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COMMISSION ANNOUNCEMENTSSecurities and Exchange Commission Suspends Trading in Securities of Four Companies for Failure to Make Required Periodic FilingsThe U.S. Securities and Exchange Commission announced the temporary suspension of trading of the securities of the following issuers, commencing at 9:30 a.m. EST on March 5, 2008, and terminating at 11:59 p.m. EDT on March 18, 2008:
The Commission temporarily suspended trading in the securities of these four issuers due to a lack of current and accurate information about the companies because they have not filed periodic reports with the Commission in over two years. This order was entered pursuant to Section 12(k) of the Securities Exchange Act of 1934 (Exchange Act) Section 12(k). The Commission cautions brokers, dealers, shareholders and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by this company. Brokers and dealers should be alert to the fact that, pursuant to Exchange Act Rule 15c2-11, at the termination of the trading suspensions, no quotation may be entered relating to the securities of the companies listed above unless and until the broker or dealer has strictly complied with all of the provisions of the rule. If any broker or dealer is uncertain as to what is required by the rule, it should refrain from entering quotations relating to the securities of this companies listed above that has been subject to a trading suspension until such time as it has familiarized itself with the rule and is certain that all of its provisions have been met. Any broker or dealer with questions regarding the rule should contact the staff of the Securities and Exchange Commission in Washington, DC at (202) 551-5720. If any broker or dealer enters any quotation which is in violation of the rule, the Commission will consider the need for prompt enforcement action. If any broker, dealer or other person has any information which may relate to this matter, they should immediately communicate it to the Delinquent Filings Branch of the Division of Enforcement at (202) 551-5466, or by e-mail at DelinquentFilings@sec.gov. (Rel. 34-57431) SEC Proposes to Streamline ETF Approval ProcessOn March 4, the Securities and Exchange Commission voted unanimously to propose two new rules under the Investment Company Act to permit exchange-traded funds (ETFs) to operate without the need to obtain individual exemptive orders from the Commission. ETFs are similar to traditional mutual funds, but issue shares that trade throughout the day on securities exchanges. The Commission also proposed amendments to disclosure Form N-1A to include additional information for ETF investors who purchase shares in the secondary markets. "The proposed rules would increase investor choice by eliminating a barrier to entry for new participants in this fast-growing market, while preserving investor protections," said Andrew J. Donohue, Director of the SEC's Division of Investment Management. "Permitting most ETFs to come directly to market without the cost and delay of obtaining an exemptive order would also allow staff to focus on more novel and difficult requests." Specifically, the Commission voted to propose:
The comment period for the proposal will end 60 days from the date of publication of the proposed rule in the Federal Register. (Press Rel. 2008-30) RULES AND RELATED MATTERSRegulation S-P: Privacy of Customer Financial Information and Safeguarding Personal InformationOn March 4, the Commission voted unanimously to propose amendments to Regulation S-P, which sets forth privacy obligations for entities regulated by the Commission. To help prevent and address security breaches at the institutions the Commission regulates, the proposed amendments would provide more detailed standards for information security programs. The amendments also would provide a new exception to permit the disclosure of limited personal information when representatives move from one broker-dealer or registered investment adviser to another. "Today's proposal should help guard against growing problems such as identity theft and intrusions into online brokerage accounts," said Erik Sirri, Director of the SEC's Division of Trading & Markets. "It also includes a pragmatic exception that would continue to protect information while providing an orderly mechanism for departing representatives to take limited customer information to their new firms. This should help give firms flexibility while facilitating the transfer of accounts, promoting investor choice, and providing firms with legal certainty." The proposed amendments would provide more specific requirements for safeguarding information and responding to information security breaches, and update Regulation S-P's safeguarding and disposal provisions. They also would extend the application of the disposal provisions to individuals associated with brokers, dealers, investment advisers registered with the Commission and transfer agents registered with the Commission, and would extend the application of the safeguarding provisions to registered transfer agents. The proposed amendments also would permit a limited transfer of information without the required notice and opt out when personnel move from one broker-dealer or registered investment adviser to another. The comment period for the proposal will end 60 days from the date of publication of the proposed rule in the Federal Register. (Rels. 34-57427; IC-28178; IA-2712; File No. S7-06-08) Proposed Amendments to Part 2 of Form ADVOn February 13, the Commission voted to propose amendments to Part 2 of Form ADV and related rules under the Investment Advisers Act of 1940. The proposing release is available at the Commission's