SEC Distributes Nearly $50 Million to Defrauded Xerox Investors
On February 29, the Securities and Exchange Commission announced that checks totaling nearly $50 million were mailed on February 22 to investors harmed by the financial fraud at Xerox Corporation between 1997 and 2000. The distribution totals $45,867,740, representing the penalties and disgorgement, plus interest, paid by five Xerox managers and Xerox's auditors. Prior to the enactment of the Fair Fund provision of the Sarbanes-Oxley Act of 2002, the SEC was required to send financial penalties from its enforcement actions to the U.S. Treasury, instead of to the investors harmed by corporate misconduct. As a result of the Act, however, checks were mailed to 80,964 investors, with an average distribution amount of $566.
The Xerox Fair Fund resulted from SEC actions brought in 2002 and 2003 against Xerox Corporation, five of its officers, Xerox's independent audit firm, KPMG, LLP, and five KPMG accountants who held senior positions on the Xerox engagement. Among them, the defendants paid more than $46 million to settle SEC charges that they caused Xerox to make materially false and misleading statements in SEC filings. Ten million dollars of the total amount was paid by Xerox to the U.S. Treasury before the Fair Fund provisions were enacted.
Judge Denise Cote of the United States District Court for the Southern District of New York approved the methodology used to calculate the amounts paid to Xerox investors injured by the fraud. The distribution occurred within seven months of the Court approving the establishment of the Fair Fund in July 2007.
Questions regarding the Fair Fund distribution should be directed to the court-appointed distribution agent, Gilardi & Co. Contact information for Gilardi is as follows: Toll Free Number: 1-800-708-4103; Website Address: www.gilardi.com; Email Address: Classact@gilardi.com; Mailing Address: PO Box 808003, Petaluma, CA 94975-8003. [SEC v. KPMG, LLP, et al., Civil Action No. 03 CV 0671, DLC, S.D.N.Y.; SEC v. Paul A. Allaire, G. Richard Thoman, Barry D. Romeril, Philip D. Fishback, Daniel S. Marchibroda, and Gregory B. Tayler, Civil Action No. 03 CV 4087, DLC, S.D.N.Y.] (LR-20471)
Closed Meeting - Monday, March 3, 2008 - 2:00 p.m. - Additional Item
The following matter will also be considered during the 2:00 p.m. closed meeting scheduled for Monday, March 3, 2008: An adjudicatory matter.
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.
In the Matter of Paul Germain
On February 29, the Securities and Exchange Commission issued an Order Instituting Administrative Proceedings Pursuant to Sections 15(b) and 17A(c)(4)(C) of the Securities Exchange Act of 1934 and Section 203(f) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions against Paul N. Germain. The Order finds that on March 8, 2007, Germain pled guilty to one count of theft in the first degree in violation of Iowa Code Sections 714.1(1) and 714.2(1) before the Iowa District Court for Polk County, Iowa, in State of Iowa v. Paul Germain, Case No. FE207223. The counts of the criminal information to which Germain pled guilty alleged, inter alia, that between 1997 and 2005, while serving as an officer of a transfer agent, Germain misappropriated a total of $184,337 from nine mutual fund accounts in seventeen transactions without the account owners' authorization and spent the funds for his personal purposes.
Based on the above, the Order bars Germain from association with any broker or dealer, transfer agent, or investment adviser. Germain consented to the issuance of the Order without admitting or denying any of the Commission's findings. (Rel. 34-57402; IA-2708; File No. 3-12972)
INVESTMENT COMPANY ACT RELEASES
Barclays Global Fund Advisors, et al.
An order has been issued on an application filed by Barclays Global Fund Advisors, et al. The order permits (a) 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; and (c) 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. (Rel. IC-28173 - February 27)
Wisdomtree Trust, et al.
An order has been issued on an application filed by Wisdomtree Trust, et al. The order permits (a) 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 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; and (d) certain registered management investment companies and unit investment trusts outside of the same group of investment companies as the series to acquire Shares. (Rel. IC-28174 - February 27)
Patriot Capital Funding, Inc.
A notice has been issued giving interested persons until March 24, 2008, to request a hearing on an application filed by Patriot Capital Funding, Inc. for an order under Section 6(c) of the Investment Company Act for an exemption from Sections 23(a), 23(b) and 63 of the Act, and under Sections 57(a)(4) and 57(i) of the Act and Rule 17d-1 under the Act permitting certain joint transactions otherwise prohibited by Section 57(a)(4) of the Act. The order would permit Patriot Capital to issue restricted shares of its common stock under the terms of its employee compensation plan. (Rel. IC-28176 - February 28)
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