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COMMISSION ANNOUNCEMENTSSEC Adds Units to Oversee Financial Institutions, Asset-Backed Securities, New Financial Products and TrendsThe Securities and Exchange Commission's division that reviews public company filings is creating three specialized offices to enhance its disclosure review and policy operations. The new offices in the Division of Corporation Finance will focus on large financial institutions, asset-backed securities and other structured products, and securities offering trends. "These changes will help us focus our resources more sharply on critically important institutions and financial products so we can stay ahead of the curve and better protect investors," said Meredith Cross, Director of the SEC's Division of Corporation Finance. The three new offices are:
Enhanced Reviews of Large and Financially Significant Companies Since late 2008, the Division has been conducting continuous real-time reviews of the periodic reports filed by some of the largest bank holding companies and other large financial institutions. Through its new financial services review office, the Division will be able to increase the number of institutions subject to these reviews, concentrate staff expertise, and develop new review techniques to further strengthen its review program. The new office also will facilitate sharing information about the firms it reviews with others throughout the agency involved in regulatory oversight of these firms. ABS and Other Structured Finance Products This new office will review disclosures in asset-backed securities and other structured finance products and monitor their impact on the markets. The office will also lead rulemaking and interpretive activities related to structured products. Capital Market Trends This new office will evaluate trends in securities offerings and capital markets to determine whether rules and regulations are keeping pace and working effectively. The office also will conduct market research and selectively review securities offering documents and coordinate the Division's consideration of new products. (Press Rel. 2010-124) Paula Dubberly Named to New Deputy Director Position in Division of Corporation FinanceThe Securities and Exchange Commission today announced that Paula Dubberly has been named to a new Deputy Director position in the Division of Corporation Finance. In her new role as Deputy Director for Policy and Capital Markets, Ms. Dubberly will oversee two new offices to be created in the Division. One of the new offices will focus exclusively on asset-backed securities and other structured finance products. The other will review new securities products and capital markets trends, and develop recommendations for changes to enhance investor protection in securities offerings. Ms. Dubberly also will continue to lead the Division's rulemaking efforts through her oversight of the Division's rulemaking office. "Paula has a deep understanding of complex financial products and the needs of investors in this critical market segment," said Meredith Cross, Director of the SEC's Division of Corporation Finance. "She is uniquely suited to anticipate trends and quickly respond to changes in capital raising techniques. I am very grateful that she is willing to take on this challenging new role." Ms. Dubberly joins fellow Division of Corporation Finance deputy directors Brian Breheny, who oversees the legal and regulatory program, and Shelley Parratt, who oversees disclosure operations. Ms. Dubberly joined the Division of Corporation Finance as an attorney in 1992. She has served in many roles in the Division including Assistant Director for disclosure operations, Chief Counsel, and Associate Director (Legal) overseeing the Division's rulemaking efforts and its Office of Enforcement Liaison. Ms. Dubberly received her JD from the American University Washington College of Law in 1989 and received her BA in political science from George Washington University in 1983. She received the SEC's Distinguished Service Award for 2009. (Press Rel. 2010-125) ENFORCEMENT PROCEEDINGSCommission Revokes Registration of Securities of Future Carz, Inc. for Failure to Make Required Periodic FilingsOn July 16, 2010, the Commission revoked the registration of each class of registered securities of Future Carz, Inc. (FCRZ) 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, FCRZ 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 Future Carz, 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 FCRZ's securities pursuant to Section 12(j) of the Exchange Act. This Order settled the charges brought against FCRZ in In the Matter of American Energy Services, Inc., et al., Administrative Proceeding File No. 3-13940. 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 American Energy Services, Inc., et al., Administrative Proceeding File No. 3-13940, Exchange Act Release No. 62292 (June 15, 2010). (Rel. 34-62510; File No. 3-13940) Commission Revokes Registration of Securities of Robotic Vision Systems, Inc. (n/k/a Acuity Cimatrix, Inc.) for Failure to Make Required Periodic FilingsOn July 16, 2010, the Commission revoked the registration of each class of registered securities of Robotic Vision Systems, Inc. (n/k/a Acuity Cimatrix, Inc.) (RVSIQ) 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, RVSIQ 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 Robotic Vision Systems, Inc. (n/k/a Acuity Cimatrix, 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 RVSIQ's securities pursuant to Section 12(j) of the Exchange Act. This Order settled the charges brought against RVSIQ in In the Matter of Channel America Television Network, Inc., et al., Administrative Proceeding File No. 3-13946. 