Following is a schedule of Commission meetings, which will be conducted under provisions of the Government in the Sunshine Act. Meetings will be scheduled according to the requirements of agenda items under consideration.
Open meetings will be held in the Auditorium, Room L-002 at the Commission's headquarters building, 100 F Street, N.E., Washington, D.C. Visitors are welcome at all open meetings, insofar as space is available. Persons wishing to photograph or videotape Commission meetings must obtain permission in advance from the Secretary of the Commission. Persons wishing to tape record a Commission meeting should notify the Secretary's office 48 hours in advance of the meeting.
Any member of the public who requires auxiliary aids such as a sign language interpreter or material on tape to attend a public meeting should contact SECInterpreter@SEC.gov at least three business days in advance. For any other reasonable accommodation related disability contact DisabilityProgramOfficer or call 202-551-4158.
Open Meeting - Wednesday, December 15, 2010 - 10:00 a.m.
The subject matters of the Open Meeting will be:
Closed Meeting - Thursday, December 16, 2010 - 2:00 p.m.
The subject matter of the Closed Meeting scheduled for Thursday, Dec. 16, 2010, will be: institution and settlement of injunctive actions; institution and settlement of administrative proceedings; regulatory matters regarding financial institutions; 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.
Adviser to Mutual Fund Sanctioned
Diane M. Keefe, formerly the portfolio manager of the Pax World High Yield Fund (Pax HYF), has been sanctioned for her violation of the antifraud provision of the Investment Company Act of 1940. She was ordered to cease and desist from further violations and censured for violative conduct that consisted of her admitted after-the-fact creation of notes of meetings of a non-existent "investment committee" of the Pax HYF in response to a request by an employee and officer of its investment adviser. The sanctions were ordered after a hearing before an administrative law judge. (Initial Decision No. 410; File No. 3-13337)
In the Matter of Bryan S. Rogers
On December 8, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions (the Order) against Bryan S. Rogers (Rogers). The Order finds that from February 2002 through September 2003, Rogers was a proprietary trader at A.B. Watley, Inc. (Watley), a day trading firm registered with the Commission as a broker-dealer. From September 2003 through December 2003, Rogers day-traded as a customer and, later, as a proprietary trader at E*Trade (also a registered broker-dealer). For at least part of the time during which he engaged in the conduct described below, Rogers was a registered person associated with a broker-dealer registered with the Commission, and held a Series 7 license.
The Order further finds that on Oct. 5, 2010, a final judgment was entered by consent against Rogers, permanently enjoining him from future violations of 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, and from aiding and abetting violations of Section 15(c) of the Exchange Act, in the civil action entitled SEC v. A.B. Watley Group, Inc., et al., Civil Action Number 1:06-CV-1274, in the United States District Court for the Eastern District of New York. The Commission's complaint alleged that, while associated with a broker-dealer, Rogers participated in a scheme to improperly obtain and use material confidential information improperly obtained from broker-dealers' "squawk boxes" to trade ahead of the broker-dealers' institutional orders.
Based on the above, the Order bars Rogers from association with any broker or dealer. Rogers consented to the issuance of the Order without admitting or denying any of the findings in the Order, except as to the entry of the final judgment against him, which he admits. (Rel. 34-63477; File No. 3-14157)
In the Matter of Steven L. Rattner
On December 9, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934 and Section 203(f) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions (Order) against Steven L. Rattner.
The Order finds that on Nov. 23, 2010, the United States District Court for the Southern District of New York entered a final consent judgment against Rattner in the civil action entitled Securities and Exchange Commission v. Steven L. Rattner, Civil Action No. 10-CV-8699. The court's judgment, to which Rattner consented, (i) permanently enjoins Rattner from future violations of Section 17(a)(2) of the Securities Act of 1933, and (ii) orders Rattner to pay $3,213,378 in disgorgement plus prejudgment interest and a $3 million civil penalty.
The Commission's complaint against Rattner charges him with violating Section 17(a)(2) of the Securities Act of 1933 by entering into undisclosed "pay-to-play" arrangements in order to secure an investment from the New York Common Retirement Fund (Retirement Fund) for Quadrangle Group LLC. The complaint alleges that Rattner secured a $150 million investment from the Retirement Fund for a Quadrangle private equity fund only after arranging for a Quadrangle affiliate to distribute the DVD of a low-budget film that David Loglisci, then the New York State Deputy Controller, and his brothers produced and after agreeing to pay more than $1 million in purported "finder" fees to Henry Morris, the top political advisor and chief fundraiser for then-New York State Comptroller Alan Hevesi, even though Quadrangle had already succeeded in presenting its investment proposal directly to Loglisci. The complaint alleges further that Rattner failed to disclose the DVD deal or the true nature of the payment to Morris to the Retirement Fund's Investment Advisory Committee, which is required by state law to monitor and give advice regarding the Retirement Fund's investments, or to anyone else that was not involved in the "pay-to-play" arrangement.
