Securities and Exchange Commission Suspends Trading in the Securities of Twelve 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 May 6, 2010, and terminating at 11:59 p.m. EDT on May 19, 2010.
The Commission temporarily suspended trading in the securities of these twelve 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. 34-62045)
Closed Meeting - Thursday, May 13, 2010 - 2:00 p.m.
The subject matter of the Closed Meeting scheduled for Thursday, May 13, 2010 will be: institution and settlement of injunctive actions; institution of administrative proceedings; a litigation matter; and other matters relating to enforcement proceedings.
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.
Commission Orders Hearings on Registration Suspension or Revocation Against Twelve Companies for Failure to Make Required Periodic Filings
In conjunction with today's trading suspension, the Commission also instituted two separate 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 ten companies for failure to make required periodic filings with the Commission:
In the Matter of Alyn Corp., et al., Administrative Proceeding File No. 3-13881
In the Matter of American Healthchoice, Inc., et al., Administrative Proceeding File No. 3-13882
In each Order, the Division of Enforcement (Division) alleges that the respective Respondents are delinquent in their required periodic filings with the Commission.
In each of these proceedings, 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 proceedings 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 each proceeding issue an initial decision not later than 120 days from the date of service of the order instituting proceedings. (Rel. 34-62046, File No. 3-13881; 34-62047, File No. 3-13882)
Don C. Weir Sanctioned
Don C. Weir (Weir), of Missouri, has been barred from association with any broker, dealer, or investment adviser. The sanctions were ordered in an administrative proceeding before an administrative law judge, following his 2009 conviction for mail fraud and criminal forfeiture. The wrongdoing underlying Weir's conviction took place from 2000 to 2008. He purchased approximately $13.7 million in gold coins and other precious metals for brokerage customers, sold approximately $10.7 million of the metals without the customers' authorization, and used the money for personal and business expenses and to pay purported profits to certain investors. He also provided a customer with a fraudulent account statement that was designed to conceal the misappropriation and inflated the market values of items not yet sold. (Rel. 34-62049, IA-3022; File No. 3-13816)
SEC Announces Distribution of DiBella Fair Fund to Connecticut Retirement and Trust Funds
On May 5, 2010, the Securities and Exchange Commission was granted final court approval of a Fair Fund distribution that will return $795,000 to the State of Connecticut Retirement and Trust Funds that were harmed by a fraudulent scheme perpetrated by the former president of the Connecticut State Senate, William A. DiBella.
The federal district court in New Haven, Conn., ordered the disbursement of the SEC Fair Fund, which was established after DiBella paid court-ordered disgorgement, prejudgment interest, and penalties assessed in an SEC enforcement action. On May 18, 2007, following a seven-day trial, a jury returned a verdict finding DiBella liable for aiding and abetting violations of various securities laws.
In its 2004 complaint, the SEC alleged that DiBella and his consulting company, North Cove, participated in a fraudulent scheme with the former Treasurer of the State of Connecticut, Paul Silvester, concerning Silvester's investment of $75 million on behalf of the Connecticut Retirement and Trust Funds with investment advisor, Thayer Capital Partners. Although neither Mr. DiBella nor North Cove had any role in the investment of the funds with Thayer, and performed no meaningful work related to the investment, Silvester nevertheless requested that Thayer pay DiBella fees based upon a percentage of the total investment with Thayer. Thayer ultimately paid DiBella a total of $374,500 through North Cove.
On March 24, 2008, the court entered a Final Judgment against DiBella ordering him to pay a civil penalty and disgorgement and prejudgment interest. Due to Mr. DiBella's continued non-payment of the judgment, the Commission instituted contempt proceedings with the federal court in New Haven. DiBella finally paid more than $795,000 on March 12, 2010, and the funds will now be distributed for the benefit of harmed investors. [SEC v. DiBella, Civil Action No. 3:04-CV-1342 (EBB) (D. Conn.)] (LR-21517)
Former Investment Adviser Pleads Guilty to Criminal Charges
The Commission announced today that, on May 4, 2010, Stephen F. Clifford, formerly an investment adviser in Plymouth, Massachusetts, pled guilty to one count of willfully violating Sections 206 and 217 of the Investment Advisers Act of 1940, one count of wire fraud, one count of mail fraud, and three counts of subscribing to false tax returns.
