Mutual Fund Comparisons Using Interactive Data Now Available to Investors
Securities and Exchange Commission Chairman Christopher Cox today announced the launch of a new Internet Web page that enables investors to more easily read, analyze, and compare the information provided by mutual funds related to fund cost, risk, and past performance.
The Mutual Fund Reader - available on the SEC's Web site at http://www.sec.gov/xbrl - follows on the Commission's new rules that permit mutual funds to voluntarily provide information to the SEC and investors using interactive data. Now, investors can review the interactive information provided by mutual funds, including a fund's cost, risk, investment objectives and strategies, and historical performance.
"The Mutual Fund Reader is an important, time-saving step to help investors compare various mutual funds at the click of a mouse," said Chairman Cox. "It will help ordinary investors use mutual fund information quickly to make the best decisions in investing for retirement, college education, health care, and other financial needs."
Andrew J. Donohue, Director of the SEC's Division of Investment Management, added, "We commend the mutual funds that are demonstrating their commitment to investors by volunteering to help lead this movement to interactive data. The new viewer will enable investors to use the interactive information that these mutual funds have stepped forward to provide."
The SEC approved rule amendments in June 2007 to enable mutual funds to submit risk/return summary information from their prospectuses using interactive data. Already, 20 mutual funds have voluntarily submitted their information in interactive data format since Aug. 20, 2007. Additional filers are expected to participate in the coming months.
Interactive data is powered by XBRL, a computer software language that labels companies' financial and other data so that investors and analysts can more easily find what they're looking for, and use the information for comparisons and analysis. (Press Rel. 2008-55)
RULES AND RELATED MATTERS
Declaration of Effectiveness of the Boston Stock Exchange Fingerprinting Plan
A fingerprinting plan filed by the Boston Stock Exchange pursuant to Section 17(f)(2) of the Securities Exchange Act of 1934, has been declared effective by the Commission. Publication is expected in the Federal Register during the week of April 7. (Rel. 34-57613)
Order Modifying the Exemption for Qualified Contingent Trades from Rule 611 of Regulation NMS
The Commission issued an order modifying the exemption for Qualified Contingent Trades from Rule 611(a) of Regulation NMS under the Securities Exchange Act of 1934. (Rel. 34-57620)
Order Exempting Non-Convertible Preferred Securities from Rule 611 of Regulation NMS
The Commission issued an order exempting non-convertible preferred securities from Rule 611(a) of Regulation NMS under the Securities Exchange Act of 1934. (Rel. 34-57621)
In the Matter of Machine Technology, Inc.
An Administrative Law Judge has issued an Order Making Findings and Revoking Registrations by Default (Default Order) in Machine Technology, Inc. The Order Instituting Proceedings alleged that Respondents Machine Technology, Inc., Madrona International, Inc., Mangum Acquisitions Corp., Magnum Sports & Entertainment, Inc., Majestic Companies, Ltd., Management of Environmental Solutions & Technology Corp., Maple Corp., Mariculture Systems, Inc., and Marina Capital, 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 registrations of each class of registered securities Machine Technology, Inc., Madrona International, Inc., Mangum Acquisitions Corp., Magnum Sports & Entertainment, Inc., Majestic Companies, Ltd., Management of Environmental Solutions & Technology Corp., Maple Corp., Mariculture Systems, Inc., and Marina Capital, Inc., have with the Commission, pursuant to Section 12(j) of the Securities Exchange Act of 1934. (Rel. 34-57628; File No. 3-12975)
SEC Charges John N. Milne, Former Vice-Chairman, President and CFO of United Rentals, Inc., with Financial Fraud
The Commission announced the filing on April 4, 2008, of securities fraud charges against John N. Milne, a former Vice Chairman, President, and Chief Financial Officer of United Rentals, Inc. (URI). Milne is the second URI officer, and the third CFO, charged in connection with the alleged violations. On Dec. 12, 2007, the Commission filed settled financial fraud charges against Michael J. Nolan, another former CFO of URI. On Dec. 27, 2001, the Commission charged Joseph F. Apuzzo, a former CFO of Terex Corporation, with aiding and abetting the fraudulent scheme.
