Former Schottenfeld Trader Settles SEC Insider Trading Charges
The Securities and Exchange Commission (Commission) announced today that on October 21, 2013, The Honorable Richard J. Sullivan of the United States District Court for the Southern District of New York, entered a final judgment against Joseph M. Mancuso ("Mancuso") in SEC v. Mancuso, 13-CV-2555, an insider trading case the SEC filed on April 17, 2013. The SEC alleged in its complaint that Mancuso, a former proprietary trader at the registered broker-dealer Schottenfeld Group, LLC, used inside information he received from his good friend and colleague Zvi Goffer ("Goffer") to trade ahead of five separate corporate acquisition announcements in 2007, resulting in illicit profits of approximately $350,000.
The SEC's complaint alleged that Mancuso used the material, nonpublic information he was tipped by Goffer to trade ahead of the announced acquisitions of Avaya, Inc., 3Com Corp., Axcan Pharma Inc., Hilton Hotels Corp. and Kronos Inc. As alleged in the complaint, certain of the tips originated from Arthur Cutillo ("Cutillo") and Brien Santarlas ("Santarlas"), attorneys at the law firm Ropes & Gray. The SEC alleged that Cutillo and Santarlas had access to inside information about potential acquisitions involving their firm's clients, and that Goffer paid them kickbacks in exchange for the information, using their mutual friend Jason Goldfarb as a conduit. The SEC alleged that other tips passed from Goffer to Mancuso came through Gautham Shankar ("Shankar"), another former proprietary trader at Schottenfeld. As alleged in the complaint, Shankar was tipped the inside information by Thomas Hardin, a managing director at the hedge fund adviser Lanexa Management. The SEC alleged that Goffer also paid kickbacks in exchange for this information.
To settle the SEC's charges, Mancuso consented to the entry of a final judgment that: (i) permanently enjoins him from violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; and (ii) orders disgorgement of $349,489, plus prejudgment interest of $112,171. Those payment obligations will be waived, and no civil penalty will be imposed, in light of Mancuso's financial condition. In addition, Mancuso consented to the entry of an SEC Order, which was issued today, barring him from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, and barring him from participating in any offering of a penny stock.
The judgment against Mancuso concludes the SEC's investigation in this matter, which resulted in insider trading charges against more than 20 individuals and entities, including all of the individuals named above. In these cases, the SEC obtained judgments totaling more than $16 million in disgorgement and civil penalties, and in related administrative proceedings barred 15 individuals from the securities industry. Many of these individuals also were charged and convicted in parallel criminal actions, including Goffer, who is currently serving a ten-year prison sentence.
The SEC's investigation was led by Brian O. Quinn, Anthony Kelly, and Brian Vann. The SEC thanks the U.S. Attorney's Office for the Southern District of New York, and the Federal Bureau of Investigation, for their assistance in this matter. (LR-22857; Rel. 34-70768)
In the Matter of Ronald Baldwin, Jr.
The Commission today announced the issuance of an Order Instituting Administrative Proceedings Pursuant to Rule 102(e) of the Commission's Rules of Practice, Making Findings, and Imposing Remedial Sanctions (Order) against Ronald Baldwin, Jr.
The Order finds that from January 1, 2010 until his resignation effective March 28, 2011, Baldwin, a certified public accountant licensed to practice in the State of Florida since 1996, was employed by JBI, Inc. (JBI) as its Chief Financial Officer. The Order finds that JBI's common stock was quoted on the OTC Bulletin Board. The Order also finds that the Commission filed fraud charges against Baldwin in an action titled Securities and Exchange Commission v. JBI, Inc. et al., Civil Action Number 1:12-cv-10012-MLW (District of Massachusetts, Complaint filed January 4, 2012).
The Order finds that the Commission's complaint alleges, among other things, that Baldwin and others engaged in a scheme to commit securities fraud by stating materially false and inaccurate financial information on the financial statements of JBI for two reporting periods during 2009. Specifically, the complaint alleges that in an effort to boost JBI's value as a company, Baldwin and others overstated by almost 1,000% the value of certain of JBI's assets on the company's financial statements for the third quarter of 2009 and the year end 2009. JBI and others then used the overvalued financial statements in two private capital raising efforts that raised more than $8.4 million from unwitting investors.
