Revocation of Registration of Securities of Randgold & Exploration Company, Limited
The Securities and Exchange Commission announced the revocation of the registration of the securities of Randgold & Exploration Company, Limited (Randgold) of Johannesburg, South Africa, on March 24, 2008, pursuant to Section 12(j) of the Securities Exchange Act of 1934 (Exchange Act).
In its Order, the Commission found the following: Randgold's ordinary shares and its American Depositary Shares have been registered with the Commission since 1997; Randgold's American Depositary Receipts (ADRs) were traded on the NASDAQ National Market until they were delisted on September 21, 2005, for failure to file a Form 20-F with the Commission for the year ended December 31, 2004; Randgold's ADRs are currently quoted and traded on the Pink Sheets; and Randgold has not filed an Annual Report on Form 20-F with the Commission since July 15, 2004 (as amended on April 4, 2005).
Without admitting or denying the findings, Randgold consented to the entry of an Order finding that it had failed to comply with Section 13(a) of the Exchange Act and Rule 13a-1 thereunder, and revoking the registration of each class of Randgold's securities registered with the Commission pursuant to Section 12 of the Exchange Act.
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 the company.
Further, brokers and dealers should be alert to the fact that 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 pursuant to the preceding sentence.
(Rel. 34-57548; File No. 3-12996)
SEC Charges Biovail Corporation and Its Former CEO, CFO and Two Current Senior Executives with Securities Fraud
The Securities and Exchange Commission today charged Canadian pharmaceutical company Biovail Corporation and its former CEO, former CFO, and two current senior executives with engaging in a number of fraudulent accounting schemes and making a series of misstatements to analysts and investors.
The SEC's complaint alleges that present and former senior Biovail executives, obsessed with meeting quarterly and annual earnings guidance, repeatedly overstated earnings and hid losses in order to deceive investors and create the appearance of achieving earnings goals. When it ultimately became impossible to continue concealing the company's inability to meet its own earnings guidance, Biovail actively misled investors and analysts about the reasons for the company's poor performance.
Biovail settled the SEC's charges and will pay a $10 million penalty. Four current or former Biovail senior executives still face SEC charges: former chairman and CEO Eugene Melnyk; former CFO Brian Crombie; current controller John Miszuk; and current CFO Kenneth G. Howling.
The SEC's complaint alleges that in October 2003 Biovail and some of its executives schemed to deceive investors and analysts by falsely attributing nearly half of Biovail's failure to meet its third quarter 2003 earnings guidance to a truck accident involving a shipment of one of Biovail's products. Led by Melnyk, Biovail intentionally misstated both the effect of the accident on Biovail's third quarter earnings as well as the value of the product involved in the truck accident. The accident, in fact, had no effect on third quarter earnings.
The SEC's complaint also alleges three accounting schemes that affected reporting periods from 2001 to 2003.
The SEC's complaint alleges that each of Biovail's fraudulent accounting schemes had a material effect on Biovail's financial statements for the relevant quarters and years and was engineered by Biovail's senior management in order to inflate Biovail's reported earnings. Biovail management also intentionally deceived the company's outside auditors as to the true nature of the transactions. The truck accident misstatements were intended to mislead investors about the significance of Biovail's failure to meet its own earnings guidance.
According to the SEC's complaint, Melnyk violated shareholder disclosure provisions by failing to include in his Schedule 13D filings Biovail shares held by several off-shore trusts that Melnyk controlled. Because Melnyk exercised both investment and trading authority over the shares in the trusts, Melnyk was a beneficial owner of the securities and was required to disclose that ownership in his Schedule 13D filings with the SEC.
