Closed Meeting - Wednesday, July 28, 2010 - 2:30 p.m.
The subject matter of the Closed Meeting scheduled for Wednesday, July 28, 2010, will be: institution and settlement of an injunctive action; and institution and settlement of administrative proceedings.
Closed Meeting - Thursday, July 29, 2010 - 2:00 p.m.
The subject matter of the Closed Meeting scheduled for Thursday, July 29, 2010, will be: institution and settlement of injunctive actions; institution and settlement of administrative proceedings; 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 Grants Request of Guy S. Amico and Scott H. Goldstein to Withdraw Their Administrative Appeal
On June 9, 2009, an administrative law judge issued an initial decision imposing sanctions upon Guy S. Amico, president of registered broker dealer Newbridge Securities Corporation (Newbridge), and Scott H. Goldstein, chief executive officer of Newbridge (together with Amico, "Respondents"). The law judge found that Amico and Goldstein failed reasonably to supervise Daniel M. Kantrowitz, a former trader at Newbridge, within the meaning of Sections 15(b)(4)(E) and 15(b)(6) of the Securities Exchange Act of 1934, with a view to detecting and preventing Kantrowitz's violations of the registration and antifraud provisions of the federal securities laws. For these failures, the law judge barred Respondents from associating with a broker dealer in a supervisory capacity with a right to apply for reinstatement after two years and imposed on each a civil monetary penalty of $79,000.
On June 16, 2010, Respondents requested that their petition for review be withdrawn. The Commission determined to grant Respondents' request and to dismiss its review of the proceeding. The Commission's order gave notice that the June 9, 2009 initial decision of the administrative law judge has become the final decision of the Commission with respect to Amico and Goldstein and declared effective the sanctions imposed therein. (Rel. 34-62565; File No. 3-13099)
Commission Bars James C. Dawson Following Entry of Permanent Injunction
The Commission barred James C. Dawson of Rye, New York, an investment adviser and general partner of Victoria Investors, LP, a hedge fund, from association with an investment adviser following Dawson˙s consent to the entry of a permanent injunction against him by the Southern District of New York. The Commission found that Dawson had been enjoined for fraud involving "cherry picking" profitable investments from his clients and that the public interest required that Dawson be barred. In imposing the bar, the Commission found that, as alleged in the underlying injunctive complaint, Dawson had unreasonably allocated profitable trades to himself to the detriment of his clients and used Victoria funds to pay non business expenses for himself and his family. (Rel. IA-3057; File No. 3-13579)
In the Matter of Aris Industries, Inc., et al.
An Administrative Law Judge has issued an Order Making Findings and Revoking Registrations by Default as to Eight Respondents (Default Order) in Aris Industries, Inc., Administrative Proceeding No. 3-13950. The Order Instituting Proceedings alleged that Respondents each failed repeatedly to file required annual and quarterly reports while their securities were registered with the Securities and Exchange Commission.
The proceeding has ended as to Respondent URT Industries, Inc. Aris Indus., Inc., Exchange Act Release No. 62545 (July 22, 2010).
The Default Order finds the allegations to be true as to the remaining eight Respondents. It revokes the registrations of each class of registered securities of Aris Industries, Inc., Bene Io, Inc., China Mineral Acquisition Corp., Commodore Separation Technologies, Inc., Food Integrated Technologies, Inc., Gap Instrument Corp., Skysat Communications Network Corp., and Vicon Fiber Optics Corp. pursuant to Section 12(j) of the Securities Exchange Act of 1934. (Rel. 34-62558; File No. 3-13950)
Delinquent Filers' Stock Registrations Revoked
The registrations of the registered securities of Aquacell Technologies, Inc. (n/k/a GreenCore Technology, Inc.), AquaPro Corp., Asian Star Development, Inc., and Avasoft, Inc., have been revoked. Each had repeatedly failed to file required annual and quarterly reports with the Securities and Exchange Commission. Thus, each violated a crucial provision of the federal securities laws that requires public corporations to publicly disclose current, accurate financial information so that investors may make informed decisions. The revocations were ordered in an administrative proceeding before an administrative law judge. (Rel. 34-62559; File No. 3-13943)
Commission Revokes Registration of Securities of Kore Holdings, Inc. for Failure to Make Required Periodic Filings
On July 23, 2010, the Commission revoked the registration of each class of registered securities of Kore Holdings, Inc. (KORHQ) 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, KORHQ 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 Kore Holdings, 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 KORHQ's securities pursuant to Section 12(j) of the Exchange Act. This Order settled the charges brought against KORHQ 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 File No. 3-13946, Exchange Act Release No. 62364 (June 23, 2010). (Rel. 34-62560; File No. 3-13946)
In the Matter of Gary S. Becker and Gregory S. Schaefer
On July 23, 2010, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Notice of Hearing (Order) against Gary S. Becker and Gregory S. Schaefer, based on the entry of a permanent injunction against them in the civil action entitled Securities and Exchange Commission v. Gary S. Becker, et. al. Civil Action No. 09 cv 5707 (S.D.N.Y.)(SAS) in the United States District Court for the Southern District of New York.