Based on the above, the Order bars Rattner from association with any broker, dealer or investment adviser with the right to reapply after two years. Rattner consented to the issuance of the Order without admitting or denying any of the findings in the Order, except that he admitted to the entry of the injunction. (Rel. 34-63478; IA-3122; File No. 3-14158)
Court Freezes Assets Linked to Suspicious Securities Purchases Ahead of WBD Foods Acquisition Announcement
On December 8, the U.S. District Court for the Southern District of New York entered a Temporary Restraining Order freezing assets and trading proceeds of certain One of More Unknown Purchasers of the Securities of Wimm-Bill-Dann Foods OJSC (Unknown Purchasers) and prohibiting the Unknown Purchasers from obtaining the securities or the proceeds from any sale of the securities. The Commission filed a complaint alleging that the Unknown Purchasers engaged in illegal insider trading in the last three days before the Dec. 2, 2010, announcement that PepsiCo, Inc. intended to acquire a 66 percent interest in Wimm-Bill-Dann Foods OJSC (WBD) for $3.8 billion, pending required government approvals. (The $3.8 billion price for 66 percent implies a total enterprise value of $5.4 billion.) WBD is a Russian corporation that manufactures and sells dairy and fruit juice products. It has American Depositary Receipts (ADRs) that trade on the New York Stock Exchange. The Commission's complaint alleges that the Unknown Purchasers, through their insider trading, violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks permanent injunctive relief, the disgorgement of all illegal profits, and the imposition of civil monetary penalties.
The Commission's complaint alleges that, in an account maintained at SG Private Banking (Suisse) SA in Geneva, Switzerland, the Unknown Purchasers placed orders to buy 107,500 ADRs on Nov. 29, 2010; another 132,500 ADRs on November 30, 2010; and an additional 160,000 ADRs on Dec. 1, 2010. The Unknown Purchasers' buys on November 29th comprised 23 percent of the total trading volume of WBD ADRs that day; their purchases on November 30th comprised 13 percent of that day's total trading volume of WBD ADRs; and their December 1st purchases comprised 21 percent of that day's total trading volume of WBD ADRs.
The complaint further alleges that, after the acquisition announcement, the price of WBD ADRs rose approximately 28 percent for the day. As a result, the Unknown Purchasers are in a position to realize total profits of approximately $2.7 million from the sale of the ADRs.
The Court's Temporary Restraining Order prohibits the transfer of the illegally purchased WBD ADRs, or proceeds from their sale, to the Unknown Purchasers. In addition, the Order requires the Unknown Purchasers to identify themselves, imposes an expedited discovery schedule, and prohibits the defendants from destroying documents. [SEC v. One or More Unknown Purchasers of Securities of Wimm-Bill-Dann Foods OJSC, 10 Civ. 9159 (JFK) (S.D.N.Y.)] (LR-21766)
SEC Charges Uncle and Nephew in Insider Trading Scheme
On December 8, the Securities and Exchange Commission charged a Baltimore-based business consultant and his uncle with insider trading in the stock of two biotechnology companies based on material, nonpublic information that he obtained from his fraternity brother.
The SEC alleges that Brett A. Cohen received coded e-mails referencing the movie Wall Street from his fraternity brother, who was being tipped with inside information by his own brother, a patent agent for San Diego-based Sequenom, Inc. Cohen subsequently made phone calls from an outdoor pay phone to tip his uncle David V. Myers of Cleveland, who then traded on the illegally obtained inside information and garnered more than $600,000 in illicit profits.
In a parallel criminal proceeding, the U.S. Attorney's Office for the Southern District of California today filed criminal charges against both Cohen and Myers.
According to the SEC's complaint, filed in the U.S. District Court for the Southern District of California, the patent agent learned about two corporate events involving Sequenom prior to the public release of the information:
According to the SEC's complaint, the patent agent conducted intellectual property due diligence with respect to the EXAS transaction, and he was the patent agent assigned to the company's Down syndrome test.