The Commission seeks a final judgment permanently enjoining all defendants from future violations of the Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5; Melnyk, Crombie, Miszuk, and Howling from aiding and abetting violations of Section 10(b) of the Exchange Act and Rule 10b-5; Biovail from violating Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-16 and Rule 302(b) of Regulation S-T; Crombie and Biovail from violating Section 17(a) of the Securities Act of 1933 ("Securities Act"); Crombie from violating Rule 13a-14; Melnyk from violating Section 13(d) of the Exchange Act and Rules 13d-1 and 13d-2; Crombie and Miszuk from violating Section 13(b)(5) of the Exchange Act and Rules 13b2-1 and 13b2-2 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-16; and ordering them to pay civil penalties and disgorgement of any ill-gotten gains with prejudgment interest. The Commission also seeks a judgment barring Melnyk, Crombie, Howling, and Miszuk from serving as officers or directors of any public company.
Without admitting or denying the allegations in the SEC's complaint, Biovail agreed to settle this matter by consenting to a final judgment requiring it to pay a penalty of $10 million and disgorgement of $1, ordering it to comply with certain undertakings, including the retention of an independent consultant, and permanently enjoining it from future violations of Section 17(a) of the Securities Act of 1933 and Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934 and Rules 10b-5, 12b-20, 13a-1, and 13a-16, and Rule 302(b) of Regulation S-T.
The settlement is subject to court approval. [SEC v. Biovail Corp., et al., 08 Civ. 02979 (LAK) (S.D.N.Y.)] (LR-20506)
SEC Files Settled Books and Records and Internal Controls Charges Against AB Volvo for Improper Payments to Iraq Under the U.N. Oil for Food Program - - Company Agrees to Pay Over $12.6 Million in Civil Penalties, Disgorgement of Profits, and Interest
The Securities and Exchange Commission today filed Foreign Corrupt Practices Act books and records and internal controls charges against AB Volvo in the U.S. District Court for the District of Columbia. AB Volvo is a Swedish company that provides commercial transport solutions, including trucks, buses and construction equipment. The Commission's complaint alleges that from 1999 through 2003, two of AB Volvo's subsidiaries and their agents and distributors made approximately $6,206,331 in kickback payments, and authorized additional payments of $2,388,419 in connection with their sales of humanitarian goods to Iraq under the United Nations Oil for Food Program (the "Program"). The kickbacks were characterized as "after-sales service fees" ("ASSFs"), but no bona fide services were performed. One of Volvo's subsidiaries also made other types of illicit payments to Iraq. The Program was intended to provide humanitarian relief for the Iraqi population, which faced severe hardship under international trade sanctions. The Program allowed the Iraqi government to purchase humanitarian goods through a U.N. escrow account. The kickbacks paid by AB Volvo's subsidiaries diverted funds out of the escrow account and into Iraqi-controlled accounts at banks in Jordan.
According to the Commission's Complaint:
Between November 2000 and July 2001, AB Volvo's subsidiary, Renault Trucks SAS, entered into at least eighteen contracts under the Program to supply trucks. Renault Trucks then sub-contracted commercial bodybuilders to outfit the trucks with trailers or superstructures, commonly referred to as "bodies," to tailor the trucks to the Iraqi ministries' specifications. In order to mask its payment of ASSFs, Renault Trucks devised a scheme in which the bodybuilders facilitated the ASSF payments to Iraq. The bodybuilders added the cost of the ASSF into their bodybuilding costs and submitted the total cost to Renault Trucks for payment. The bodybuilders then passed the ASSF payments to Iraq. Internal documents discuss the fact that had Renault Trucks made the payments in its own name, "we would have been caught red-handed." One bodybuilder signed side letters to pay the ASSF on Renault's behalf, and agreed to send Renault an invoice for the ASSF so that Renault would have paperwork to cover the scheme. ASSFs of $5,103,941 were paid, and another $1,255,922 was authorized but not paid.