The Order finds that on October 16, 2013, the court entered a final judgment by consent against Baldwin, permanently enjoining him from violating Section 17(a) of the Securities Act of 1933 (Securities Act) and Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5, 13b2-1 and 13a-14 thereunder, and aiding and abetting violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20 and 13a-1 thereunder, and ordered Baldwin to pay a civil penalty of $25,000. Baldwin also was barred for five years from acting as an officer or director of a public company.
Based on the entry of the permanent injunction against Baldwin, the Commission's Order suspends Baldwin from appearing or practicing before the Commission as an accountant with the right to apply for reinstatement after five years. (Rel. 34-70767)
Commission Charges New York Investment Professional with Insider Trading
On October 29, 2013, the Commission filed a civil injunctive action in federal court in the Northern District of Georgia against Dennis Rosenberg ("Rosenberg"). The Commission alleges that Rosenberg traded in the securities of Carter's Inc., ("Carter's), the Atlanta-based public issuer and clothing marketer, on the basis of material non-public information provided by a former Carter's executive, and tipped two investment advisers about this information.
The Commission's complaint alleges that, between 2005 and 2010, Rosenberg, a retired hedge fund investment consultant and market analyst who had previously covered the stock of Carter's, traded in advance of market-moving news concerning Carter's anticipated earnings, after having been tipped by a former Carter's executive regarding the substance of the upcoming announcements. Rosenberg also disclosed this information to two investment advisers for two separate hedge funds, according to the complaint, who then also traded on the inside information. Rosenberg's total ill-gotten gains, losses avoided, and consulting fees (based on tips to one hedge fund client) totaled approximately $500,000, according to the complaint, while the combined losses avoided and profits by Rosenberg's tippees totaled approximately $2 million.
The Commission's complaint alleges that Rosenberg violated the antifraud provisions of the federal securities laws, Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. Without admitting or denying any of the allegations in the complaint, Rosenberg consented to the entry of an order enjoining him from future violations of these provisions, and ordering him to disgorge approximately $500,000 of ill-gotten gains and approximately $108,000 in prejudgment interest. The amount of civil monetary penalties to be imposed, if any, will be decided at a later date.
This is the second insider trading case that the Commission has brought in connection with its ongoing investigation of trading in the securities of Carter's, see SEC v. Eric Martin, et al., http://www.sec.gov/litigation/litreleases/2012/lr22458.htm, and the Commission's fifth overall case as part of its broader Carter's investigation. See SEC v. Joseph Elles, http://www.sec.gov/litigation/litreleases/2010/lr21784.htm, SEC v. Joseph Pacifico, http://www.sec.gov/litigation/litreleases/2012/lr22517.htm, SEC v. Michael Johnson, http://www.sec.gov/litigation/litreleases/2012/lr22520.htm.
The SEC acknowledges the assistance of the U.S. Attorney's Office for the Northern District of Georgia and the Federal Bureau of Investigation in this matter. [(SEC v. Dennis Rosenberg, Civil Action No. 1:13-CV-3559-AT (N.D. Ga.)] (Rel. LR-22858)
In the Matter of Patch International, Inc.
An Administrative Law Judge has issued an Initial Decision of Default (ID) in Patch International, Inc., Admin. Proc. File No. 3-15499. The Order Instituting Proceedings alleged that Respondents repeatedly failed to file timely periodic reports while their securities were registered with the Securities and Exchange Commission. The ID finds these allegations to be true and revokes the registrations of each class of Respondents' registered securities, pursuant to Section 12(j) of the Securities Exchange Act of 1934. (ID-512)
In the Matter of Miguel A. Ferrer
An Administrative Law Judge has issued an Initial Decision dismissing the proceeding as to all allegations in Miguel A. Ferrer, Admin. Proc. File No. 3-14862. The Securities and Exchange Commission issued an Order Instituting Proceedings on May 1, 2012, in which the Division of Enforcement alleged that Respondents, employees of UBS Financial Services, Inc. of Puerto Rico (UBS PR), misrepresented and omitted to disclose material facts to investors, and thereby misled investors into buying and holding hundreds of millions of dollars in UBS PR–affiliated, non-exchange-traded closed-end funds in 2008 and 2009.