The Commission filed a civil injunctive action against Clifford on June 17, 2008. On that date, the Commission also sought and obtained a temporary restraining order and asset freeze. The Commission's action, which remains pending, alleges that, between at least July 2004 and June 2008, while acting as an investment adviser, Clifford defrauded investors of at least $2.9 million and misappropriated investor funds for his personal use. The United States Attorney's Office for the District of Massachusetts filed a criminal Information on December 16, 2009, making substantially similar factual allegations against Clifford.
The Commission acknowledges the assistance and cooperation of the Massachusetts Securities Division, the United States Postal Inspection Service, and the United States Attorney's Office for the District of Massachusetts.
For additional information, see Litigation Release Nos. 20622 (June 18, 2008) and 21343 (Dec. 18, 2009). [U.S. v. Stephen Clifford, No. 09-CR-10387-NG (D. Mass.); SEC v. Stephen F. Clifford d/b/a Clifford Financial Associates, No. 08-CV-11023-RGS (D. Mass.)] (LR-21518)
L. Rex Andersen, CPA, Permanently Enjoined for Role in Penny Stock and Accounting Fraud
The Securities and Exchange Commission announced that a federal district court in Nevada has granted the Commission's motion for summary judgment and entered a final judgment against L. Rex Andersen of Draper, Utah, a certified public accountant. The final judgment against Andersen, entered on May 4, 2010, is in connection with an enforcement action filed by the Commission in 2005 concerning a penny stock manipulation and accounting fraud. The final judgment permanently enjoins Andersen from violating the antifraud and other provisions of the federal securities laws and orders him to pay disgorgement, prejudgment interest, and a civil money penalty totaling $126,219.04.
The civil injunctive action was filed on April 25, 2005, against Andersen, Exotics.com, Inc., a Nevada corporation based in Vancouver, British Columbia, and 11 additional principal defendants and one relief defendant. The Commission's complaint alleged that, between at least 1999 and 2002, Exotics.com (formerly a corporate shell known as Hardrock Mines, Inc.) was the subject of a stock manipulation and accounting fraud. According to the complaint, Andersen performed audits of the 1999 and 2000 year-end financial statements of Hardrock Mines, Inc., but he lacked independence during the audits because he himself had prepared most of the client's books and records and its financial statements. The Commission's complaint further alleged that Andersen created the client's books and records in reliance on documents that he knew, or was reckless in not knowing, were fraudulent, and thereby caused the financial statements to depart from generally accepted accounting principles (GAAP). The complaint also alleged that Andersen's firm thereafter issued audit reports falsely representing that the audits had been conducted in accordance with generally accepted auditing standards, and that the financial statements were presented in conformity with GAAP. The fraudulent audit reports provided by Andersen were incorporated in various public filings with the Commission made by Hardrock Mines and Exotics.com.
The final judgment against Andersen permanently enjoins him from future violations of Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder and Rule 2-02 of Regulation S-X. It also enjoins him from aiding and abetting violations of Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-1 thereunder, and orders him to pay disgorgement in the amount of $3,500, prejudgment interest in the amount of $2,719.04, and a $120,000 civil penalty.
The Commission previously obtained judgments by default against two defendants and judgments by consent against seven additional defendants. The action remains pending against defendants Daniel G. Chapman, James L. Ericksteen, and Sean P. Flanagan and relief defendant Flanagan & Associates, Ltd...
