Commission Dismisses Appeal Filed by Manuel P. Asensio
The Commission has dismissed the application for review filed by Manuel P. Asensio, formerly a registered representative associated with Asensio Brokerage Services, Inc., a former FINRA member firm, of a FINRA order barring him from association with any FINRA member and a subsequent FINRA denial of an application for him to associate with another member firm. The Commission dismissed Asensio's appeals because they were untimely as they were filed more than three years after FINRA barred him and more than a year after FINRA denied the application for him to associate with another firm. In reaching this decision, the Commission determined that there was no merit in Asensio's arguments attempting to justify his late-filed appeals. (Rel. 34-62315; File No. 3 13733)
Commission Sets Aside Restitution Order Imposed on Michael Frederick Siegel
In a proceeding remanded by the U.S. Court of Appeals for the District of Columbia Circuit, the Commission has set aside a restitution order imposed on Michael Frederick Siegel, formerly a general securities representative associated with Rauscher Pierce Refsnes, an NASD member firm. The Court upheld the Commission's findings that, in 1997, Siegel engaged in private securities transactions without providing prior written notice to his firm and made unsuitable recommendations to two couples in violation of NASD Rules. The Court also upheld the $30,000 fine and two consecutive six month suspensions. The Court, however, vacated the restitution order and remanded to the Commission for further consideration. Given the remedial sanctions sustained against Siegel and the age of the case, the Commission determined, in its discretion, to set aside the restitution order. (Rel. 34-62324; File No. 3 12659r)
In the Matter of Arthur Nadel
On June 18, 2010, the Commission issued an Order Making Findings and Imposing Remedial Sanctions Pursuant to Section 203(f) of the Investment Advisers Act of 1940 (Order) against Arthur Nadel. The Order finds that while a resident of Sarasota, Florida, Nadel was the president and a director of Scoop Management, Inc., and the managing member of Scoop Capital, LLC, both unregistered investment advisers, from April 2001 through January 2009. The Order also finds that on Feb. 24, 2010 Nadel pled guilty to six counts of securities fraud in violation of Title 15 United States Code, Section 78j(b) and 78ff, one count of mail fraud in violation of Title 18 United States Code, Sections 1341 and 1342, and eight counts of wire fraud in violation of Title 18 United States Code, Sections 1342 and 1343, before the United States District Court for the Southern District of New York, in U.S. v. Arthur G. Nadel, Criminal Indictment No. 09-CRIM-433.
Based on the above, the Order bars Nadel from association with any investment adviser. Nadel consented to the issuance of the Order without admitting or denying any of the findings in the Order except for his guilty plea, which he admitted.(Rel. IA-3039; File No. 3-13853)
SEC Halts $53 Million Investment Scheme Operated in Orange County
On June 16, 2010, the Securities and Exchange Commission obtained an emergency court order to freeze the assets of an Orange County man and four of his companies that were orchestrating a $53 million Ponzi-like investment scheme on investors.
The SEC alleges that Matthew Jennings and his companies that collectively operated under the brand name of "Westmoore" raised the money from investors in more than 15 offerings of equity and debt that were not registered with the SEC under the securities laws. To attract the new investors necessary to sustain the scheme, Jennings and his companies offered exorbitant short-term returns as high as 130 percent annually. Rather than financing the operations of Jennings' businesses, the SEC alleges that Jennings misused new investor funds to pay returns to existing Westmoore investors, and diverted funds into his personal accounts.
The companies charged in the SEC's complaint are Westmoore Management LLC, Westmoore Investment L.P., Westmoore Capital Management Inc., and Westmoore Capital LLC.
According to the SEC's complaint filed in U.S. District Court for the Central District of California, Jennings operated a corporate shell game through Westmoore, directing the movement of funds among Westmoore's various accounts to prevent the collapse of the scheme. Jennings treated these accounts as one integrated account from which funds, regardless of their source, could be used as necessary to pay investors promised returns.
The SEC alleges that Westmoore did not tell investors that it had to rely on proceeds from new investors to pay existing investors. Instead, investors expected that their funds would be used for investments that might ultimately generate returns if the underlying business succeeded.
The SEC's complaint charges the defendants with violating the antifraud provisions of the federal securities laws. The complaint seeks a permanent injunction, sworn accounting, disgorgement of ill-gotten gains, and financial penalties against defendants as well as an officer-and-director bar against Jennings.