Web site at http://www.sec.gov/rules/proposed.shtml (Investment Advisers Act Release No. 2711). The proposed amendments, if adopted, would require investment advisers to provide clients with narrative brochures containing plain English descriptions of the advisers' businesses, services, and conflicts of interest. The proposal also would require advisers to electronically file their brochures with the Commission and the brochures would be available to the public through the Commission's Web site. For further information, please contact Vivien Liu, Senior Counsel, Division of Investment Management, at 202-551-6787. (Rels. IA-2711; 34-57419; File No. S7-10-00) ENFORCEMENT PROCEEDINGSIn the Matter of Richard E. Fresia, CPAOn March 4, the Commission issued 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 Richard E. Fresia. The Order finds that Fresia, having been a certified public accountant and having served as the chief financial officer of Expanets, Inc. subsidiary of NorthWestern Corporation, consented to a Final Judgment which was entered against him on Feb. 22, 2008 permanently enjoining him from future violations of securities laws. Based on the above, the Order suspends Fresia from appearing or practicing before the Commission as an accountant, with a right to apply for reinstatement after three years from the date of the order. Richard E. Fresia consented to the issuance of the Order without admitting or denying any of the findings in the Order. (Rel. 34-57428; AAE Rel. 2794; File No. 3-12974) Commission Orders Hearings on Registration Suspension or Revocation Against Nine Companies for Failure to Make Required Periodic FilingsIn conjunction with today's trading suspension, the Commission also instituted nine separate public administrative proceedings to determine whether to revoke or suspend for a period not exceeding twelve months the registration of each class of the securities twelve companies for failure to make required periodic filings with the Commission:
In each Order, the Division of Enforcement (Division) alleges that the respective respondents are delinquent in their required periodic filings with the Commission. In each of these proceedings, instituted pursuant to Exchange Act Section 12(j), a hearing will be scheduled before an Administrative Law Judge. At the hearing, the judge will hear evidence from the Division and the respondents to determine whether the allegations of the Division contained in the Order, which the Division alleges constitute failures to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 thereunder, are true. The judge in the proceeding will then determine whether the registrations pursuant to Exchange Act Section 12 of the securities of these respondents should be revoked, or in the alternative, suspended for a period not exceeding twelve months. The Commission ordered that the Administrative Law Judge in this proceeding issue an initial decision not later than 120 days from the date of service of the order instituting proceedings. For further information see the Order of Suspension of Trading, In the Matter of Machine Technology, Inc., et al. File No. 500-1. (Rel. 34-57432; File No. 3-12975) SEC Charges Broadcom's Former Vice President of Human Resources for Stock Option BackdatingOn March 4, the Commission filed a settled enforcement action against Nancy M. Tullos, the former vice president of human resources at Broadcom Corporation, for her participation in a five-year scheme to backdate stock options granted to Broadcom employees and officers. As a result of this scheme, Broadcom restated its financial results in January 2007 and reported an additional $2.22 billion in compensation expenses - the largest restatement to date arising from stock option backdating. The Commission charged Tullos with participating in a scheme at Broadcom from 1998 to 2003 to backdate stock option grants to coincide with the dates of low closing prices for the company's stock, resulting in grants of in-the-money options to Tullos and numerous individuals. The SEC's complaint alleges that Tullos communicated false grant dates within the company and provided spreadsheets of stock option allocations for the backdated grants to Broadcom's finance and shareholder services departments, knowing that they would use such information to prepare Broadcom's books and records and periodic filings with the SEC. As a result, the complaint alleges that Tullos contributed to Broadcom's misrepresentations in these filings that no compensation expense was required for the stock option grants. Tullos personally benefited from the backdating scheme because she received and exercised backdated stock options that were in-the-money by more than $1.2 million. Under the settlement, Tullos agreed to pay more than $1.3 million in disgorgement and prejudgment interest, which will be offset by the value of her exercisable stock options that Broadcom cancelled. She agreed to pay a civil penalty of $100,000. Tullos also will be permanently enjoined from violations of Section 17(a)(3) of the Securities Act of 1933 and Section 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 13b2-1 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, 13a-1, and 13a-13 thereunder. Tullos agreed to the settlement without admitting or denying the allegations in the complaint. The Commission acknowledges the assistance of the U.S. Attorney's Office for the Central District of California. The Commission's investigation in this matter is continuing. [SEC v. Nancy M. Tullos, Civil Action No. SACV 08-242 AG (MLGx) (C.D. Cal.)] (LR-20476) SEC Settles With Former Chief Financial Officer of Expanets, Inc., a Former Subsidiary of NorthWestern CorporationThe Commission announced today