U.S. Securities & Exchange Commission
SEC Seal
Home | Previous Page
U.S. Securities and Exchange Commission

SEC News Digest

Issue 2010-205
October 29, 2010

COMMISSION ANNOUNCEMENTS

Joint CFTC-SEC Advisory Committee on Emerging Regulatory Issues to Meet November 5

The Securities and Exchange Commission and the Commodity Futures Trading Commission (CFTC) will hold a public meeting of the Joint CFTC-SEC Advisory Committee on Emerging Regulatory Issues on November 5 from 9 a.m. to noon ET.

Meeting agenda includes:

  • Receive a summary and recap from the staffs of the CFTC and SEC on the report issued Sept. 30, 2010.
  • Hear a report from the subcommittee on cross-market linkages.
  • Hear a report from the subcommittee on pre-trade risk management.
  • Discuss potential recommendations and responses.

The meeting will be held in the Lobby Level Hearing Room at the CFTC's Headquarters: Three Lafayette Centre, 1155 21st Street, NW, Washington, D.C. The meeting will be open to the public with seating on a first-come, first-served basis. The meeting also will be webcast on the CFTC's website.

Viewing/Listening Information:

  • Watch a live broadcast of the meeting via webcast on www.cftc.gov.
  • Call in to a toll-free telephone line to connect to a listen-only live audio feed.

Call-in participants should be prepared to provide their first name, last name and affiliation. Conference call information listed below:

  • U.S./Canada Toll-Free: 877-951-7311
  • Participant Passcode: 6960577

The agencies will accept public comments regarding the issues addressed at the meeting. Comments may be submitted to the SEC through a comment form on its website. Comments may be submitted to the CFTC at jointacstatements@cftc.gov. (Press Rel. 2010-206)


SEC Staff Publishes Progress Report on Work Plan for Global Accounting Standards

The Securities and Exchange Commission's Office of the Chief Accountant and Division of Corporation Finance today published their first progress report on the Work Plan related to global accounting standards.

The Commission directed agency staff earlier this year to execute the Work Plan to provide the information needed to evaluate the implications of incorporating International Financial Reporting Standards (IFRS) into the financial reporting system for U.S. issuers. The Commission indicated that following successful completion of the Work Plan and the convergence projects of the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB), it will be in a position in 2011 to determine whether to incorporate IFRS into the U.S. financial reporting system.

"The staff has invested significant time and effort in executing the Work Plan, and we've made great progress to date," said SEC Chief Accountant Jim Kroeker. "This progress report emphasizes the importance of transparency in the staff's activities, and can help the public's understanding of the magnitude of this project and the staff's progress."

The Work Plan addresses six key areas:

  • Sufficient development and application of IFRS for the U.S. domestic reporting system.
  • The independence of standard setting for the benefit of investors.
  • Investor understanding and education regarding IFRS.
  • Examination of the U.S. regulatory environment that would be affected by a change in accounting standards.
  • The impact on issuers both large and small, including changes to accounting systems, changes to contractual arrangements, corporate governance considerations, and litigation contingencies.
  • Human capital readiness.

The SEC staff expects to continue to report periodically on the status of the Work Plan in 2011. (Press Rel. 2010-207)


Report on Administrative Proceedings

The Report on Administrative Proceedings for the Period April 1, 2010 through September 30, 2010 has been issued, giving summary statistical information on the Commission's administrative proceedings caseload. The report is published in the SEC Docket and appears on the Commission's website. (Rel. 34-63214)


ENFORCEMENT PROCEEDINGS

Initial Decision Permanently Disqualifying L. Rex Andersen, CPA, from Appearing or Practicing Before the Commission as an Accountant is Final

The Commission has declared final the initial decision of an administrative law judge permanently disqualifying L. Rex Andersen, CPA, from appearing or practicing before the Commission as an accountant. The initial decision found that on May 4, 2010, Andersen had been permanently enjoined from violations of Sections 10(b) and 13(a) of the Securities Exchange Act of 1934 and Rules 10b 5, 12b 20, and 13a 1 thereunder, and of Rule 2 02 of Regulation S X (17 C.F.R. 210.2 02). It was also found that Andersen lacked auditor independence in the audits. SEC v. Exotics.com, Inc., No.2 05 cv 00531 (D. Nev.). The court ordered disgorgement of ill gotten gains of $3,500 plus prejudgment interest of $2,719.04, and a civil penalty of $120,000. Previously, Andersen and his former partner settled charges related to their failure to register their now defunct public accounting firm with the Public Company Accounting Oversight Board as required by Section 102(a) of the Sarbanes Oxley Act of 2002.

