SEC News Digest

ENFORCEMENT PROCEEDINGS

Initial Decision Barring Eric R. Majors From Association With Any Investment Adviser is Final

The Commission has declared final the initial decision of an administrative law judge barring Eric R. Majors from association with any investment adviser. The initial decision found that, on March 19, 2010, judgment was imposed on Majors after he pleaded guilty to one count of conspiracy to defraud the SEC and the Internal Revenue Service in violation of 18 U.S.C. § 371. Majors was sentenced to five years imprisonment and three years supervised release, and ordered to pay $166,540.57 in restitution. United States v. Majors, No. 07 CR 471 JLK 01 (D. Colo.).

The initial decision further found that, on July 7, 2010, a final judgment by consent was entered against Majors enjoining him from committing or aiding and abetting future violations of Sections 5 and 17(a) of the Securities Act of 1933, Sections 10(b), 13(a), and 16(a) of the Securities Exchange Act of 1934, and Section 302 of the Sarbanes Oxley Act of 2002. SEC v. Majors, No. 07 CV 2414 WYD MJW (D. Colo.). Majors was also barred from acting as an officer or director of any issuer that has securities registered pursuant to Exchange Act Section 12, barred from participating in an offering of penny stock, and ordered to disgorge $123,574 in ill gotten gains and $48,835 in prejudgment interest.

The initial decision found that starting in 2000, Majors along with a co conspirator, formed bogus shell corporations and registered the shares of those corporations with the SEC for public trading. The bogus corporations would engage in reverse merger transactions with actively operating, non registered businesses. Majors then registered as an investment adviser in order to find initial investors for the shell corporation and to promote the shell corporations' stock. In order to further his scheme, Majors solicited money from family, friends, and investors using a private placement. Majors also purchased identity information for several Mexican nationals and used the information to open brokerage accounts, lease office space, and rent mailboxes. In January 2001, Majors filed registration statements for the shares of the first of the shell corporations. Later that year, Majors and his co conspirator engaged in another scheme to create fictitious revenue for the shell company, and finally at the end of 2001, sold that company which grossed proceeds of over $300,000.

Majors and his co conspirator also tried to register the shares of a second shell company by using the identities that they had previously purchased to distribute the shares, and to create fictitious revenue and false financial statements, all of which were included in the registration statements filed with the SEC. From December 2002 through February 2005, they orchestrated another scheme to register more than 45 million shares of stock in the shell company and distribute the shares to accounts they controlled, employed stock promoters to drive trading in the company's shares, while creating false revenue and financial data. The gains from the sales of shares were used for their personal use. (Rel. IA-3131; File No. 3 13975)

In the Matter of Milowe Allen Brost

Milowe Allen Brost, a/k/a Milo Brost, a/k/a M.B. Gonne, a/k/a Phillip K. Collins (Brost), of Calgary, Alberta, Canada, has been barred from association with any broker or dealer. The sanction was ordered in an administrative proceeding before an administrative law judge, following a court-ordered injunction against him. In November 2010, Brost was enjoined from violating the antifraud and registration provisions of the federal securities laws based on his involvement in a fraudulent "Ponzi" scheme.

Brost and others perpetrated a $300 million Ponzi scheme that victimized over 3,000 investors in the United States and Canada. The perpetrators executed the scheme through a multi-level marketing organization and operated through a labyrinth of companies and bank accounts that were designed to hide their misconduct from investors and law enforcement; they eventually used more than eighty entities to issue securities to investors, provide "dog and pony" shows to investors, and to disguise the movement of investor funds among more than eighty bank accounts, located in United States, Canada, Honduras, Ecuador, Peru, Venezuela, Panama, the Bahamas, Belize, Bermuda, Malaysia, and Portugal. To further hide his involvement in the scheme, Brost acted under the guise of several personal aliases. (Rel. 34-63633; File No. 3-14144)

SELF-REGULATORY ORGANIZATIONS

Immediate Effectiveness of Proposed Rule Changes

A proposed rule change filed by The NASDAQ Stock Market to enhance the Investor Support Program (SR-NASDAQ-2010-154) 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 January 3. (Rel. 34-63628)

A proposed rule change filed by BATS Exchange (SR-BATS-2010-039) related to fees for use of BATS Exchange 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 January 3. (Rel. 34-63630)

The Commission issued notice of filing and immediate effectiveness of proposed rule change (SR-CBOE-2010-117) filed by Chicago Board Options Exchange under Rule 19b-4 of the Securities Exchange Act of 1934 relating to order router subsidy. Publication is expected in the Federal Register during the week of January 3. (Rel. 34-63631)

A proposed rule change filed by BATS Exchange (SR-BATS-2010-038) related to fees for use of BATS Exchange 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 January 3. (Rel. 34-63632)

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http://www.sec.gov/news/digest/2011/dig010411.htm