Richard A. Levine Named SEC Associate General Counsel for Legal Policy
On May 3, 2010, the Securities and Exchange Commission announced that Richard A. Levine has been named an Associate General Counsel for Legal Policy in the agency's Office of the General Counsel.
Mr. Levine will provide legal and policy advice to the Commission on a wide range of matters, with a particular emphasis on enforcement, corporate disclosure, and accounting. He will begin his new role immediately.
Since 1997, Mr. Levine has served as the SEC's Assistant General Counsel for Enforcement, playing a key role in advising the Commission on all aspects of its enforcement program.
"Rich is known to the public and across the Commission as a splendid lawyer. He has extensive knowledge of the securities laws and superb judgment," said SEC General Counsel David Becker. "Rich has been a valued advisor to me and to the Commission for many years. I am delighted that he has agreed to serve in this new capacity."
Mr. Levine said, "I have been fortunate in my career to have worked with and learned from so many talented and dedicated SEC staff. I know how vital the SEC's work is for America's investors, and I am honored to have this opportunity to continue to advance the SEC's mission."
Before becoming Assistant General Counsel, Mr. Levine held several positions of increasing responsibility in the SEC's Office of General Counsel, beginning in 1984 as a staff attorney in the Office's Appellate Group and then serving as Special Counsel and Senior Special Counsel in the Disclosure Policy and Accounting Branch of the Legal Policy Group.
Mr. Levine, 53, received the Chairman's Award for Excellence in 2000 for his work on the SEC's Selective Disclosure and Insider Trading rulemaking (Regulation FD and rules 10b5-1 and 10b5-2). He has received several other awards for his work at the SEC including the Distinguished Service Award, which is the Commission's highest honor. He received the Phillip A. Loomis, Jr. Award from the Federal Bar Association.
Before joining the SEC, Mr. Levine was a litigation associate at Cahill Gordon & Reindel in New York City. He earned his JD in 1980 from Michigan Law School and his BA, summa cum laude, from the State University of New York at Albany in 1977. (Press Rel. 2010-69)
Commission Revokes Registration of Securities of BioImmune, Inc. for Failure to Make Required Periodic Filings
On May 4, 2010, the Commission revoked the registration of each class of registered securities of BioImmune, Inc. (BioImmune) for failure to make required periodic filings with the Commission.
Without admitting or denying the findings in the Order, except as to jurisdiction, which it admitted, BioImmune consented to the entry of an Order Making Findings and Revoking Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of 1934 as to BioImmune, Inc. finding that it had failed to comply with Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 13a-1 and 13a-13 thereunder and revoking the registration of each class of BioImmune's securities pursuant to Section 12(j) of the Exchange Act. This order settled the charges brought against BioImmune in In the Matter of BFA Liquidation Trust, et al., Administrative Proceeding File No. 3-13834.
Brokers and dealers should be alert to the fact that Exchange Act Section 12(j) provides, in pertinent part, as follows:
No member of a national securities exchange, broker, or dealer shall make use of the mails or any means or instrumentality of interstate commerce to effect any transaction in, or to induce the purchase or sale of, any security the registration of which has been and is suspended or revoked . . . .
For further information see Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934, In the Matter of BFA Liquidation Trust, et al., Administrative Proceeding File No. 3-13834, Exchange Act Release No. 61773 (March 24, 2010). (Rel. 34-62024; File No. 3-13834)
In the Matter of Goldman Sachs Execution & Clearing, L.P.
On May 4, 2010, the Securities and Exchange Commission issued an Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (Order) against Goldman Sachs Execution & Clearing, L.P. (GSEC). The Order finds that GSEC violated Rule 204T of Regulation SHO (Rule 204T or the Rule) on certain occasions in December 2008 and January 2009. Rule 204T was an important part of the Commission's response to concerns about the effects of "naked" short selling upon securities prices. The Rule, adopted as an interim final temporary rule on Oct. 17, 2008, required participants of a registered clearing agency such as GSEC to either deliver securities by a trade's settlement date or, in connection with short sales, immediately purchase or borrow securities to close out the fail to deliver position by no later than the beginning of regular trading hours on the trading day following the settlement date. GSEC initially responded to the Commission's enactment of Rule 204T of Regulation SHO by implementing procedures that were inadequate in that they relied too heavily on individuals to perform manual tasks and calculations, without sufficient oversight or verification of accuracy. As a result, GSEC violated Rule 204T by failing to timely close out fail to deliver positions.
Based on the above, the Order censures GSEC, orders that GSEC cease and desist from committing or causing any violations and any future violations of Exchange Act Rule 204, and orders that GSEC pay a civil money penalty of $225,000. GSEC has also agreed to an undertaking requiring it to pay a fine in the amount of $225,000 to NYSE Regulation, Inc. GSEC consented to the issuance of the Order without admitting or denying any of the findings in the Order.