For further information, see Litigation Release Nos. 19207 (April 28, 2005) [civil injunctive action filed], 19645 (April 7, 2006) [judgment by default against Exotics.com], 19699 (May 15, 2006) [judgment by consent against Barry F. Duggan], 19957 (Jan. 4, 2007) [judgment by default against Gary Thomas], 21028 (May 7, 2009) [judgment by consent against Edward James Wexler], 21456 (March 19, 2010) [judgments by consent against Stephen P. Corso and Brian K. Rabinovitz], 21490 (April 16, 2010) [judgments by consent against Ingo W. Mueller and Firoz Jinnah], 21498 (April 22, 2010) [judgment by consent against Marlin R. Brinsky], and Exchange Act Release Nos. 59766 (April 14, 2009) [forthwith suspension of Stephen P. Corso, CPA], 61771 (March 24, 2010) [suspension of Brian K. Rabinovitz, CPA], and 61998 (April 28, 2010) [suspension of Marlin R. Brinsky, CPA]. [SEC v. Exotics.com, Inc., et al., Civil Action No. 2:05-cv-00531-PMP-GWF, United States District Court, District of Nevada] (LR-21519; AAE Rel. 3132))
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change (SR-NYSEArca-2010-39) filed by NYSE Arca to add seventy-five options classes to the Penny Pilot Program 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 May 10. (Rel. 34-62031)
A proposed rule change (SR-BATS-2010-009) filed by BATS Exchange to add seventy-five options classes to the Penny Pilot Program 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 May 10. (Rel. 34-62033)
A proposed rule change filed by the Chicago Board Options Exchange (CBOE-2010-035) amending CBOE Rules 9.11, 9.18 and 9.21 to correspond and harmonize with rules of the Financial Industry Regulatory Authority, Inc. has become effective. Publication is expected in the Federal Register during the week of May 10. (Rel. 34-62034)
A proposed rule change (SR-BX-2010-032), filed by NASDAQ OMX BX to add 75 classes to the penny pilot program 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 May 10. (Rel. 34-62039)
A proposed rule change filed by NYSE Amex adding 75 options classes to the Penny Pilot Program (SR-NYSEAmex-2010-42) 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 May 10. (Rel. 34-62041)
A proposed rule change (SR-ISE-2010-42) filed by the International Securities Exchange to add seventy-five options classes to the Penny Pilot Program 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 May 10. (Rel. 34-62042)
A proposed rule change (SR-BX-2010-033), filed by NASDAQ OMX BX relating to the Options Regulatory Fee 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 May 10. (Rel. 34-62043)
Proposed Rule Change
Pursuant to Rule 19b-4 under the Securities Exchange Act of 1934, NYSE Arca filed a proposed rule change (SR-NYSEArca-2010-31) amending NYSE Arca Rule 3.3(a) and Section 401(a) of the Exchange's Bylaws to eliminate the Exchange's Audit Committee, Compensation Committee, and Regulatory Oversight Committee. Publication is expected in the Federal Register during the week of May 10. (Rel. 34-62032)
JOINT INDUSTRY PLANS
Notice of Filing of Amendment No. 21 to the Joint Self-Regulatory Organization Plan Governing the Collection, Consolidation and Dissemination of Quotation and Transaction Information for Nasdaq-Listed Securities Traded on Exchanges on an Unlisted Trading Privileges Basis
Pursuant to Rule 608 under the Securities Exchange Act of 1934, the operating committee of the Joint Self-Regulatory Organization Plan Governing the Collection, Consolidation, and Dissemination of Quotation and Transaction Information for Nasdaq-Listed Securities Traded on Exchanges on an Unlisted Trading Privilege Basis (Nasdaq/UTP Plan) filed a proposal to amend the Nasdaq/UTP Plan (S7-24-89) and reflect: an update of the names and addresses of certain Participants; the merger of the definition of the Plan's transaction reporting system with the definition of the Plan's quotation system under the term "Nasdaq Systems;" the introduction of a capacity planning process into the Plan and the allocation among the Participants of the costs associated with their capacity needs; the deletion from the Plan of an outdated telephone-access requirement; the incorporation into the Plan of the existing fees applicable to Quotation Information and Transaction Reports disseminated pursuant to the Plan; the removal from the Plan of the provisions governing the right of Participants to direct the Plan processor to create and make available depth-of-book displays; the incorporation into the Plan of the existing practice of compensating FINRA for the FINRA data that the Participants include in the information that they make available under the Plan; and, miscellaneous non-substantive corrections to the existing language of the Plan. Publication is expected in the Federal Register during the week of May 10. (Rel. 34-62021)
SECURITIES ACT REGISTRATIONS
RECENT 8K FILINGS