The Initial Decision finds that Respondents Miguel A. Ferrer (Ferrer) and Carlos J. Ortiz (Ortiz) did not violate Section 17(a) of the Securities Act of 1933 (Securities Act); Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act); or Exchange Act Rule 10b-5. The Initial Decision finds that UBS PR did not commit any primary violations of Securities Act Section 17(a); Exchange Act Sections 10(b) or 15(c); or Exchange Act Rule 10b-5; and, therefore, Ferrer and Ortiz did not aid, abet, or cause UBS PR's alleged violations. (ID-513)
Investment company orders
DBX ETF Trust, et al.
A notice has been issued giving interested persons until November 25, 2013, to request a hearing on an application filed by DBX ETF Trust, et al., for an order to permit: (a) actively-managed series of certain open-end management investment companies to issue shares (Shares) redeemable in large aggregations only (Creation Units); (b) secondary market transactions in Shares to occur at negotiated market prices; (c) certain series to pay redemption proceeds, under certain circumstances, more than seven days from the tender of Shares for redemption; (d) certain affiliated persons of the series to deposit securities into, and receive securities from, the series in connection with the purchase and redemption of Creation Units; (e) certain registered management investment companies and unit investment trusts outside of the same group of investment companies as the series to acquire Shares; and (f) certain series to perform creations and redemptions of Creation Units in-kind in a master-feeder structure. (Rel. IC-30770)
Immediate Effectiveness of Proposed Rule Change
A proposed rule change filed by the Miami International Securities Exchange LLC to amend the MIAX Fee Schedule (SR-MIAX-2013-49) 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 October 28th. (Rel. 34-70769)
SECURITIES INVESTOR PROTECTION CORPORATION
Notice of Proposed Rule Change
The Securities Investor Protection Corporation has filed a proposed rule change (SIPC-2012-01) pursuant to Section 3(e)(2)(A) of the Securities Investor Protection Act of 1970, to amend its Rule 400, entitled "Rules Relating to Satisfaction of Customer Claims for Standardized Options." Publication is expected in the Federal Register during the week of October 28th. (Rel. SIPA-171)
The following registration statements have been filed with the SEC under the Securities Act of 1933. The reported information appears as follows: Form, Name, Address and Phone Number (if available) of the issuer of the security; Title and the number and/or face amount of the securities being offered; Name of the managing underwriter or depositor (if applicable); File number and date filed; Assigned Branch; and a designation if the statement is a New Issue.
Registration statements may be viewed in person in the Commission's Public Reference Branch at 100 F Street, N.E., Washington, D.C. To obtain paper copies, please refer to information on the Commission's Web site at http://www.sec.gov/answers/publicdocs.htm. In most cases, you can view and download this information by using the search function located at http://www.sec.gov/edgar/searchedgar/companysearch.html.