Prior to Iraq's imposition of ASSF payments, one of AB Volvo's subsidiaries was paying kickbacks to obtain business. From October 1999 to July 2000, Volvo Construction Equipment International ("VCEI") entered into four contracts under the Program in which more than $103,000 in kickbacks were paid to Iraqi ministries. On two contracts, illicit payments between 5% and 11.27% of the contract value were paid. An internal VCEI document discussed the extra trips VCEI staff had to make to Iraq in order to make the payments, and the possibility of having to give more than just payments. On one contract, VCEI documents indicate that VCEI gave its Jordanian Agent a total of $15,950 as "the commitment to the third party whom support us and VOLVO to gain orders in the said ministry." In addition, VCEI internal documents show that $19,000 was given to the Jordanian Agent to purchase a car for the Ministry of Interior. VCEI did not disclose the payments or the car to the U.N.
After Iraq began imposing ASSFs, VCEI or its distributors entered into five additional contracts. VCEI employees learned of the demands for ASSF payments when VCEI employees visited Iraq in November 2000. In an internal memorandum discussing the trip, the employees noted that the ASSF demand "appears to be a clear violation of the UN Embargo Rules that we are expected to participate in." In an e-mail, VCEI personnel discussed the need for handling the ASSF payments with "utmost discretion." On the first contract, VCEI inflated the U.N. contract price by ten percent, but did not disclose the ASSF to the U.N. VCEI then entered into a backdated agency agreement with its Jordanian Agent, who invoiced VCEI for its commission on the sale, including reimbursement of the ASSF payment. VCEI changed its method of doing business for future contracts in an effort to distance itself from the ASSF payments. VCEI made the Jordanian Agent its distributor, which allowed the Jordanian Agent to purchase vehicles directly from VCEI, and in turn sell directly to the U.N. at inflated prices. Thus, VCEI was no longer the party named on the U.N. contracts, but rather, the Jordanian Agent was the named party. With VCEI's knowledge, the Jordanian Agent made ASSF payments on these contracts. The Jordanian Agent did not have the infrastructure that normally would have been required by VCEI for its distributors, and VCEI did not enter into any written distributorship agreement. VCEI sold its products at a price that ensured the Jordanian Agent would have enough "spread" to enable the agent to make the ASSF payments. According to a U.N. report of an interview of the Jordanian Agent, the agent admitted that he personally paid kickbacks on behalf of VCEI. VCEI also used a Tunisian distributor to facilitate additional sales of its products to Iraq, and reduced its prices to the distributor to enable the distributor to make the ASSF payments. In total, VCEI or its distributors authorized more than $2.2 million in ASSF payments.
AB Volvo either knew or was reckless in not knowing that illicit payments were either offered or paid in connection with these transactions. AB Volvo failed to maintain an adequate system of internal controls to detect and prevent the payments and its accounting for these transactions failed properly to record the nature of the payments. AB Volvo, without admitting or denying the allegations in the Commission's complaint, consented to the entry of a final judgment permanently enjoining it from future violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934, ordering it to disgorge $7,299,208, in profits plus $1,303,441 in pre-judgment interest, and to pay a civil penalty of $4,000,000. AB Volvo will also pay a $7,000,000 penalty pursuant to a deferred prosecution agreement with the U.S. Department of Justice, Fraud Section. Volvo is not the company that currently makes the "Volvo" brand car.
The Commission considered remedial acts promptly undertaken by AB Volvo and the cooperation the company afforded the Commission staff in its investigation. The Commission acknowledges the assistance of the Department of Justice, Fraud Section and the United Nations Independent Inquiry Committee.