The Commission's complaint, filed in the United States District Court for the District of Connecticut, alleges that, from 2000 through 2002, Milne engaged in a series of fraudulent transactions undertaken in order to meet URI's earnings forecasts and analyst expectations. The complaint alleges that Milne and Nolan carried out the fraud through a series of interlocking three-party transactions, structured as "minor sale-leasebacks," to allow URI to recognize revenue prematurely and to inflate profits generated from the sales. As a result of the fraud, URI materially overstated its financial results in its Forms 10-K for fiscal years 2000 and 2001, and its Forms 10-Q for the periods ended June 30, 2001 and March 31, 2002, as well as in other public releases.
The complaint further alleges that shortly after URI announced 2001 and 2002 year-end results, Milne sold approximately $38 million of URI stock that he owned, knowing that the company's announced financial results were materially overstated.
The Commission's complaint alleges that, as a result of his actions, Milne violated Section 17(a) of the Securities Act of 1933, and Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934, and Rules 10b-5, 13b2-1 and 13b2-2 thereunder, and aided and abetted URI's 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. As part of this action, the Commission seeks a permanent injunction, an officer and director bar, disgorgement and prejudgment interest, civil penalties, and other equitable relief.
The U.S. Attorney's Office for the District of Connecticut also announced that Milne was indicted on conspiracy, securities fraud, making false statements to the Commission and related charges in a parallel criminal action.
The Commission acknowledges the assistance of the U.S. Attorney's Office for the District of Connecticut and the New Haven Field Office of the Federal Bureau of Investigation in the investigation of this matter. [SEC v. John N. Milne, Civil Action No. 3:08-CV-505 (VLB) (D.Ct.)] (LR-20518; AAE Rel. 2807)
SEC Charges Fourteen Defendants in Scheme to Issue and Sell Unregistered CMKM Diamonds Stock
The Commission today filed a civil injunctive action against fourteen defendants involved in the alleged illegal issuance and sale of unregistered stock of CMKM Diamonds, Inc., purportedly a diamond and gold mining company located in Las Vegas. With assistance from a transfer agent and an attorney, allegedly CMKM fraudulently issued hundreds of billions of shares of purportedly unrestricted stock to John Edwards, the scheme's mastermind, and his nominees, as well as to the nominees of Urban Casavant, the company's chief executive officer. The Commission alleges that as Casavant generated demand for CMKM stock through fraudulent promotion of the company, Edwards, Casavant, and their nominees sold their shares into the public markets for at least $64.2 million in profit, much of which was paid to Casavant to support his extravagant lifestyle. Allegedly, Edwards profited by about $26.4 million from sales through a single broker-dealer, Casavant profited by about $31.5 million, and Casavant's nominees profited by about $6.3 million.
The Commission's complaint, filed in U.S. District Court for the District of Nevada, alleges that, from January 2003 to May 2005, CMKM improperly issued up to 622 billion shares of purportedly unrestricted stock. According to the complaint, these issuances were based in large part on both written authorizations and attorney opinion letters prepared by Brian Dvorak, CMKM's lawyer, which were often facially inadequate, suspect, and inconsistent. Allegedly, based on these faulty documents, CMKM's transfer agent, 1st Global Stock Transfer LLC, and its owner, Helen Bagley, issued stacks of stock certificates without restrictive legends. Edwards, his nominees, Kathleen Tomasso and Anthony Tomasso, and Casavant's nominees, James Kinney and Ginger Gutierrez, then allegedly deposited the certificates with various broker-dealers and sold the shares into the market. NevWest Securities Corporation and its employees, Anthony Santos, Sergei Rumyantsev, and Daryl Anderson, are alleged to have sold more than 259 billion shares of CMKM stock for Edwards, despite numerous red flags indicating a massive unregistered distribution. Meanwhile, Casavant allegedly generated investor interest in CMKM by using false press releases, Internet chat boards, and "funny car" race events across the country. The complaint alleges that this promotion was extremely successful, and about 40,000 investors purchased CMKM stock during the period of the fraud without knowing that Casavant ran the company from his house in Las Vegas, and that CMKM's primary activity was to issue and promote its own stock.
The Commission charged CMKM, Casavant, Edwards, Gutierrez, Kinney, the Tomassos, 1st Global, Bagley, NevWest, Anderson, Rumyantsev, Santos, and Dvorak with violating Section 5 of the Securities Act of 1933 by participating in an unregistered distribution of securities. The Commission also charged CMKM and Casavant with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. In addition, CMKM is alleged to have violated Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, and Casavant is alleged to have violated Rule 13b2-1 under the Exchange Act. Finally, the Commission charged Casavant with aiding and abetting CMKM's violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, as well as violations of Section 13(a) of the Exchange Act and Rules 13a-1 and 13a 13 thereunder for which CMKM was previously found liable in an administrative proceeding.