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 Channel America Television Network, Inc., et al., Administrative Proceeding, Exchange Act Release No. 62364 (June 23, 2010). (Rel. 34-62511; File No. 3-13946) Goldman Sachs to Pay Record $550 Million to Settle SEC Charges Related to Subprime Mortgage CDOFirm Acknowledges CDO Marketing Materials Were Incomplete and Should Have Revealed Paulson's RoleOn July 15, 2010, the Securities and Exchange Commission announced that Goldman, Sachs & Co. will pay $550 million and reform its business practices to settle SEC charges that Goldman misled investors in a subprime mortgage product just as the U.S. housing market was starting to collapse. In agreeing to the SEC's largest-ever penalty paid by a Wall Street firm, Goldman also acknowledged that its marketing materials for the subprime product contained incomplete information. In its April 16 complaint, the SEC alleged that Goldman misstated and omitted key facts regarding a synthetic collateralized debt obligation (CDO) it marketed that hinged on the performance of subprime residential mortgage-backed securities. Goldman failed to disclose to investors vital information about the CDO, known as ABACUS 2007-AC1, particularly the role that hedge fund Paulson & Co. Inc. played in the portfolio selection process and the fact that Paulson had taken a short position against the CDO. In settlement papers submitted to the U.S. District Court for the Southern District of New York, Goldman made the following acknowledgement:
Goldman agreed to settle the SEC's charges without admitting or denying the allegations by consenting to the entry of a final judgment that provides for a permanent injunction from violations of Section 17(a) of the Securities Act of 1933. Of the $550 million to be paid by Goldman in the settlement, $250 million would be returned to harmed investors through a Fair Fund distribution and $300 million would be paid to the U.S. Treasury. The settlement also requires remedial action by Goldman in its review and approval of offerings of certain mortgage securities. This includes the role and responsibilities of internal legal counsel, compliance personnel, and outside counsel in the review of written marketing materials for such offerings. The settlement also requires additional education and training of Goldman employees in this area of the firm's business. In the settlement, Goldman acknowledged that it is presently conducting a comprehensive, firm-wide review of its business standards, which the SEC has taken into account in connection with the settlement of this matter. The settlement is subject to approval by the Honorable Barbara S. Jones, United Sates District Judge for the Southern District of New York. The July 15th, settlement, if approved by Judge Jones, resolves the SEC's enforcement action against Goldman related to the ABACUS 2007-AC1 CDO. It does not settle any other past, current or future SEC investigations against the firm. Meanwhile, the SEC's litigation continues against Fabrice Tourre, a vice president at Goldman. The SEC investigation that led to the filing and settlement of this enforcement action was conducted by the Enforcement Division's Structured and New Products Unit, led by Kenneth Lench and Reid Muoio, and including Jason Anthony, N. Creola Kelly, Melissa Lamb, and Jeffrey Leasure. Additionally, together with Deputy Director Reisner, Richard Simpson, David Gottesman, and Jeffrey Tao have been handling the litigation. [SEC v. Goldman, Sachs & Co. and Fabrice Tourre, Civil Action No. 10 Civ. 3229, USDC, SDNY, BJ] (LR-21592) SEC Charges Trident Microsystems, Inc. and its Former CEO and Former CAO with Stock Options BackdatingOn July 16, 2010, the Securities and Exchange Commission filed a civil action against Trident Microsystems, Inc., a Santa Clara, California-based provider of integrated circuits, Trident's founder and former Chief Executive Officer, Frank C. Lin, and Trident's former Chief Accounting Officer, Peter Jen, alleging violations related to stock option backdating. The Commission's complaint, filed in the United States District Court for the District of Columbia, alleges that from at least 1993 to May 2006, Trident, through the conduct of Lin and Jen, engaged in a fraudulent and deceptive scheme to provide undisclosed compensation to executives and other employees, concealing millions of dollars in expenses from the Company's shareholders. According to the complaint, Lin used, and directed others to use, hindsight to select for stock option grants dates that coincided with the dates of low closing prices for the Company's stock. Lin backdated stock option documentation to make it appear as if options had been granted on earlier dates, resulting in disguised "in-the-money" option grants to Company employees, officers, and on at least one occasion to directors. Among the alleged backdating practices, Trident backdated offer letters to newly hired employees and "parked" low-priced options under the names of certain employees which were later allocated to different employees in subsequent months when Trident's stock price increased. The complaint alleges that Jen was aware of some of the backdating practices during at least 1998 to 2006 and that he approved backdated grants to certain employees. The complaint alleges that Lin and Jen signed and/or approved of the filing of annual and quarterly reports with the Commission that they knew, or were reckless in not knowing, failed to include compensation expenses associated with the "in-the-money" portions of the backdated grants. The reports falsely stated that Trident complied with stock option accounting rules and, in certain cases, stated that Trident granted options at the fair market value of the Company's stock on the date of grant. Lin and Jen also