In the Matter of VIPC Communications, Inc.
An Administrative Law Judge has issued an Order Making Findings and Revoking Registrations by Default (Default Order) in VIPC Communications, Inc., Administrative Proceeding No. 3-14127. The Order Instituting Proceedings alleged that Respondents repeatedly failed to file required annual and quarterly reports while their securities were registered with the Securities and Exchange Commission. The Default Order finds these allegations to be true and revokes the registrations of each class of registered securities of VIPC Communications, Inc., and Vizario, Inc., pursuant to Section 12(j) of the Securities Exchange Act of 1934. (Rel. 34-63702; File No. 3-14127)
In the Matter of Springfield Co., Inc.
An Administrative Law Judge has issued an Order Making Findings and Revoking Registrations by Default as to Seven Respondents (Default Order) in Springfield Co., Inc., Administrative Proceeding No. 3-14150. The Order Instituting Proceedings (OIP) alleged that eight Respondents repeatedly failed to file required annual and quarterly reports while their securities were registered with the Securities and Exchange Commission. The Default Order finds these allegations to be true as to seven Respondents and revokes the registrations of each class of registered securities of Springfield Co., Inc., SRR Mercantile Inc., Standard Mining Corp., Stewart Foods, Inc., Sunlite, Inc., Syndicated Food Service International, Inc., and Syspower Multimedia Industries Inc., pursuant to Section 12(j) of the Securities Exchange Act of 1934.
The Commission previously accepted an Offer of Settlement from Strathclair Ventures Ltd. (n/k/a SilverCrest Mines Inc.), the other Respondent named in the OIP. Springfield Co., Inc., Exchange Act Release No. 63684 (Jan. 10, 2011). (Rel. 34-63703; File No. 3-14150)
SEC Charges Oil & Gas Exploration Company With Offering Fraud
In the Matter of Michel-Jean Geraud
The Securities and Exchange Commission today announced an enforcement action against Petroleum Unlimited, LLC, Petroleum Unlimited II, LLC, their two operators, escrow agent manager, and three boiler room managers for defrauding investors through the sale of securities in violation of the antifraud provisions of the federal securities laws. From March 2008 until July 2008, the companies raised approximately $2.9 million through offerings of their securities to investors for the purported purpose of funding oil and gas exploration and drilling projects. According to the SEC's complaint, the private placement memoranda for the offerings misrepresented the use of the offering proceeds and failed to disclose that 49% to 74% of investors' funds were paid as commissions to offering sales agents. The private placement memoranda further stated without any reasonable basis that investors could earn annual returns ranging from 14% to 141%. Ultimately, the companies used only about $534,000 of the $2.9 million raised from investors for oil drilling and never found any oil.
The SEC alleges that Roger A. Kimmel, Jr., and Harry Nyce, and the boiler room managers Michel-Jean Geraud, Robert Rossi, and Joseph Valko drafted, reviewed or distributed the private placement memorandum given to investors. The SEC further alleges that Geraud, Rossi, and Valko conducted the offerings through multiple sales offices and knew that their sales agents and the offering materials were not advising investors about the sales commissions of 49% to 74%. Morgan Petitti performed escrow functions for the offering and, among other things, distributed commissions to the sales agents that were inconsistent with the private placement memoranda, which she typed.
The SEC's complaint, which was filed in the United States District Court for the Southern District of Florida, charges Petroleum Unlimited, Petroleum Unlimited II, Kimmel, Nyce, Geraud, Rossi, and Valko with violating Section 17(a) of the Securities Act of 1933 (Securities Act), and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. The SEC's complaint further charges Geraud, Rossi, and Valko with violating Section 15(a) of the Exchange Act. The complaint also charges Petitti with violating Sections 17(a)(2) and 17(a)(3) of the Securities Act. Petroleum Unlimited, Petroleum Unlimited II, Kimmel, Nyce, and Petitti have agreed to settle the SEC's charges without admitting or denying the allegations. Petroleum Unlimited, Petroleum Unlimited II, and Kimmel, have consented to permanent injunctions and will pay disgorgement plus prejudgment interest, and civil money penalties in amounts to be determined by the court at a later date. Nyce consented to a permanent injunction, and will pay $242,339 in disgorgement and prejudgment interest, and a $65,000 civil money penalty. Petitti consented to a permanent injunction and will pay a $25,000 civil money penalty.