The Commission acknowledges the assistance of NYSE Regulation, Inc. in this matter. (Rel. 34-62025; File No. 3-13877)
In the Matter of John L. Milling
On May 4, 2010, the Commission issued an Order Instituting Administrative Proceedings and Imposing Temporary Suspension Pursuant to Rule 102(e)(3) of the Commission's Rules of Practice (Order) against John L. Milling. The Order finds that a court of competent jurisdiction has found that Milling violated the federal securities laws, and has permanently enjoined him from further violations.
Based on the above, the Order temporarily suspends Milling from appearing or practicing before the Commission. If Milling does not petition to lift that suspension within thirty days after service of the Order, the suspension will become permanent pursuant to Rule 102(e)(3)(ii) of the Commission's Rules of Practice. (Rel. 34-62030; File No. 3-13878)
SEC Files Emergency Action to Halt Albany-Area Ponzi Scheme Preying on Senior Citizens
The Securities and Exchange Commission charged Matthew J. Ryan, a Troy, N.Y.- based financial professional, with operating a Ponzi scheme through American Integrity Financial Co. The SEC obtained an emergency court order to freeze the assets of Ryan and the other defendant, Prime Rate and Return, LLC, which also does business as American Integrity.
The SEC alleges that since at least 2002, Ryan and Prime Rate have used American Integrity, an entity that exists in name only, to raise more than $6.5 million from investors - many of them in their 60s or 70s - by promising them "guaranteed" fixed rates of return ranging from 3.85% to 9% annually. Ryan obtained these investments by fostering the false impression that American integrity is a legitimate, substantial financial services firm, with numerous employees and for which he was merely an employee, and by offering safe, even guaranteed, investments, including qualified individual retirement accounts (IRAs). To perpetrate this fraud, Ryan used devices such as a phony Manhattan address, and fictitious names and titles of purported American Integrity employees, and he misrepresented to investors that their investments were safe and insured by the Federal Deposit Insurance Corporation (FDIC) or the Securities Investor Protection Corporation (SIPC) and that American Integrity was qualified to offer IRAs and other tax-deferred investments.
According to the SEC's complaint, filed on May 3, in U.S. District Court for the Northern District of New York, American Integrity is a classic Ponzi scheme. American Integrity is not even an entity, let alone an operating financial company and investments in it are not in any way insured. It is merely the name on a bank account that Ryan opened and controls. Ryan simply took investors' money and deposited the money into the bank account. When he needed money to pay investors the returns he had promised or principal amounts they sought to withdraw, Ryan simply withdrew funds from the same bank account. He also used the investor funds to pay real estate lenders on properties he and Prime Rate owned and to pay for his own personal expenses, including luxury cars. As of March 31, 2010, it appears that American Integrity owed investors at least $3.5 million, while it had less than $8500 in cash on hand.
In addition to violations of the antifraud provisions of the Securities Act and the Exchange Act, the complaint charges that the defendants violated Section 5 of the Securities Act by illegally conducting an unregistered offering of securities.
Ryan, age 45, is a resident of Troy, New York. According to the SEC's complaint, for most of the relevant period, Ryan was a registered representative of a registered broker-dealer and operated out of a branch office of the broker-dealer located in Troy. Ryan also sometimes operated under the name "Matthew J. Ryan & Associates." Ryan is the founder, owner and sole managing member of Prime Rate.
The Honorable Norman A. Mordue, Chief Judge of the U.S. District Court for the Northern District of New York granted the SEC's request for a temporary restraining order and asset freeze against the defendants and for a temporary receiver over Prime Rate and other emergency relief including expedited discovery and an order prohibiting the destruction of documents. Judge Mordue appointed Paul A. Levine, Esq., of Lemery Greisler, LLC, as the temporary receiver and scheduled a preliminary injunction hearing for May 13, 2010.
The Commission seeks an order preliminarily, and a final judgment permanently, restraining and enjoining the Defendants from violations of Sections 5(a) and 5(c) and Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; an order freezing the assets of the Defendants during the pendency of the litigation pending further order of the court, and a final judgment ordering the defendants to disgorge their ill-gotten gains and pay prejudgment interest and imposing civil penalties under Section 20(d) of the Securities Act and Section 21(d)(3) of the Exchange Act. [SEC v. Matthew John Ryan and Prime Rate and Return, LLC, individually and doing business as American Integrity Financial Co., United States District Court for the Northern District of New York, Civ. Action No. 1:10-cv-00513-NAM-RFT] (LR-21511)
SEC Charges New Day Atlanta, LLC and its Two Principals with Securities Fraud and Court Orders Entry of Permanent Injunctions Against All Defendants, and Appoints a Corporate Monitor for the Entity Defendant
The Securities and Exchange Commission filed a civil injunctive action yesterday in U.S. District Court for the Northern District of Georgia, charging two individuals and an Atlanta-based limited liability company with violations of federal securities laws for making false and misleading statements in connection with an unregistered offering of Real Estate Investment Notes (REINs).
The Commission's Complaint alleges that New Day Atlanta, LLC d/b/a NDA Financial, LLC (NDA) and its two principals, Andrew L. Avery ("Avery) and Lee E. Marks (Marks), raised more than $3.2 million between September 2007 and February 2010 through the fraudulent unregistered offering of REINs, which were sold on the internet at www.ndafinancial.com (Website). The Website and other offering materials provided to investors contained numerous material misrepresentations regarding, among other things, the safety of investor proceeds, the gross value of NDA's assets, and NDA's gross revenues. The offering attracted at least 72 investors from across the United States.
