SEC Suspends Trading in Securities of Beverage Creations, Inc.
As part of its Anti-Spam initiative, the Securities and Exchange Commission (Commission or SEC) today announced the temporary suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934 (the Exchange Act), of trading in the securities of Beverage Creations, Inc. (BCI), at 9:30 a.m. EDT on March 12, 2008, and terminating at 11:59 p.m. EDT on March 26, 2008.
The Commission temporarily suspended trading in the securities of BCI (ticker symbol BVRG) because it appears that the market for BCI securities may be reacting to manipulative forces or deceptive practices and that there is a lack of current and accurate public information about BCI upon which an informed investment decision can be made. In particular, questions have been raised regarding a widely distributed promotional mailer touting BCI's stock, several stock promotion websites that have featured BCI's stock, and a press release issued by BCI disclaiming its affiliation with the company that distributed the mailer.
The Commission cautions broker 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 the company.
Further, brokers and dealers should be alert to the fact that, pursuant to Rule 15c2-11 under the Exchange Act, at the termination of the trading suspension, no quotation may be entered unless and until they have strictly complied with all of the provisions of the rule. If any broker or dealer has any questions as to whether or not it has complied with the rule, it should not enter any quotation but immediately contact the staff in the Division of Trading and Markets, Office of Interpretation and Guidance, at (202) 551-5760. If any broker or dealer is uncertain as to what is required by Rule 15c2-11, it should refrain from entering quotations relating to BCI's securities until such time as it has familiarized itself with the rule and is certain that all of its provisions have been met. 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.
The SEC's Office of Investor Education and Advocacy has information for investors and members of the general public on topics directly related to this action by the SEC. See http://www.sec.gov/investor/35tradingsuspensions.htm for a compilation of helpful links.
Any broker or dealer or other person with information relating to this matter should contact Paul A. Montoya, Assistant Regional Director, Chicago Regional Office at (312) 353-7429, or by email at firstname.lastname@example.org. (Rel. 34-57476)
Closed Meeting - Wednesday, March 19, 2008 - 2:00 p.m.
The subject matter of the closed meeting scheduled for Wednesday, March 19, will be: Formal orders of investigation; Institution and settlement of injunctive actions; Resolution of litigation claims; Institution and settlement of administrative proceedings of an enforcement nature; a Collection matter; a Matter related to an enforcement proceeding; and a Matter related to investigative techniques and procedures.
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.
RULES AND RELATED MATTERS
On March 11, the Commission issued IC 28193, proposing two new rules and rule amendments under the Investment Company Act of 1940 (Act) relating to exchange-traded funds (ETFs). ETFs are similar to traditional mutual funds, but issue shares that trade throughout the day on securities exchanges. The proposed rules and rule amendments would codify certain exemptions the Commission has provided in orders.
Proposed rule 6c-11 under the Act would provide several exemptions from the Act to permit ETFs to form and operate without the need to obtain individual exemptive relief from the Commission. Proposed rule 12d1 4 under the Act would allow investment companies to invest in ETFs to a greater extent than currently permitted under the Act, subject to several conditions designed to address the historical abuses associated with fund investment in other funds. Proposed amendments to rule 12d1 2 under the Act would expand the investment options for investment companies that rely on the rule.
The Commission also proposed amendments to disclosure form N-1A, which open-end funds use to register under the Act and offer their securities under the Securities Act of 1933. The proposed amendments would accommodate the use of the form by ETFs, and are designed to provide key information to investors who purchase ETF shares in secondary market transactions.
The full text of the release concerning the proposals has been posted on the SEC Web site. The comment period for the proposal will end 60 days after the date of publication of the proposal in the Federal Register. (Rels. 33-8901; IC-28193; File No. S7-07-08)
In the Matter of A Novo Broadband, Inc., et al.