The SEC also today announced the issuance of an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, and Notice of Hearing against Geraud based on his criminal convictions by the United States District Court for the Southern District of Florida for one count of conspiracy to commit mail fraud (U.S. v. Michael Geraud, Case No.10-cr-80070 (S.D. Fla.)) and one count of conspiracy to defraud the United States in an income tax evasion scheme (U.S. v. Michael Geraud, Case No. 10-cr-60091 (S.D. Fla.)). The count of criminal information in Case No.10-cr-80070 alleged, among other things, that Geraud, in connection with the offer and sale of Petroleum Unlimited's securities, defrauded investors and obtained money and property by, among other things, misrepresenting the company's use of offering proceeds, and failing to disclose exorbitant sales commissions.
A hearing will be held by an administrative law judge to determine whether the allegations contained in the Order are true, to provide the Respondent an opportunity to dispute these allegations, and to determine what, if any, remedial sanctions are appropriate and in the public interest. The Order requires the Administrative Law Judge to issue an initial decision no later than 210 days from the date of service of this Order, pursuant to Rule 360(a)(2) of the Commission's Rules of Practice.
The SEC's case was investigated by Jorge L. Riera and Chad Alan Earnst, and will be litigated by Christine Nestor, all of the SEC's Miami Regional Office. The SEC acknowledges assistance from the U.S. Attorney's Office for the Southern District of Florida, Federal Bureau of Investigation, Alberta Securities Commission, Ontario Securities Commission, and Saskatchewan Financial Services Commission. [SEC v. Petroleum Unlimited, LLC, Petroleum Unlimited II, LLC, Roger A. Kimmel, Jr., Harry Nyce, Michel-Jean Geraud, Robert Rossi, Joseph Valko, and Morgan Kimmel, n/k/a Morgan Petitti, Civil Action No. 9:11-CV-80038 (S.D. Fla.)] (LR-21808); (Administrative Proceeding - Rel. 34-63704; File No. 3-14187)
SEC Settles Insider Trading Charges Against Canadian Attorney
The Securities and Exchange Commission today announced that, on Jan. 11, 2011, the U.S. District Court for the Southern District of New York entered a settled Final Judgment as to Defendant Phillip Macdonald, in the previous filed Commission insider trading action, SEC v. Phillip Macdonald, Martin Gollan, and Michael Goodman, Civil Action No. 09-CV-5352 (HB) (S.D.N.Y. filed June 10, 2009). The Commission's Complaint in that action alleges that Macdonald, a Canadian attorney, engaged in insider trading in the securities of certain companies ahead of public announcements of business combinations. The Complaint alleges that between January and June 2005, the wife of Macdonald's co-defendant, Michael Goodman, learned the identities of those companies in the course of her employment as an administrative assistant with Merrill Lynch Canada, Inc. Goodman's wife sometimes mentioned the information to Goodman, expecting that he would keep it confidential. Goodman instead misappropriated the information by, among other things, recommending stocks to his business associate, Macdonald. On the basis of the information, Macdonald then purchased securities ahead of business combination announcements. (Goodman and Gollan previously consented to the entry of a Final Judgments against them in the Commission's action.) Macdonald consented to the entry of the Final Judgment against him, without admitting or denying the allegations in the Commission's Complaint, except as to jurisdiction. The Final Judgment against Macdonald permanently enjoins him from further violations of the antifraud and tender offer insider trading provisions of the Securities Exchange Act of 1934 and Exchange Act Rules and orders him to pay disgorgement of $810,000. [SEC v. Phillip Macdonald, Martin Gollan, and Michael Goodman, Civil Action No. 09-CV-5352 (HB) (S.D.N.Y.)] (LR-21807)
Designation of Longer Period for Commission Action on Proceedings to Determine Whether to Disapprove a Proposed Rule
The Commission has designated a longer period for Commission action under Section 19(b)(2) of the Securities Exchange Act of 1934 on proceedings to determine whether to disapprove a proposed rule change (SR-NASDAQ-2010-074) filed by The NASDAQ Stock Market, as modified by Amendment No. 1, to adopt Rule 4753(c) as a six month pilot in 100 NASDAQ-listed securities. Publication is expected in the Federal Register during the week of January 17. (Rel. 34-63685)
Immediate Effectiveness of Proposed Rule Change
A proposed rule change filed by NASDAQ OMX BX to establish a $5 Strike Price Program on the Boston Options Exchange Facility (SR-BX-2011-002) 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 17. (Rel. 34-63687)
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