The Commission seeks a permanent injunction against all defendants. The Commission also seeks an accounting, disgorgement with prejudgment interest, and civil penalties against Casavant, Edwards, Gutierrez, Kinney, the Tomassos, 1st Global, Bagley, NevWest, Anderson, Rumyantsev, Santos, and Dvorak. In addition, the Commission seeks a penny stock bar against Casavant, Edwards, Gutierrez, Kinney, Anthony Tomasso, Kathleen Tomasso, Bagley, Anderson, Rumyantsev, Santos, and Dvorak. Finally, the Commission seeks an order prohibiting Casavant from acting as an officer or director of any public company.
The Commission acknowledges the assistance of the Financial Industry Regulatory Authority (FINRA) and the Saskatchewan Financial Services Commission.
The Commission's investigation is continuing. [SEC v. CMKM Diamonds, Inc., et al., Civil Action No. CV 08-CV0437 (D. Nev.)] (LR-20519)
SEC Takes Action to Halt Online Account Intrusion and Identity Theft Scheme
On April 7, the Commission filed a complaint in the federal district court in the Eastern District of New York against one or more unknown traders who carried out a sophisticated Internet scheme that stole the identities of unsuspecting individuals and netted more than $66,000 in illicit profits in just seven weeks. According to the Commission's complaint, the defendants conducted their entire online account intrusion scheme over the Internet and concealed their identities by, among other things, fraudulently opening brokerage accounts in the names of individuals who responded to a job advertisement on the Website Craig's List.
According to the Commission's complaint, beginning in February 2007, the unknown traders posted an advertisement on Craig's List for a job with a fictitious Latvian brokerage firm, AWE Trading, Inc. Individuals who responded to the advertisement provided their personal information, including social security numbers and dates of birth to AWE via the Internet for purported company background checks. The complaint further alleges the unknown traders used this personal information they collected to open securities trading accounts online without the individuals' knowledge at Interactive Brokers LLC. According to the Commission's complaint, on multiple occasions between March 8 and April 24, 2007, the unknown traders gained unauthorized, online access to accounts held by customers of various retail brokerage firms. They purchased and sold at least 18 securities listed on the New York Stock Exchange and NASDAQ. The unknown traders simultaneously bought and sold the same securities in the accounts they opened fraudulently, profiting from the change in trading volume and stock prices generated by the unauthorized transactions.
The Commission's complaint charges the unknown trader defendants with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. The complaint also seeks a final judgment permanently enjoining the unknown traders from further violations of the securities laws and ordering them to repatriate assets of the fraudulent scheme they hold outside the U.S., to disgorge their ill-gotten gains, and to pay civil money penalties. Interactive Brokers, while fully cooperating in our investigation, was named as a relief defendant because it currently holds cash and securities related to the scheme. In April 2007, Interactive Brokers detected suspicious trading in the involved accounts, suspended activity and froze the funds in the account. [SEC v. One or More Unknown Traders in the Common Stock of Certain Issuers a/k/a AWE Trading, Inc. and Andrew Andersen, 08-CV-1402- DEARIE/AZRACK, E.D.N.Y] (LR-20520)
Final Judgments Entered Against Individuals Associated with Mutual Benefits Corporation
The Commission announced that on Feb. 19, 2008, March 12, 2008 and April 3, 2008, the United States District Court for the Southern District of Florida entered Final Judgments against Defendants Raquel Kohler, Ameer Khan, and Stephen Ziegler, respectively. The Final Judgments, entered by consent, enjoin the defendants from violations of Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. Additionally, the Final Judgment against Khan enjoins him from violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933.
The Commission commenced these actions by filing its complaints on Feb. 15, 2008, against Khan, Kohler and Ziegler. The complaints allege the defendants violated the federal securities laws arising from their involvement in Mutual Benefits Corporation's offering fraud which raised more than $1 billion from approximately 30,000 investors.
The Commission appreciates the efforts of the United States Attorney's Office for the Southern District of Florida in this matter. [SEC v. Ameer Khan, Case No. 08-60221-CIV-Graham (S. D. Fla.); SEC v. Raquel Kohler, Case No.-08-60219-CIV-Dimitrouleas (S. D. Fla.); SEC v. Stephen Ziegler, Case No. 08-60220-CIV-Seitz (S. D. Fla.)] (LR-20521)
INVESTMENT COMPANY ACT RELEASES
Jefferson National Life Insurance Company, et al.