The initial decision found that Andersen's injunction was based on his wrongdoing while auditing Hardrock Mines, Inc. (Hardrock Mines), a publicly traded company, later known as Exotics.com, Inc., most recently for the year 2000. (Rel. 34-63209; File No. 3-13935)


Commission Revokes Registration of Securities of Cell Wireless Corp. for Failure to Make Required Periodic Filings

On October 29, 2010, the Commission revoked the registration of each class of registered securities of Cell Wireless Corp. (Cell Wireless) 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, Cell Wireless 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 Cell Wireless Corp. 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 Cell Wireless's securities pursuant to Section 12(j) of the Exchange Act. This Order settled the proceedings brought against Cell Wireless in In the Matter of Camera Platforms International, Inc., et al., Administrative Proceeding File No. 3-14088.

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 Camera Platforms International, Inc., et al., Administrative Proceeding File No. 3-14088, Exchange Act Release No. 63081, October 13, 2010. (Rel. 34-63210; File No. 3-14088)


In the Matter of Jeffrey M. Zamorsky

On October 29, 2010, an Administrative Law Judge issued an Order Making Findings and Imposing Sanction by Default (Default Order) in Jeffrey M. Zamorsky, Administrative Proceeding No. 3-14056. Zamorsky was permanently enjoined him from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5 in SEC v. Icon World Corp., No. 08-cv-01088-MSK-CBS (D. Colo. March 31, 2009). The complaint in the civil action charged that, between May 2007 and March 2008, Zamorsky raised $1,373,995 from twenty-three investors in at least eleven states using private offering memorandum that contained multiple false and misleading statements. Zamorsky, who is presently incarcerated at the Federal Correctional Institution Englewood, was barred from association with any broker or dealer. (Rel. 34-63212; File No. 3-14056)


In the Matter of Prism Financial Services, LLC

The Securities and Exchange Commission announced the filing of a civil injunctive action in Atlanta Georgia on October 29, 2010, charing alleging that Patricia Diane Gruber (Gruber), Kadar Josey (Josey), and the companies they operated, Elite Resources, LLC (Elite) and Elite3 Holding Corp. (Elite3), operated a fraudulent "Prime Bank" scheme that violated the antifraud and securities and broker dealer registration provisions of the federal securities laws.

The Commission's complaint alleges from at least April 8, 2010 through at least August 20, 2010, the defendants raised approximately $2.85 million from at least nine investors. In raising these funds, the complaint alleges the defendants represented that investors could draw upon bank issued guarantees worth millions of dollars, in one case representing a 40,000% return on investment, without having to repay the withdrawn funds. The defendants further represented that investor funds would be held in escrow until the bank guarantees were issued. The complaint alleges that both of these representations were false in that no such bank guarantees existed and the defendants used almost all of the funds for several undisclosed purposes immediately upon receipt. When investors demanded performance, the complaint alleges that the defendants provided them with a fictitious guarantee certificate purportedly issued by Barclays Bank.

In its Complaint, the Commission alleges that the defendants violated Sections 5(a) and (c) and 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Also on October 29, 2010, the court issued an order temporarily restraining defendants from violating these provisions, freezing their assets, providing for expedited discovery, prohibiting the destruction of documents and directing that they provide an accounting for the funds received. A hearing on the Commission's request for a preliminary injunction will be held on a date yet to be determined. [SEC v. Elite Resources, LLC, et al., Case No. 1:10-CV-3522 (N.D. Ga)] (LR-21713)


Commission Charges James D. Sterling in Scheme to Defraud Banks and Their Depositors in Over 50 Public Stock Offerings

The Commission today announced the filing of a civil injunctive action against James D. Sterling, of New York, N.Y., for conducting a fraudulent scheme involving 51 public offerings of banks that were converting from mutual to stock ownership. The Commission's complaint alleges that, from January 2003 until October 2008, Sterling defrauded these banks and their depositors by secretly using his daughter as a nominee to acquire stock in conversion offerings, in violation of the offering terms and banking regulations prohibiting purchasers from transferring their purchase rights or shares obtained in the offerings. When banks converted, Sterling executed his daughter's signature on stock order forms certifying that she was purchasing stock solely for her own account and was not transferring her purchase rights or the underlying stock to anyone else. Sterling funded his daughter's purported stock purchases, controlled the depositing and sales of the shares issued to her, and transferred all of her purported stock sale proceeds to himself. As a result, Sterling reaped $1,502,193 in ill-gotten gains from the scheme. Because most of the 51 offerings at issue were oversubscribed, Sterling's scheme harmed legitimate bank depositors by limiting the amount of stock available to them.