signed registration statements filed with the Commission that incorporated by reference these false and misleading periodic reports. The complaint also alleges that Lin and Jen reviewed and/or prepared proxy statements provided to shareholders that falsely reported stock option grant dates for executives and falsely stated that those stock options were granted at the market value of the Company's stock on the date of grant. Lin and Jen also filed beneficial ownership forms (Forms 4) with the Commission misrepresenting the purported grant dates of backdated stock options that they each received. According to the complaint, in August 2007, Trident filed a restatement to record approximately $37 million of compensation expenses that the Company had failed to record over a thirteen-year period. As a result of Trident's failure to properly account for its stock option grants, Trident materially overstated its pre-tax income or understated its pre-tax losses, by as much as 113%, in each of the Company's fiscal years from 1993 through 2005, and through the third quarter of its 2006 fiscal year, according to the complaint. Trident, Lin, and Jen agreed to settle the matter without admitting or denying the allegations of the Commission's complaint. Trident consented to the entry of an order permanently enjoining it from violating Section 17(a) of the Securities Act of 1933 (Securities Act), Sections 10(b), 13(a), 13(b)(2)(A), 13 (b)(2)(B) and 14 (a) of the Securities Exchange Act of 1934 (Exchange Act) and Exchange Act Rules 10b-5, 12b-20, 13a-1, 13a-13 and 14a-9. Lin consented to an order permanently enjoining him from violating Section 17(a) of the Securities Act, Sections 10(b), 13(b)(5), 14(a), and 16(a) of the Exchange Act, and Exchange Act Rules 10b-5, 13a-14, 13b2-1, 13b2-2, 14a-9, and 16a-3; and from aiding and abetting violations of the Exchange Act's reporting, books and records, and internal controls provisions. Lin agreed to pay a $350,000 penalty and to be barred for five years from serving as an officer or director of any issuer that has a class of securities registered with the Commission or that is required to file reports with the Commission. Lin also agreed to disgorge the "in-the-money" benefit he received upon his exercise of backdated option grants, plus pre-judgment interest thereon, for total disgorgement of $817,509, which the Commission will deem satisfied upon Lin's payment of this amount to Trident. Jen consented to an order permanently enjoining him from violating Section 17(a) of the Securities Act, Sections 10(b), 13(b)(5), and 16(a) of the Exchange Act, and Exchange Act Rules 10b-5, 13a-14, 13b2-1, 13b2-2, and 16a-3; and from aiding and abetting violations of Exchange Act's reporting, books and records, internal controls, and proxy solicitation provisions. Jen agreed to pay a $50,000 penalty and to be barred for five years from serving as an officer or director of a public company. Jen also agreed to disgorge the "in-the-money" benefit he received upon his exercise of backdated option grants, plus pre-judgment interest thereon, totaling $359,819. The Commission deems Jen's disgorgement satisfied based on Jen's prior payment of this amount to Trident. These settlements are subject to the approval of the United States District Court for the District of Columbia. [SEC v. Trident Microsystems, Inc., Frank C. Lin, and Peter Y. Jen, Civil Action No. 1:10-cv-01202 (JDB) (D.D.C.)] (LR-21593; AAE Rel. 3154) INVESTMENT COMPANY ACT RELEASESFederated Enhanced Treasury Income Fund, et al.A notice has been issued giving interested persons until Aug. 9, 2010, to request a hearing on an application filed by Federated Enhanced Treasury Income Fund, et al., under Section 6(c) of the Investment Company Act for an exemption from Section 19(b) of the Act and Rule 19b-1 under the Act. The order would permit certain registered closed-end management investment companies to make periodic distributions of long-term capital gains with respect to their outstanding common stock as frequently as monthly in any taxable year, and as frequently as distributions are specified by or in accordance with the terms of any outstanding preferred stock that such investment companies may issue. (Rel. IC-29341 - July 14) Pruco Life Insurance Company, et al.An order has been issued under Section 6(c) of the Investment Company Act, as amended, to Pruco Life Insurance Company and Pruco Life Insurance Company of New Jersey (together the Insurance Companies); Pruco Life Flexible Premium Variable Annuity Account and Pruco Life of New Jersey Flexible Premium Variable Annuity Account (together the Accounts); and Prudential Annuities Distributors, Inc. granting exemptions from Sections 2(a)(32), and 27(i)(2)(A) of the Act and Rule 22c-1 thereunder, to permit the recapture of certain credits applied to purchase payments under the Prudential Premier Retirement Variable Annuity X Series annuity contracts (the Contracts) issued by the Insurance Companies and under contracts that are substantially similar in all material respects to the Contracts (the Future Contracts) issued through the Accounts or any other separate account of the Insurance Companies created in the future to support Future Contracts. (Rel. IC-29342 - July 15) SELF-REGULATORY ORGANIZATIONSAccelerated Approval of Proposed Rule ChangeThe Commission granted accelerated approval to a proposed rule change (SR-NYSEArca-2010-57), submitted by NYSE Arca regarding listing and trading shares of AdvisorShares WCM/BNY Mellon Focused Growth ADR ETF. Publication is expected in the Federal Register during the week of July 19. (Rel. 34-62502) SECURITIES ACT REGISTRATIONSRECENT 8K FILINGS
http://www.sec.gov/news/digest/2010/dig071610.htm
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