In its lawsuit, the SEC obtained an order (1) freezing the assets of Jennings, Westmoore Management, LLC, Westmoore Investment, L.P., Westmoore Capital Management, Inc., Westmoore Capital, LLC; (2) preventing the destruction of documents; (3) requiring accountings from all Defendants; (4) temporarily enjoining all Defendants from future violations of 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 SEC also seeks preliminary and permanent injunctions, disgorgement plus prejudgment interest, and civil penalties against all Defendants. A hearing on whether a preliminary injunction should be issued against the Defendants and whether a permanent receiver should be appointed is scheduled for June 24, 2010, at 10:00 a.m. [SEC v. Matthew Jennings, Westmoore Management, LLC, Westmoore Investment, L.P., Westmoore Capital Management, Inc., Westmoore Capital, LLC United States District Court for the Central District of California, Civil Action No. SACV-10-00849-AG (MLGX)] (LR-21561)
SEC Charges Fraud in International Sale of Texas Oil and Gas Investments
On June 16, 2010, the Securities and Exchange Commission filed suit in the U.S. District Court for the Northern District of Texas, Lubbock Division, alleging that Justin Solomon of Deerfield Beach, Florida, and three affiliated companies fraudulently sold investments in Texas oil and gas projects to overseas investors. The defendants have offered to consent to a preliminary injunction against further fraudulent sales, the repatriation of any remaining investor assets, and other relief.
According to the Commission's complaint, since 2007, three companies Solomon controls - Seisma Oil Research, LLC of Boca Raton, Florida and two Aruban affiliates, Seisma Energy Research, AVV and Permian Asset Management, AVV (collectively, Seisma) - have used high-pressure sales tactics to raise at least $25 million from more than 400 non-U.S. investors through fraudulent offers of units in six joint ventures. The ventures were supposed to purchase undivided working interest in oil and gas projects owned and operated by two unrelated Texas companies. According to the complaint, however, Seisma never acquired any working interest for two of the six ventures and has expended only $9.5 million of the funds raised toward acquiring interests on behalf of the ventures. The complaint also alleges that Seisma misrepresented or omitted material facts about the profitability and prospects of the oil and gas opportunities.
The Commission's complaint alleges that Seisma and Solomon violated 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. The Commission's complaint seeks permanent injunctive relief, civil penalties and disgorgement of the proceeds of the fraud, as well as the agreed preliminary injunction, repatriation of all investor funds, an accounting and orders preserving documents. [SEC v Seisma Oil Research, LLC (a/k/a Seisma Energy Research, LLC), Seisma Energy Research, AVV (a/k/a Seisma Oil Research, AVV), Permian Asset Management, AVV and Justin Solomon, Civil Action No. 5:10-CV-95 (NDTX)] (LR-21562)
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change (SR-CBOE-2010-053) filed by the Chicago Board Options Exchange to establish the appointment cost for options on the iPath S&P 500 VIX Short-Term Futures Index ETN (VXX) 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 June 21. (Rel. 34-62287)
A proposed rule change filed by NYSE Amex amending NYSE Amex Equities Rule 123C(9)(a)(1) to extend the operation of a pilot operating pursuant to the rule until December 1, 2010 (SR-NYSEAmex-2010-50) 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 June 21. (Rel. 34-62293)
A proposed rule change filed by NASDAQ OMX PHLX (SR-Phlx-2010-81) to list options on Trust Issued Receipts in $1 strike intervals 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 June 21. (Rel. 34-62294)
Approval of Proposed Rule Change
The Commission approved a proposed rule change filed by The Options Clearing Corporation (SR-OCC-2010-07) under Section 19(b)(1) of the Securities Exchange Act. The proposed rule change would provide that OCC will clear options on the CBOE Gold ETF Volatility Index as securities options. Publication is expected in the Federal Register during the week of June 21. (Rel. 34-62290)
Proposed Rule Changes
The New York Stock Exchange filed a proposed rule change (SR-NYSE-2010-43) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 amending its rules to incorporate the receipt and execution of odd-lot interest into the round lot market and decommission the use of the "Odd-lot System." Publication is expected in the Federal Register during the week of June 21. (Rel. 34-62302)
NYSE Amex filed a proposed rule change (SR-NYSEAmex-2010-53) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 amending its rules to incorporate the receipt and execution of odd-lot interest into the round lot market and decommission the use of the "Odd-lot System." Publication is expected in the Federal Register during the week of June 21. (Rel. 34-62303)
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