Securities & Exchange Commission v. AB Volvo, Civil Action No. 08 CV 00473 (D.D.C.) (JB); (LR-20504) / March 20, 2008
INVESTMENT COMPANY ACT RELEASES
Kohlberg Capital Corporation
An order has been issued on an application filed by Kohlberg Capital Corporation (Kohlberg Capital) under Section 6(c) of the Investment Company Act of 1940 (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 authorizing certain joint transactions otherwise prohibited by Section 57(a)(4) of the Act. The order would permit Kohlberg Capital to issue restricted shares of its common stock to its officers and employees under the terms of its equity incentive compensation plan. Rel. IC-28199 / March 24, 2008
JOINT INDUSTRY PLANS
Proposed Plan Amendment
The Options Price Reporting Authority filed with the Securities and Exchange Commission a notice of filing of a proposed Plan amendment pursuant to Section 11A of the Securities Exchange Act of 1934 and Rule 608 thereunder (SR-OPRA-2008-01) to adopt new form of Vendor Affiliate Agreement. Publication is expected in the Federal Register during the week of March 24. (Rel. 34-57530)
Immediate Effectiveness of Amendments
A proposed amendment to the Plan for the Purpose of Developing and Implementing Procedures to Facilitate the Listing and Trading of Standarized Options (4-443) filed by the Nasdaq Stock Market pursuant to Section 11A(a)(3) of the Securities Exchange Act of 1934 to add the Nasdaq Stock Market LLC as a Sponsor has become effective. Publication is expected in the Federal Register during the week of March 24. (Rel. 34-57546)
A proposed amendment to the Plan for the Purpose of Creating and Operating an Intermarket Option Linkage (4-429) filed by the Nasdaq Stock Market pursuant to Section 11A(a)(3) of the Securities Exchange Act of 1934 to add the Nasdaq Stock Market LLC as a Participant has become effective. Publication is expected in the Federal Register during the week of March 24. (Rel. 34-57545)
Approval of Proposed Rule Changes
The Commission has approved a proposed rule change (SR-DTC-2007-11) filed by the Depository Trust Company under Section 19(b)(1) of the Exchange Act to amend its Operational Arrangements as it applies to Structured Securities. Publication is expected in the Federal Register during the week of March 24. (Rel. 34-57542)
The Commission granted approval of a proposed rule change (File No. SR-OCC-2008-01) filed by the Options Clearing Corporation under Section 19(b)(1) of the Exchange Act relating to its facilities management agreements. Publication is expected in the Federal Register during the week of March 24. (Rel. 34-57535)
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed with the Commission by the American Stock Exchange to restore Amex's revenue sharing program for ETF quoting participants (SR Amex-2008-25) has become immediately effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934 and Rule 19b-4(f)(2) thereunder. Publication is expected in the Federal Register during the week of March 24. (Rel. 34-57541)
A proposed rule change filed with the Commission by the American Stock Exchange adding Designated Amex Remote Traders to Amex's revenue sharing program (SR Amex-2008-23) has become immediately effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934 and Rule 19b-4(f)(2) thereunder. Publication is expected in the Federal Register during the week of March 24. (Rel. 34-57540)
A proposed rule change (SR-NSX-2008-07) filed by the National Stock Exchange relating to Post Only Orders 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 March 24. (Rel. 34-57538)
A proposed rule change (SR-NASDAQ-2008-021) filed by the NASDAQ Stock Market to modify the Midpoint Pegging Order has become effective under Section 19(b)(3)(A) under the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of March 24. (Rel. 34-57537).
A proposed rule change filed by the NASDAQ Stock Market and Amendment No. 1 thereto, to modify fees associated with proceedings under Rule 11890 (SR-NASDAQ-2008-015) 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 March 24. (Rel. 34-57534)
A proposed rule change filed by the American Stock Exchange to eliminate the Nasdaq UTP equity fee schedule (SR-Amex-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 24. (Rel. 34-57532)
A proposed rule change (SR-Amex-2008-24), filed by the American Stock Exchange relating to additional options classes in the Options Penny Quoting 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 24. (Rel. 34-57531)
Proposed Rule Change
The American Stock Exchange filed a proposed rule change (SR-Amex-2008-17) and Amendment No. 1 thereto pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 to adopt listing rules for Fixed Income-Linked Securities, Futures-Linked Securities, and Combination-Linked Securities. Publication is expected in the Federal Register during the week of March 24. (Rel. 34-57539)
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