S-4 EAST WEST BANCORP INC, 135 N. LOS ROBLES AVE. 7TH FLOOR, PASADENA, CA, 91101, 6267686000 - 0 ($182,577,262.00) Equity, (File 333-191921 - Oct. 28) (BR. 07C) S-3 ARROWHEAD RESEARCH CORP, 225 SOUTH LAKE AVENUE, SUITE 1050, PASADENA, CA, 91101, 626-304-3400 - 0 ($87,481,223.00) Equity, (File 333-191922 - Oct. 28) (BR. 01B) S-8 Sprague Resources LP, TWO INTERNATIONAL DRIVE, SUITE 200, PORTSMOUTH, NH, 03801, (800) 225-1560 - 0 ($43,200,000.00) Equity, (File 333-191923 - Oct. 28) (BR. 04B) S-1 BOISE CASCADE Co, 1111 WEST JEFFERSON STREET, SUITE 300, P. O. BOX 50, BOISE, ID, 83702, (208) 384-6161 - 0 ($249,274,000.00) Equity, (File 333-191924 - Oct. 28) (BR. 06A) N-2 FS Investment Corp III, CIRA CENTRE, 2929 ARCH STREET, SUITE 675, PHILADELPHIA, PA, 19104, 215-495-1150 - 0 ($3,000,000,000.00) Equity, (File 333-191925 - Oct. 28) (BR. 16) S-3 QUANTUM FUEL SYSTEMS TECHNOLOGIES WORLDWIDE, INC., 25242 ARCTIC OCEAN DRIVE, LAKE FOREST, CA, 92630, 949-399-4500 - 477,598 ($2,512,165.48) Equity, (File 333-191929 - Oct. 28) (BR. 05B) S-4 HECLA MINING CO/DE/, 6500 N MINERAL DRIVE SUITE 200, NONE, COEUR D'ALENE, ID, 83815-9408, 2087694100 - 0 ($500,000,000.00) Debt, (File 333-191935 - Oct. 28) (BR. 09B) S-8 TAURIGA SCIENCES, INC., 39 OLD RIDGEBURY ROAD, DANBURY, CT, 06180, 917-796-9926 - 9,000,000 ($189,000.00) Equity, (File 333-191936 - Oct. 28) (BR. 02C) S-8 Howard Bancorp Inc, 6011 University Boulevard, Suite 370, Ellicott City, MD, 21043, 410-750-0020 - 500,000 ($4,125,000.00) Equity, (File 333-191938 - Oct. 28) (BR. 07) S-3D COMMUNITY FINANCIAL CORP /MD/, 3035 LEONARDTOWN RD, P O BOX 38, WALDORF, MD, 20601, 3016455601 - 250,000 ($5,497,500.00) Equity, (File 333-191939 - Oct. 28) (BR. 07C) S-8 MORGANS FOODS INC, 4829 GALAXY PARKWAY, SUITE S, CLEVELAND, OH, 44128, 2163607500 - 150,000 ($525,000.00) Equity, (File 333-191941 - Oct. 28) (BR. 05B) S-1 CHANNELADVISOR CORP, 2701 AERIAL CENTER PARKWAY, MORRISVILLE, NC, 27560, 919-228-4700 - 5,750,000 ($205,735,000.00) Equity, (File 333-191946 - Oct. 28) (BR. 03A) S-8 OFFICEMAX INC, 263 SHUMAN BLVD., NAPERVILLE, IL, 60563, (630) 864-5070 - 0 ($29,900,000.00) Equity, (File 333-191949 - Oct. 28) (BR. 04B) S-1 Tableau Software Inc, 837 N 34TH ST, SUITE 200, SEATTLE, WA, 98103, 206-633-3400 - 0 ($450,000,000.00) Equity, (File 333-191950 - Oct. 28) (BR. 03B) S-1 GlassesOff Inc., C/O COHEN & SCHAEFFER, 420 LEXINGTON AVENUE, SUITE 2450, NEW YORK, NY, 10170, 855-393-7243 - 53,303,534 ($66,096,382.16) Equity, (File 333-191951 - Oct. 28) (BR. 05B) S-3ASR COCA COLA CO, ONE COCA COLA PLAZA, ATLANTA, GA, 30313, 404-676-2121 - 0 ($0.00) Unallocated (Universal) Shelf, (File 333-191953 - Oct. 28) (BR. 09A) S-1 Terra Tech Corp., 18101 VON KARMAN, THIRD FLOOR, IRVINE, CA, 92612, 855-447-6967 - 19,000,000 ($1,330,000.00) Equity, (File 333-191954 - Oct. 28) (BR. 10B) F-3 GOLD RESERVE INC, 926 W SPRAGUE AVENUE, SUITE 200, SPOKANE, WA, 99201, 5096231500 - 31,877,282 ($51,163,038.00) Equity, (File 333-191955 - Oct. 28) (BR. 09B) S-8 INTEL CORP, 2200 MISSION COLLEGE BLVD, RNB-4-151, SANTA CLARA, CA, 95054, 4087658080 - 600,000,000 ($600,000,000.00) Other, (File 333-191956 - Oct. 28) (BR. 10A) S-1 BLUE VALLEY BAN CORP, 11935 RILEY, OVERLAND PARK, KS, 66225, 9133381000 - 0 ($10,000,000.00) Equity, (File 333-191958 - Oct. 28) (BR. 07C) N-2 Blackstone Real Estate Income Master Fund, 345 PARK AVENUE, NEW YORK, NY, 10154, 212-583-5000 - 0 ($1.00) Other, (File 811-22908 - Oct. 28) (BR. 16)
Recent 8K Filings
Form 8-K is used by companies to file current reports on the following events:
In most cases, recent 8-K reports may be viewed by using the search function on the Commission's Web site located at http://www.sec.gov/edgar/searchedgar/currentevents.htm.