The SEC alleges that the patent agent tipped material, non-public information about the EXAS transaction to his brother, who relayed it to his fraternity brother Cohen. For example, the patent agent's brother sent Cohen an e-mail asking, "[a]ny word related to Blu H@rsesh0e? La Jolla says the times are ripe." The movie Wall Street uses the phrase, "Blue Horseshoe loves Anacot Steel," as a code for insider trading. "La Jolla" references the fact that the patent agent lived and worked near La Jolla, Calif.
The SEC alleges that after at least a dozen phone calls among the scheme's four participants in the succeeding days, Myers made his first-ever purchase of EXAS securities, buying 15,000 shares. It was the first stock purchase in Myers's brokerage account since at least January 2007. Myers later purchased an additional 20,000 shares of EXAS stock before Sequenom publicly announced after the markets closed on Jan. 9, 2009, that it planned to acquire EXAS. EXAS stock rose 50 percent by the close of the markets on January 10 on increased trading volume of 466 percent. During the next few weeks, Myers sold nearly all of his EXAS stock for illegal profits of more than $34,000.
The SEC alleges that the patent agent also tipped his brother ahead of Sequenom's announcement that investors could no longer rely on previously disclosed data related to its Down syndrome test. The announcement caused Sequenom's stock price to drop by more than 75 percent in one day. Cohen illegally obtained and tipped inside information just prior to the company's announcement through a series of communications, including a call he placed from a pay phone near his workplace to convey information to Myers, who immediately purchased risky Sequenom put options just minutes before the markets closed on April 29, 2009. The next morning, Myers sold his entire Sequenom position for illegal profits of more than $570,000.
The SEC's complaint charges that Cohen and Myers violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission is seeking permanent injunctive relief, disgorgement of illicit profits with prejudgment interest, and financial penalties against them.
The SEC thanks the U.S. Attorney's Office for the Southern District of California and the Federal Bureau of Investigation for their cooperation and assistance in this matter. The SEC also acknowledges the assistance of FINRA and the Options Regulatory Surveillance Authority in this investigation.
The SEC's investigation is ongoing. [SEC v. Brett A. Cohen and David V. Myers, United States District Court for the Southern District of California, Case No. 3:10-cv-2514-L-WMC] (LR-21767)
INVESTMENT COMPANY ACT RELEASES
Nuveen Asset Management, et al.
A notice has been issued giving interested persons until Dec. 28, 2010 to request a hearing on an application filed by Nuveen Asset Management, et al. for an order under Section 6(c) of the Investment Company Act for an exemption from Rule 12d1-2(a) under the Act. The order would permit open-end management investment companies relying on Rule 12d1-2 under the Act to invest in certain financial instruments. (Rel. IC-29522 - December 8)
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed by NASDAQ OMX BX to Establish Strike Price Intervals and Trading Hours for Options on Index-Linked Securities (SR-BX-2010-085) 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 December 13. (Rel. 34-63461)
A proposed rule change (SR-ISE-2010-113) filed by the International Securities Exchange relating to payment for order flow fees 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 December 13. (Rel. 34-63469)
A proposed rule change filed by NYSE Arca (SR-NYSEArca-2010-108) amending its fee schedule 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 December 13. (Rel. 34-63471)
A proposed rule change filed by NYSE Amex re-establishing a pilot program relating to cabinet trades until June 1, 2011 (SR-NYSEAmex-2010-114) 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 December 13. (Rel. 34-63475)
A proposed rule change filed by NYSE Arca re-establishing and extending the Exchange's pilot program relating to cabinet trades until June 1, 2011 (SR-NYSEArca-2010-109) 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 December 13. (Rel. 34-63476)
Proposed Rule Changes
NYSE Arca filed a proposed rule change (SR-NYSEArca-2010-106) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 amending its rules regarding the listing of options series with $1 strike prices. Publication is expected in the Federal Register during the week of December 13. (Rel. 34-63462)
NYSE Amex filed a proposed rule change (SR-NYSEAmex-2010-109) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 amending its rules regarding the listing of options series with $1 strike prices. Publication is expected in the Federal Register during the week of December 13. (Rel. 34-63463)
Accelerated Approval of Proposed Rule Change
The Commission approved on an accelerated basis a proposed rule change submitted by NYSE Arca (SR-NYSEArca-2010-95) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 to list and trade shares of the ETFS Asian Gold Trust. Publication is expected in the Federal Register during the week of December 13. (Rel. 34-63464)
SECURITIES ACT REGISTRATIONS
RECENT 8K FILINGS