that on Feb. 22, 2008, the Honorable John L. Kane, United States District Judge for the District of Colorado, entered a permanent injunction against Richard E. Fresia, the former chief financial officer of Expanets, Inc. (Expanets), a former subsidiary of NorthWestern Corporation (NorthWestern). The judgment permanently enjoins Fresia from violating Section 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 13b2-1 thereunder, and from 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, 13a-1 and 13a-13 thereunder and requires him to pay a civil penalty of $20,000. Fresia, without admitting or denying the allegations in the Commission's complaint against him, consented to the entry of the final judgment. The Commission's complaint alleged, among other things, that during the second and third quarters of 2002, Fresia participated in concealing from the public Expanets' ongoing operational problems and poor financial performance. The complaint also alleged that Fresia knew that Expanets improperly accounted for accounts receivable and adjustments to customers' bills, causing overstatements of NorthWestern's reported income from continuing operations of 90% and 109% in the second and third quarters of 2002, respectively. The Commission's complaint further alleged that Fresia participated in NorthWestern's failure to disclose the nature of Expanets' reported income during the second and third quarters of 2002, including the magnitude of Expanets' reserve reductions and its receipt of unusual non-compete payments. The Commission's complaint alleged that Fresia's conduct helped facilitate more than $800 million in securities offerings by NorthWestern in September and October 2002, including raising approximately $87.5 million in an equity offering that provided NorthWestern with badly needed operating capital. [SEC v. Richard E. Fresia, Civil Action No. 07-CV-01549-JKL-BNB (D. Colo.)] (LR-20477) SEC Charges Former Merisel, Inc. Executive for Self-Dealing Company AssetsThe Commission filed charges on March 4, against Timothy N. Jenson, formerly Merisel Inc.'s chief executive and chief financial officer and a director. The Commission's complaint, filed in federal district court in Santa Ana, alleges that Jenson, age 48 and a resident of Los Alamitos, Calif., made numerous material misstatements and omissions in Merisel's SEC filings and in company press releases as part of a scheme to loot company assets in two separate but similar self-dealing transactions. Also named in the complaint is TDH Enterprises, LLC, the Jenson-controlled company used to carry out one of the transactions. At the time of Jenson's misconduct, Merisel was based in El Segundo, Calif. and engaged in the software licensing business. As alleged in the complaint, one transaction involved Jenson's sale of certain Merisel software licensing assets and real property to D&H Services, LLC, an undisclosed related party that he controlled, at over $2.6 million below the assets' value. The complaint further alleges that Jenson engaged in another undisclosed related party transaction when he sold RKM Partners, an inoperative Merisel subsidiary, to defendant TDH Enterprises for just $1,000 although the subsidiary held over $952,000 in assets. The Commission's complaint further alleges that Jenson misrepresented or failed to disclose the related party nature of those transactions in Merisel's Form 10-Q, an earnings press release, various Forms 8-K, and a proxy statement. Jenson also failed to account properly for the $2.6 million loss resulting from the asset sale to D&H Services in a Merisel earnings press release and in a Form 8-K that announced Merisel's earnings. The complaint alleges that, as a result of his conduct, Jenson committed securities fraud and that, in carrying out and covering up his fraud, Jenson falsified Merisel's books and records, circumvented its internal controls, signed a false certification as to the accuracy of Merisel's Form 10-Q, made false and misleading statements and omissions to Merisel's auditors, and solicited proxies by means of a misleading proxy statement. The complaint further alleges that Jenson aided and abetted Merisel's violations of the reporting requirements, record keeping, and internal control requirements of the securities laws. The complaint also alleges that TDH aided and abetted Jenson's antifraud and proxy violations, as well as Merisel's reporting violations. Jenson and TDH Enterprises, without admitting or denying the Commission's allegations, consented to the entry of Final Judgments that will enjoin them permanently from violating the antifraud and other provisions of the federal securities laws. Jenson also consented to the entry of a Final Judgment that will bar him from serving as an officer or director of a public company and order him to pay a $275,000 civil penalty. The complaint alleges that, as a result of his conduct, Jenson committed securities fraud in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint also alleges that in carrying out and covering up his fraud, Jenson falsified Merisel books and records and circumvented internal controls in violation of Exchange Act Section 13(b)(5) and Rule 13b2-1, signed a false certification as to the accuracy of Merisel's Form 10-Q in violation of Exchange Act Rule 13a-14, made false and misleading statements and omissions to Merisel's auditors in violation of Exchange Act Rule 13b2-2, and solicited proxies by means of a proxy statement containing material misrepresentations and omissions in violation of Exchange Act Section 14(a) and Rule 14a-9. The complaint further alleges that Jenson aided and abetted Merisel's violations of the reporting requirements of Exchange Act Section 13(a) and