An order has been issued approving an application filed by Jefferson National Life Insurance Company (JNL), Jefferson National Life Annuity Account C, Jefferson National Life Annuity Account E, Jefferson National Life Annuity Account F, Jefferson National Life Annuity Account G, Jefferson National Life Annuity Account H, Jefferson National Life Annuity Account I, Jefferson National Life Annuity Account J, Jefferson National Life Annuity Account K, Conseco Variable Insurance-Separate Account L (collectively, Applicants), and Northern Lights Variable Trust (collectively, Section 17 Applicants). The Applicants have been authorized under Section 26(c) of the Investment Company Act to substitute shares of securities of a single portfolio held by one or more separate accounts of JNL. Section 17 Applicants have also been granted an exemption from Section 17(a) of the Act in order to engage in certain in-kind transactions in connection with the substitution. (Rel. IC-28234 - April 3)
Approval of Proposed Rule Changes
The Commission granted approval of proposed rule change (SR-FICC-2007-10) filed by the Fixed Income Clearing Corporation under Section 19(b)(1) of the Exchange Act that allows FICC to replace the Mortgage-Backed Securities Division (MBSD) margin calculation methodology with a Value-at-Risk (VaR) methodology. Publication is expected in the Federal Register during the week of April 7. (Rel. 34-57586)
A proposed rule change (SR-CBOE-2008-14) filed by the Chicago Board Options Exchange to establish a Solicitation Auction Mechanism and to Amend its Automated Improvement Mechanism has been approved pursuant to Section 19(b)(2) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of April 7. (Rel. 34-57610)
The Commission approved a proposed rule change (SR-CBOE-2007-120) and Amendments No. 1 and No. 2 thereto submitted by the Chicago Board Options Exchange under Rule 19b-4 of the Securities Exchange Act of 1934 relating to Market-Makers and Remote Maker-Makers. Publication is expected in the Federal Register during the week of April 7. (Rel. 34-57615)
The New York Stock Exchange filed a proposed rule change and Amendments No. 1 and 2 thereto (SR-NYSE-2008-20) under Rule 19b-4 of the Securities Exchange Act of 1934 relating to Exchange Rule 36 (Communications Between Exchange and Member's Offices) to make permanent an existing portable phone pilot. Publication is expected in the Federal Register during the week of April 7. (Rel. 34-57611)
The Commission granted approval to a proposed rule change, as modified by Amendment No. 5 (SR-BSE-2008-05), submitted by the Boston Stock Exchange. Publication is expected in the Federal Register during the week of April 7. (Rel. 34-57623)
Proposed Rule Change
The NASDAQ Stock Market has filed a proposed rule change (SR-NASDAQ-2008-017) to clarify the listing of additional shares notification process. Publication is expected in the Federal Register during the week of April 7. (Rel. 34-57616)
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed by The NASDAQ Stock Market (SR-NASDAQ-2008-029) to modify a pricing incentive program for Market Makers in Exchange-Traded Funds and Index-Linked Securities listed on NASDAQ 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 April 7. (Rel. 34-57614)
A proposed rule change (SR-NYSE-2008-25) filed by the New York Stock Exchange to extend the pilot program for providing liquidity on the NYSE BondsSM system 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 April 7. (Rel. 34-57617)
A proposed rule change (SR-BSE-2008-21) as modified by Amendment No. 2 thereto, filed by the Boston Stock Exchange relating to exchange fees and charges 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 April 7. (Rel. 34-57618)
Amendment to Proposed Rule Change and Accelerated Approval of Proposed Rule Change
The Commission issued notice of filing of Amendment No. 1 to a proposed rule change (SR-NYSEArca-2008-25) and granted accelerated approval to such proposed rule change, as modified by Amendment No. 1 thereto, submitted pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 by NYSE Arca, through its wholly owned subsidiary, NYSE Arca Equities, Inc., relating to rules permitting the listing and trading of Managed Fund Shares, trading hours and halts, listing fees applicable to Managed Fund Shares, and the listing and trading of shares of the PowerShares Active AlphaQ Fund, the PowerShares Active Alpha Multi-Cap Fund, the PowerShares Active Mega-Cap Portfolio and the PowerShares Active Low Duration Portfolio. Publication is expected in the Federal Register during the week of April 7. (Rel. 34-57619)
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