In the Order, the Division of Enforcement alleges that on July 12, 2010, a judgment was entered against Becker and Schaefer, permanently enjoining each from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, and from aiding and abetting future violations of Sections 15(b)(7), 15(c)(1), and 17(a) of the Exchange Act and Rules 10b-3, 15b3-1, 15b7-1, and 17a-3(a)(12) thereunder.
The Division of Enforcement further alleges in the Order that the Commission's complaint alleged that, from at least January 2001 until July 2007, Becker and Schaefer sold three unregistered securities offerings of Gold Rush Technologies, Inc., Dillon Scott's parent company, raising approximately $1.3 million in proceeds from 29 investors. Becker and Schaefer, through offering memoranda, direct solicitations, and solicitations by two of their salespersons, represented that the money raised would be used to form a brokerage firm, Dillon Scott, but they instead diverted approximately 79% of the offering proceeds to enrich themselves and others. In addition, Becker and Schaefer knowingly and substantially assisted Dillon Scott in violating numerous regulatory provisions governing broker-dealers by not disclosing in regulatory filings that Becker was controlling Dillon Scott, permitting individuals to effect securities transactions when they were not registered with FINRA, and not making or keeping required employment documentation for certain associated persons of Dillon Scott.
A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide Becker and Schaefer an opportunity to dispute the allegations, and to determine what, if any, remedial action is appropriate and in the public interest pursuant to Section 15(b) of the Exchange Act.
The Order directed that an Administrative Law Judge shall issue an initial decision no later than 210 days from the date of service of the order, pursuant to Rule 360(a)(2) of the Commission's Rules of Practice. (Rel. 34-62561; File No. 3-13976)
Court Enters Permanent Injunction, Officer and Director Bar, Civil Penalty, and Forfeiture of Bonuses and Stock Sale Proceeds Pursuant to Section 304(a) of the Sarbanes-Oxley Act Against Former CFO Carl W. Jasper Following a Jury's Verdict for the Commission in Stock Options Backdating Case
The Securities and Exchange Commission today announced that, on July 21, 2010, following a jury's verdict for the Commission, the Honorable James Ware of the United States District Court for the Northern District of California entered judgment against Defendant Carl W. Jasper imposing a permanent injunction against future violations of the federal securities laws and other relief, including a bar against serving as an officer or director of a public company for two years, a civil monetary penalty, and forfeiture of bonuses and stock sales pursuant to Section 304(a) of the Sarbanes-Oxley Act.
The judgment resolves the Commission's civil action and grants relief sought against Jasper in a Complaint filed on Dec. 4, 2007. In its Complaint, the Commission had alleged that Jasper, the former CFO of Maxim Integrated Products, Inc., a Silicon Valley semiconductor company, participated in a years-long fraudulent scheme to report false financial information to investors.
The Commission's Complaint alleged, among other things, that between 2000 and 2005, Jasper helped Maxim fraudulently conceal hundreds of millions of dollars in compensation expenses through the use of backdated, "in-the-money" options grants. The Commission's complaint also alleged that Jasper was aware of the improper backdating practices, drafted backdated grant approval documents for Maxim's CEO to sign, and signed several financial statements that he knew or was reckless in not knowing were materially false and misleading. Following an eight-day trial in United States District Court in San Jose, California, a jury found Jasper liable for, among other violations, fraud and lying to auditors.
The judgment (i) permanently enjoins Jasper from violating the federal securities laws; (ii) bars Jasper from serving as an officer or director of a public company for two years; (iii) orders Jasper to pay a $360,000 civil monetary penalty; and (iv) orders Jasper to forfeit $1,869,639 in bonuses and stock sale proceeds earned by Jasper. [SEC v. Carl W. Jasper, United States District Court for the Northern District of California, Civil Action No. C 07-6122 JW] (LR-21598)
SEC Brings Settled Civil Charges Against Sunrise Senior Living, Inc. and Two Former Sunrise Officers, Larry E. Hulse and Kenneth J. Abod
The Securities and Exchange Commission today filed a civil action in U.S. District Court for the District of Columbia against Sunrise Senior Living, Inc., a Virginia-based owner and manager of assisted living facilities whose stock is listed on the New York Stock Exchange, and former Sunrise officers, Larry E. Hulse and Kenneth J. Abod. The Commission's complaint alleges that Sunrise engaged in financial reporting fraud during the relevant period from 2003 through 2005, by making improper adjustments to its reserve for self-insured health and dental benefits and its accrual for corporate bonuses to meet public earnings forecasts. The complaint further alleges that Hulse, Sunrise's Chief Financial Officer during most of the relevant period, oversaw improper adjustments to the health and dental reserve and signed false SEC filings and Sarbanes-Oxley certifications. In addition, the complaint alleges that Hulse and Abod, Sunrise's former Treasurer during most of the relevant period, directed Sunrise employees to make improper adjustments to the bonus accrual account. Hulse and Abod are both certified public accountants.