Rules 12b-20, 13a-11, and 13a-13, of the record keeping requirements of Exchange Act Section 13(b)(2)(A), and of the internal control requirements of Exchange Act Section 13(b)(2)(B). The complaint also alleges that TDH aided and abetted Jenson's violations of Exchange Act Sections 10(b) and 14(a) and Rules 10b-5 and 14a-9 and Merisel's violations of Exchange Act Section 13(a) and Rules 12b-20 and 13a-13 thereunder. [SEC v. Timothy N. Jenson and TDH Enterprises, LLC, No. SACV 08-0241 CJC (MLGx) (C.D. Cal.)] (LR-20478) SEC Files Settled Insider Trading Charges Against Consultant and Tippee Who Traded Prior to an Acquisition AnnouncementThe Commission today announced that it filed a settled civil action in federal district court against Douglas M. Beahm (Beahm) and James P. Crilly (Crilly), alleging insider trading in the common stock of Del Laboratories, Inc. (Del), a manufacturer of cosmetics and over-the-counter pharmaceuticals. The settlements are subject to Court approval. The Commission's complaint, filed in the U.S. District Court for the Southern District of New York, charges Beahm and Crilly each with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint alleges that Beahm unlawfully traded in the securities of Del, while in possession of material non-public information, one week prior to the announcement on July 2, 2004, that Church & Dwight (C&D) and a second company had reached a definitive agreement to acquire Del. According to the complaint, at the time, Beahm had been retained as a consultant by C&D, his former employer, to assist it in its acquisition of Del and had participated directly in C&D's efforts to acquire Del. After trading Beahm tipped his friend and former C&D supervisor Crilly, and based on that tip Crilly traded in Del securities. By trading in advance of the public announcement of the acquisition agreement, Beahm profited by $2,046.58 and Crilly profited by $11,388. Without admitting or denying the allegations in the complaint, Beahm and Crilly each consented to the entry of final judgments, permanently enjoining each from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The final judgment against Beahm also requires Beahm to pay disgorgement of $2,046.58, representing his illicit profits, plus prejudgment interest of $526.34; disgorgement of $11,338, representing Crilly's illicit profits, plus prejudgment interest of $2,928.84 on a joint and several basis with Crilly; and a civil penalty of $13,434.58. The final judgment against Crilly also requires Crilly to pay disgorgement of $11,388, representing his illicit profits, plus prejudgment interest of $2,928.84 on a joint and several basis with Beahm, and a civil penalty of $11,388. [SEC v. Douglas M. Beahm and James P. Crilly, 08 Civ. 02209 (HB) (S.D.N.Y.)] (LR-20479) SELF-REGULATORY ORGANIZATIONSImmediate Effectiveness of Proposed Rule ChangesA proposed rule change filed by NYSE Arca extending the SizeQuote Mechanism pilot program for one year (SR-NYSEArca-2008-21) 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 March 10. (Rel. 34-57412) A proposed rule change filed by the Financial Industry Regulatory Authority to make permanent a pilot program that increases options position and exercise limits (SR-FINRA-2008-007) has become immediately 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 March 10. (Rel. 34-57413) A proposed rule change filed by the Boston Stock Exchange to make permanent two pilot programs that increase position and exercise limits on equity options (SR-BSE-2008-12) has become immediately 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 March 10. (Rel. 34-57414) A proposed rule change filed by the American Stock Exchange to make permanent two pilot programs that increase position and exercise limits on equity options (SR-Amex-2008-16) has become immediately 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 March 10. (Rel. 34-57415) A proposed rule change filed by the International Securities Exchange as modified by Amendment No. 1 thereto, to make permanent two pilot programs that increase position and exercise limits on equity options (SR-ISE-2008-20) has become immediately 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 March 10. (Rel. 34-57416) A proposed rule change filed by NYSE Arca to make permanent two pilot programs that increase position and exercise limits on equity options (SR-NYSEArca-2008-26) has become immediately 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 March 10. (Rel. 34-57417) A proposed rule change filed by the Philadelphia Stock Exchange to make permanent a pilot program that increases position and exercise limits on equity options (SR-Phlx-2008-14) has become immediately 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 March 10. (Rel. 34-57418) A proposed rule change (SR-Phlx-2008-16), filed by the Philadelphia Stock Exchange to extend the Dividend, Merger, and Short Stock Interest Strategies Fee Cap Program 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 March 10. (Rel. 34-57420) A proposed rule change (SR-NYSEArca-2008-24), as modified by Amendment No. 1 thereto, filed by NYSE Arca. amending its Schedule of Fees and Charges applicable to the Options Strategy Executions Pilot Program 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 March 10. (Rel. 34-57421) A proposed rule change filed by the International Securities Exchange (SR-ISE-2008-19) amending the Quarterly Options Series Pilot Program to Permit the Listing of Additional Series has become immediately 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 March 10. (Rel. 34-57425) SECURITIES ACT REGISTRATIONSRECENT 8K FILINGS
http://www.sec.gov/news/digest/2008/dig030508.htm
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