commission appreciates the assistance of the U.S. Attorney's Office for the District of New Jersey, the Federal Bureau of Investigation, and the Internal Revenue Service, with which the Commission has coordinated its investigation. The SEC's investigation is continuing. [SEC v. Nevin K. Shapiro, Civil Action No. 1:10-CV-21281-ALTONAGA/BROWN (S.D. FL)] (LR-21495)
INVESTMENT COMPANY ACT RELEASES
MCG Capital Corporation
An order has been issued on an application filed by MCG Capital Corporation (Company) under Section 23(c)(3) of the Investment Company Act for an exemption from Section 23(c) of the Act. The order amends a prior order that permits the Company to issue restricted shares of its common stock under the terms of its employee and director compensation plans (Plans). The amended order permits the Company, pursuant to the Plans, to engage in certain transactions that may constitute purchases by the Company of its own securities within the meaning of Section 23(c) of the Act. (Rel. IC-29210 - April 20)
MetLife Insurance Company of Connecticut, et al.
An order has been issued pursuant to Sections 26(c) and 17(b) of the Investment Company Act on an application filed by MetLife Insurance Company of Connecticut, et al. (Applicants). The order permits the Applicants to substitute shares of certain registered management investment companies for shares of certain other registered management investment companies. The order also exempts them from Section 17(a) of the Act to the extent necessary to permit certain in-kind transactions in connection with the substitutions. (Rel. IC-29211 - April 20)
Rydex Series Funds, et al.
An order has been issued on an application filed by Rydex Series Funds, et al., under Section 6(c) of the Investment Company Act for an exemption from Rule 12d1-2(a) under the Act. The order permits funds of funds relying on Rule 12d1-2 under the Act to invest in certain financial instruments. (Rel. IC-29212 - April 20)
Proposed Rule Change
The Commission noticed a proposed rule change (SR-FINRA-2010-014) submitted by the Financial Industry Regulatory Authority pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 to eliminate explicitly the inability-to-pay defense in the expedited proceedings context. Publication is expected in the Federal Register during the week of April 26. (Rel. 34-61938)
Immediate Effectiveness of Proposed Rule Change
A proposed rule change (SR-NYSEArca-2010-26) filed by NYSE Arca amending its fees schedule 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 April 26. (Rel. 34-61942)
Accelerated Approval of Proposed Rule Changes
The Commission approved on an accelerated basis a proposed rule change (SR-Phlx-2010-40) filed by NASDAQ OMX PHLX to establish strike-price intervals and trading hours for options on Index-Linked Securities. Publication is expected in the Federal Register during the week of April 26. (Rel. 34-61943)
The Commission approved on an accelerated basis a proposed rule change (SR-NASDAQ-2010-035) filed by The NASDAQ Stock Market to establish strike-price intervals and trading hours for options on Index-Linked Securities. Publication is expected in the Federal Register during the week of April 26. (Rel. 34-61944)
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