In its Complaint, the Commission alleges that NDA, Avery, and Marks violated Sections 5 and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule10b-5 thereunder and seeks permanent injunctions from further violations of those provisions.
The Commission also announced today that the Honorable Timothy C. Batten, United States District Judge for the Northern District of Georgia entered an order granting permanent injunctions against the three defendants, and among other things, appointing a corporate monitor for NDA. Without admitting or denying the allegations in the complaint, NDA consented to the entry of the Order that: (i) permanently enjoined it from committing future violations of the above provisions; (ii) appointed a corporate monitor to oversee NDA's liquidation of assets and return of principal to investors; and (iii) ordered it to pay disgorgement of ill-gotten gains, prejudgment interest thereon, and civil penalties, in amounts to be determined by the court upon the Commission's motion. Likewise, Avery and Marks consented to the entry of the order that: (i) permanently enjoined them from committing future violations of the above provisions; and (ii) ordered them to pay disgorgement of ill-gotten gains, prejudgment interest thereon, and civil penalties, in amounts to be determined by the court upon the Commission's motion. [SEC v. New Day Atlanta, LLC d/b/a NDA Financial, LLC, Andrew L. Avery and Lee E. Marks, Civil Action No. 1:10-cv-1333-TCB (N.D. Ga.)] (LR-21512)
SEC v. Seven Palm Investments, LLC, et al.
The Securities and Exchange Commission filed a civil action in the United States District Court for the Northern District of Illinois against Seven Palm Investments, LLC, Peter P. Veugeler, Cardiovascular Sciences, Inc., and Lawrence H. Hooper, Jr., for antifraud and registration violations.
According to the SEC's complaint, Veugeler reaped more than $8 million from the pump and dumps of two unrelated companies, Cardiovascular and Emergent Health Corp. The SEC alleges that Veugeler, through his company Seven Palm, promised financing to both companies in exchange for nearly all their purportedly unrestricted shares. Veugeler, among other things, entered manipulative trades and generated illegal trading profits in both stocks. The SEC's complaint further alleges that Cardiovascular and Hooper, Cardiovascular's president and CEO, disseminated false and misleading press releases during the relevant time period.
The SEC alleges that the defendants violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks a judgment against all defendants providing for injunctions, and civil money penalties. The complaint also seeks disgorgement of ill-gotten gains with prejudgment interest against Seven Palm, Veugeler, and Cardiovascular, and penny stock bars against Veugeler and Hooper. [SEC v. Seven Palm Investments, LLC, et al., Civil Action No. 1:10-cv-02755 (N.D. Ill.)] (LR-21513)
SEC v. Michael Graf and SEC v. Larry E. Pust
The Securities and Exchange Commission announced today that on April 13, 2010, Judge Robert M. Dow, Jr. of the United States District Court for the Northern District of Illinois found Chicago-area resident Michael Graf and Larry Pust of Spokane, Washington, in civil contempt and ordered the U.S. Marshals Service to incarcerate them for refusing to provide testimony and documents to the SEC in violation of the Court's prior orders. The Court stayed the effect of its orders to allow Graf and Pust an opportunity to comply with the Court's prior orders. The period for Graf to comply expired and he has been taken into custody. Pust has until May 10, 2010 to comply.
The Court's orders to incarcerate Graf and Pust stem from subpoena enforcement actions that the SEC filed in federal court on March 1, 2010, against Graf and Pust alleging that they failed to comply with the SEC's subpoenas. The SEC alleged that it issued subpoenas to Graf and Pust requiring them to provide testimony and documents related to a non-public investigation that the SEC was conducting into a possible fraudulent investment scheme. The SEC alleged that the possible scheme is the subject of an SEC Formal Order Directing Private Investigation entitled In the Matter of Rosand Enterprises, Inc. The Formal Order authorized SEC staff to investigate, among other things, whether anyone violated the federal securities laws in connection with the offer and sale of securities by Rosand. The SEC's subpoena enforcement actions alleged that Rosand raised millions of dollars from investors for the stated purpose of constructing or rehabbing homes and then selling them for a profit. The SEC further alleged that it was informed that Graf served as the accountant for Rosand which paid at least $28,500 to Graf and that Pust raised investor funds for Rosand which paid at least $214,000 to Pust.
The SEC alleged that Graf and Pust refused to provide testimony and documents or otherwise respond to the SEC's subpoenas. On March 12th and March 15th, the Court ordered Graf and Pust, respectively, to comply with the SEC's subpoenas by a certain date. Graf and Pust, however, did not appear for testimony or provide documents. The Court's April 13th order requires that once incarcerated Graf and Pust are to remain in jail until they are in compliance with the Court's orders. [SEC v. Michael Graf, Case No. 10-cv-1365 and SEC v. Larry E. Pust, Case No. 10-cv-1367, N.D. Ill.] (LR-21514)
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