An Administrative Law Judge has issued an Order Making Findings and Revoking Registrations by Default as to Six Respondents (Default Order) in A Novo Broadband, Inc., et al. The Order Instituting Proceedings alleged that Respondents A Novo Broadband, Inc., Acadia Group, Inc., Adva International, Inc., AHT Corp., Alliance Environmental Technologies, Inc. (f/k/a Spacial Corp.), and Allou Healthcare, Inc. (f/k/a Allou Health & Beauty Care, Inc.), failed repeatedly 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 registration of each class of registered securities A Novo Broadband, Inc., Acadia Group, Inc., Adva International, Inc., AHT Corp., Alliance Environmental Technologies, Inc. (f/k/a Spacial Corp.), and Allou Healthcare, Inc. (f/k/a Allou Health & Beauty Care, Inc.), have with the Commission, pursuant to Section 12(j) of the Securities Exchange Act of 1934. (Rel. 34-57471; File No. 3-12946)
In the Matter of Frank J. Russo
On March 12, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 203(f) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions (Order) against Frank J. Russo. The Order finds that Russo owned and controlled FJR Corporation, a Wakefield, Massachusetts Investment Adviser and that during the period 1982 through 2006, Russo and FJR Corporation managed two limited partnership investment vehicles. The Order also finds that on Feb. 25, 2008, Russo pled guilty to one count of Investment Adviser Fraud in violation of Title 15 of United States Code, Sections 80b-6 and 80b-17 and nineteen counts of mail fraud in violation of Title 18 United States Code, Section 1341 before the U.S. District Court for the District of Massachusetts, in U.S. v. Frank J. Russo, Crim. No. 07-10127-WGY-1. In addition, the Order finds that on February 26, 2008, a judgment in the criminal case was entered against Russo. He was sentenced to a prison term of 18 years followed by three years of supervised release, ordered to make restitution in the amount of $20,000,000 and to pay a fine in the amount of $500,000, and a special assessment of $2,000.
Based on the above, the Order bars Russo from association with any investment adviser. Russo consented to issuance of the Order without admitting or denying the findings in the Order, except for the findings relating to his criminal conviction stated above, which he admits. (Rel. IA-2720; File No. 3-12987)
Commission Revokes Registration of Securities of Airtech International Group, Inc. for Failure to Make Required Periodic Filings
On March 12, the Commission revoked the registration of each class of securities of Airtech International Group, Inc. (Airtech) for failure to make required periodic filings with the Commission.
Without admitting or denying the findings in the order, except as to jurisdiction, which it admitted, Airtech consented to the entry of an Order Making Findings and Revoking Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of 1934 as to Airtech International Group, Inc. finding that it had failed to comply with Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 13a-1 and 13a-13 thereunder and revoking the registration of each class of Airtech's securities pursuant to Section 12(j) of the Exchange Act. This order settled the charges brought against Airtech in In the Matter of A Novo Broadband, Inc., et al., Administrative Proceeding File No. 3-12946.
Brokers and dealers should be alert to the fact that Exchange Act Section 12(j) provides, in pertinent part, as follows:
No member of a national securities exchange, broker, or dealer shall make use of the mails or any means or instrumentality of interstate commerce to effect any transaction in, or to induce the purchase or sale of, any security the registration of which has been and is suspended or revoked . . . .
For further information see Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934, In the Matter of A Novo Broadband, Inc., et al., Administrative Proceeding File No. 3-12946, Exchange Act Release No. 57267 (Feb. 4, 2008). (Rel. 34-57477; File No. 3-12946)
Final Judgments of Permanent Injunction and other Relief Entered against Defendants Peter Krieger, Sheldon Krieger and John Madey
The Commission announced that on Feb. 6, 2008, the U.S. District Court for the Southern District of Florida entered Final Judgments of Permanent Injunction and Other Relief against defendants Peter Krieger and Sheldon Krieger, and a Final Judgment of Disgorgement against defendant John Madey. The Final Judgments against the Kriegers, entered by consent, enjoin them from violations of Section 17(a) of the Securities Act of 1933, Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. Additionally, the Final Judgments dismiss the Commission's claims for disgorgement against Sheldon and Peter Krieger, who previously had paid investors signficant amounts of money in connection with other civil and criminal cases related to the same conduct. Finally, the Final Judgments order each of the Kriegers to pay a $110,000 civil penalty. The Final Judgment as to John Madey, also entered by consent, orders him to pay disgorgement of $223,094.90, prejudgment interest in the amount of $48,224.80 and waives the Commission's civil penalty claim against Madey.
The Commission commenced this action by filing its complaint on April 15, 2005, alleging defendants, Peter and Sheldon Krieger and Madey, as principals of a hedge fund called KFSI Equity Fund, L.P. (KFSI Fund), misappropriated approximately $3.7 million of the $7.5 million the KFSI Fund raised. The defendants raised money from approximately 45 investors by claiming the KFSI Fund would generate profits by trading in securities. The SEC's complaint also alleges in early 2000, the defendants began diverting money in the KFSI Fund to pay for the operations of Krieger Financial Services, Inc. (Krieger Financial), a broker-dealer the defendants controlled. The SEC's complaint claims the defendants concealed their misappropriation of funds and trading losses in the KFSI Fund by issuing false KFSI Fund account statements. [SEC v. Peter Krieger, Sheldon Krieger and John Madey, Case No. 05-80312-CIV-MIDDLEBROOKS/JOHNSON (S.D. Fla.)] (LR-20488)
Edward R. Showalter, Defendant in SEC Enforcement Action, Sentenced in Federal Court on Related Criminal Charges
On March 4, Edward R. Showalter, a defendant in a previously-filed Commission enforcement action, was sentenced in U.S. District Court for the Central District of California to almost thirteen years in prison to be followed by three years of supervised release. Showalter pled guilty in September 2006 to charges of wire fraud, related to his conduct in the investment fraud alleged in the Commission's November 2005 civil action. In addition to his jail sentence, Showalter was ordered to pay over $15 million in restitution to defrauded investors.