The Commission's complaint, which was filed in the United States District Court for the Southern District of New York, charges Sterling with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

Sterling, without admitting or denying the allegations in the complaint, has consented to the entry of a final judgment permanently enjoining him from violating the abovementioned provisions, ordering him to pay $2,084,494 in disgorgement and prejudgment interest, and imposing a civil monetary penalty of $150,000. [SEC v. James D. Sterling, USDC SDNY, Case No. 10 Civ. 8206] (LR-21714)


INVESTMENT COMPANY ACT RELEASES

Dolby Laboratories, Inc.

An order has been issued to Dolby Laboratories, Inc. under Section 3(b)(2) of the Investment Company Act declaring it to be primarily engaged in a business other than that of investing, reinvesting, owning, holding or trading in securities. (Rel. IC-29492 - October 27)


SELF-REGULATORY ORGANIZATIONS

Proposed Rule Changes

NYSE Amex filed a proposed rule change (SR-NYSEAmex-2010-100) to amend Rule 900.3NY(h) to define Stock/Complex Orders, amend Rule 963NY(d) to update and clarify the priority of Complex Orders, eliminate Rule 963.1NY, and amend Rule 980NY to establish a Complex Order Auction. Publication is expected in the Federal Register during the week of November 1. (Rel. 34-63187)

The NASDAQ OMX PHLX filed a proposed rule change (SR-Phlx-2010-145) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 and Rule 19b-4 thereunder, to establish remote specialists. Publication is expected in the Federal Register during the week of November 1. (Rel. 34-63192)

The NASDAQ Stock Market filed a proposed rule change (SR-NASDAQ-2010-134) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 to adopt additional criteria for listing commodity stockpiling companies that have indicated that their business plan is to buy and hold commodities. Publication is expected in the Federal Register during the week of November 1. (Rel. 34-63207)


Immediate Effectiveness of Proposed Rule Changes

A proposed rule change filed by NASDAQ OMX PHLX to modify prices for co-location services (SR-Phlx-2010-146) 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 November 1. (Rel. 34-63188)

A proposed rule change filed by the NASDAQ Stock Market to modify prices for co-location services (SR-NASDAQ-2010-135) 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 November 1. (Rel. 34-63189)

A proposed rule change filed by NASDAQ OMX BX to modify prices for co-location services (SR-BX-2010-069) 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 November 1. (Rel. 34-63190)

The National Securities Clearing Corporation filed a proposed rule change (File No. SR-NSCC-2010-12) under Section 19(b)(1) of the Exchange Act, which became effective upon filing, modify procedures related to the Automated Customer Account Transfer Service. Publication is expected in the Federal Register during the week of November 1. (Rel. 34-63194)

A proposed rule change filed by NASDAQ OMX BX (SR-BX-2010-070) to make clerical and grammatical corrections to Chapter VII, Section 1 (Exercise of Options Contracts) of the Boston Options Exchange Group, LLC Rules 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 November 1. (Rel. 34-63195)

A proposed rule change (SR-NASDAQ-2010-136) filed by the NASDAQ Stock Market relating to access service fees 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 November 1. (Rel. 34-63197)

A proposed rule change filed by NASDAQ OMX PHLX (SR-Phlx-2010-151) relating to routing fees 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 November 1. (Rel. 34-63198)

A proposed rule change filed by the NASDAQ Stock Market (SR-NASDAQ-2010-139) relating to routing fees has become immediately 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 November 1. (Rel. 34-63199)

A proposed rule change filed by NASDAQ OMX BX to Expand the $0.50 Strike Program (SR-BX-2010-073) 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 November 1. (Rel. 34-63206)


Approval of Proposed Rule Change

The Commission approved a proposed rule change (SR-FINRA-2010-046) filed by the Financial Industry Regulatory Authority pursuant to Rule 19b-4 under the Securities Exchange Act of 1934, to remove the exemption from the trading activity fee for transactions in exchange listed options effected by a member when FINRA is not the designated options examining authority for that member. Publication is expected in the Federal Register during the week of November 1. (Rel. 34-63196)


JOINT INDUSTRY PLAN RELEASES

Immediate Effectiveness of the Seventeenth Substantive Amendment to the Second Restatement of the Consolidated Tape Association Plan and Thirteenth Substantive Amendment to the Restated Consolidated Quotation Plan

Pursuant to Rule 608 under the Securities Exchange Act of 1934, the Participants of the Consolidated Tape Association Plan and Consolidated Quotation Plan filed a proposal to amend the CTA Plan and CQ Plan (SR-CTA/CQ-2010-04) to add BATS Y-Exchange, Inc. to the Plans. Publication is expected in the Federal Register during the week of November 1. (Rel. 34-63193)


SECURITIES ACT REGISTRATIONS


RECENT 8K FILINGS

 

http://www.sec.gov/news/digest/2010/dig102910.htm


Modified: 10/29/2010