Without admitting or denying the allegations in the complaint, Sunrise has agreed to a final judgment permanently enjoining it from violating Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934 (Exchange Act) and Exchange Act Rules 12b-20, 13a-1, and 13a-13. Hulse has consented, without admitting or denying the allegations in the complaint, to entry of a final judgment permanently enjoining him from violating and/or aiding and abetting violations of the antifraud provisions of Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933 (Securities Act) and Sections 13(a), 13(b)(2)(A), 13(b)(2)(B), and 13(b)(5) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1, and 13a-13, 13a-14, and 13b2-1.
Hulse also agreed to pay $164,993, comprised of $50,000 in civil penalties, disgorgement of $83,333, and prejudgment interest of $31,660. As part of his settlement, and following the entry of the proposed final judgment against him, Hulse, without admitting or denying the Commission's findings, has consented to the issuance of an administrative order pursuant to Rule 102(e) of the Commission's Rules of Practice, suspending him from appearing or practicing before the Commission as an accountant, with the right to apply for reinstatement after three years. Abod has agreed, without admitting or denying the allegations in the complaint, to pay a civil penalty of $25,000. The proposed settlements in the civil action are subject to Court approval.
In a related settled administrative proceeding, the Commission charged that for Sunrise's year-end 2004 and its first fiscal quarter of 2005, Abod willfully violated Exchange Act Section 13(b)(5) and Rule 13b2-1 thereunder and caused and willfully aided and abetted Sunrise's violations of Exchange Act Sections 13(a), 13(b)(2)(A), 13(b)(2)(B), and Rules 12b-20, 13a-1 and 13a-13 thereunder. Abod has agreed to cease and desist from committing or causing the violations charged as well as any future violations of these provisions and denied the privilege of appearing or practicing before the Commission as an accountant with a right to apply for reinstatement after one year. [SEC v. Sunrise Senior Living, Inc., et al., Civil Action No. 1:10-CV-01247 (D.D.C.)] (LR-21600; AAE Rel. 3157); Administrative Proceeding - Rel. 34-62563; AAE Rel. 3158; File No. 3-13977)
SEC Awards $1 Million for Information Provided in Insider Trading Case
The Securities and Exchange Commission today announced the award of $1 million to Glen Kaiser and Karen Kaiser of Southbury, Connecticut, who provided information and documents leading to the imposition and collection of civil penalties in SEC v. Pequot Capital Management, Inc., et al. This is the largest award paid by the SEC for information provided in connection with an insider trading case.
The SEC staff previously investigated alleged insider trading in Microsoft Corp. securities by hedge fund adviser Pequot Capital Management, Inc., its chief executive, Arthur J. Samberg, and David E. Zilkha, a Microsoft employee who accepted an employment offer at Pequot, but closed its investigation without action. In late 2008, Karen Kaiser, the ex-wife of Zilkha, and her husband, Glen Kaiser, discovered key evidence that ultimately led to the filing of a settled enforcement action against Defendants Pequot and Samberg alleging they engaged in insider trading. Among other documents and information the Kaisers provided the SEC was a key email communication between Zilkha and another Microsoft employee that was not turned over to the SEC in the first investigation. Without admitting or denying the allegations in the SEC's complaint, Pequot and Samberg consented to the entry of injunctions and orders requiring the payment of civil penalties totaling $10 million (as well as the payment of disgorgement and prejudgment interest totaling over $17 million and an investment advisory bar as to Samberg and censure as to Pequot).
The SEC approved the award earlier this week pursuant to Section 21A(e) of the Securities Exchange Act of 1934, which authorized the Commission, in its discretion, to grant an award of up to 10% of the penalties paid in a case to a person who provided information leading to the imposition of those penalties, but only in insider trading cases. That provision has since been repealed by the Dodd-Frank Wall Street Reform and Consumer Protection Act, which added new Section 21F to the Securities Exchange Act, authorizing the Commission to award bounties to parties who provide information leading to recovery of monetary sanctions in a broader range of cases, not limited as before to civil penalties recovered in insider trading cases.
On the same day the Commission filed the settled complaint against Pequot and Samberg in the above matter, it also issued an order instituting administrative and cease-and-desist proceedings against Zilkha in connection with the conduct described above. That matter is pending before an SEC administrative law judge.
For further information, please see Litigation Release Number 21540 (May 28, 2010). [SEC v. Pequot Capital Management, Inc., et al., Civil Action No. 3:10-CV-00831-CVD (United States District Court for the District of Connecticut] (LR-21601)
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