The Commission's previously-filed civil action against Showalter (and his two companies, High Park Investment Group, Inc. and Harbor Financial Group, Inc.) alleged violations of the registration and anti-fraud provisions of the federal securities laws. Immediately after filing the action, the Commission obtained emergency relief from the court in the form of a temporary restraining order and an asset freeze against all defendants, as well as the appointment of a temporary receiver over Showalter's two companies. In December 2005, and pursuant to a stipulation by the parties, the court made the receiver permanent and issued a preliminary injunction against Showalter and his two companies. One month later, after no responsive pleadings were filed by the two defendant entities, the clerk of the court entered a default against High Park Investment Group, Inc. and Harbor Financial Group, Inc. at the request of the Commission. In July 2006, the liquidation and distribution of the receivership assets were transferred to a bankruptcy court. These receivership assets are currently being supervised by a Chapter 7 Trustee. The Commission's action against Showalter and his two co-defendant entities is still pending. [SEC v. High Park Investment Group Inc., Harbor Financial Investment Group, Inc., and Edward R. Showalter, Civil Action No. SACV05-1090 CJC (Mlgx) (C.D. Cal.)] (LR-20489)
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed by American Stock Exchange to amend rules pertaining to the Terms of Index Option Contracts (SR-Amex-2008-13) has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication in the Federal Register is expected during the week of March 10. (Rel. 34-57449)
A proposed rule change filed by Financial Industry Regulatory Authority to establish a minimum quarterly threshold for securities transaction credit under NASD Rule 7001C (SR-FINRA-2008-006) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication in the Federal Register is expected during the week of March 17. (Rel. 34-57462)
A proposed rule change filed by the Municipal Securities Rulemaking Board relating to amendment to Rule G-8, on books and records, to delete the requirement to maintain copies of Form G-40 (SR-MSRB-2008-01) has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication in the Federal Register is expected during the week of March 17. (Rel. 34-57463)
A proposed rule change filed by the International Securities Exchange (SR-ISE-2008-23) relating to cancellation fees has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication in the Federal Register is expected during the week of March 17. (Rel. 34-57467)
A proposed rule change filed by the Philadelphia Stock Exchange. to delete Rule 715 and Rule 716 (SR-Phlx-2008-13) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication in the Federal Register is expected during the week of March 17. (Rel. 34-57473)
Proposed Rule Changes
The International Securities Exchange filed a proposed rule change (SR-ISE-2008-15) under Rule 19b-4 relating to the Exchange's limitation of liability. Publication in the Federal Register is expected during the week of March 17. (Rel. 34-57450)
The National Securities Clearing Corporation filed a proposed rule change (File No. SR-NSCC-2007-12) under Section 19(b) of the Exchange Act to provide a new Alternative Investments Products service. Publication in the Federal Register is expected during the week of March 17. (Rel. 34-57461)
The Chicago Board Options Exchange filed a proposed rule change (SR-CBOE-2005-11), as modified by Amendments No. 1 and 2, under Rule 19b-4 of the Securities and Exchange Act of 1934 relating to the listing and trading on the exchange of options on the streetTRACKS Gold Trust. Publication in the Federal Register is expected during the week of March 17. (Rel. 34-57465)
The Options Clearing Corporation filed a proposed rule change (SR-OCC-2008-07) under Section 19(b)(2) of the Securities Exchange Act that would clarify the jurisdictional status of options and security futures on streetTRACKS Gold Shares by adding an interpretation following the definition of "fund share" in OCC's By-Laws. Publication in the Federal Register is expected during the week of March 17. (Rel. 34-57466)
Accelerated Approval of Proposed Rule Change
The Commission issued notice of filing of Amendment No. 2 and granted approval, on an accelerated basis, to a proposed rule change, as modified by Amendment Nos. 1 and 2 thereto (SR-CHX-2007-24), submitted by the Chicago Stock Exchange relating to the handling of clearly erroneous transactions. Publication in the Federal Register is expected during the week of March 17. (Rel. 34-57458)
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