Temporary Suspension of Trading in the Securities of Health Professionals, Inc.
The U.S. Securities and Exchange Commission announced the temporary suspension of trading in the securities of Health Professionals, Inc. (Health Professionals, symbol HPFS), commencing at 9:30 a.m. EDT on May 5, 2008, and terminating at 11:59 p.m. EDT on May 16, 2008.
The Commission temporarily suspended trading due to a lack of current and accurate information about Health Professionals, which has not made a required periodic filing in more than ten years. The Order of Suspension of Trading was entered pursuant to Section 12(k) of the Securities Exchange Act of 1934 (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 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 suspension, no quotation may be entered relating to the securities of Health Professionals 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 Health Professionals that have 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 contact the Delinquent Filings Branch of the Division of Enforcement at (202) 551-5466, or by e-mail at DelinquentFilings@sec.gov. (Rel. 34-57773)
Erik Sirri to Testify
Erik Sirri, Director, Division of Trading and Markets, U.S. Securities and Exchange Commission, will testify before the Senate Subcommittee on Securities, Insurance, and Investment on Wednesday, May 7, 2008, concerning Examining the Regulation of Investment Banks by the U.S. Securities and Exchange Commission. The hearing will begin at 10:00 a.m. in Room 538 of the Dirksen Senate Office Building.
Chairman Cox to Testify
Christopher Cox, Chairman, U.S. Securities and Exchange Commission, will testify before the Senate Appropriations Subcommittee on Financial Services and General Government on Wednesday, May 7, 2008, concerning SEC's FY 2009 Budget Request. The hearing will begin at 3:00 p.m. in Room 192 of the Dirksen Senate Office Building.
SEC Announces Start of Distribution Process in AIG Settlement; Court Approves Distribution Plan for $800 Million Fair Fund
The Securities and Exchange Commission today announced the start of the process that will return more than $800 million in Fair Funds to harmed investors in American International Group, Inc., which settled SEC charges of financial fraud and improper financial reporting and disclosure over a four-year period.
The U.S. District Court for the Southern District of New York approved a distribution plan on April 14, 2008, for the Fair Fund created from financial penalties and disgorgement of ill-gotten gains that AIG paid in its 2006 settlement with the SEC. The court-appointed Distribution Agent, Kenneth R. Feinberg, will administer the distribution of the Fair Fund to eligible current and former shareholders of AIG.
"The court's approval of the AIG Distribution Plan is a significant advancement of the Commission's goal to return to eligible investors more than $800 million currently in the Fair Fund," said Linda Chatman Thomsen, Director of the SEC's Division of Enforcement.
The AIG distribution is expected to be completed by the beginning of 2009. The funds are on deposit in the court's registry earning interest. Potentially eligible claimants include:
The Sarbanes-Oxley Act of 2002 provided the SEC with authority to increase the amount of money returned to injured investors by allowing civil penalties to be included in Fair Fund distributions. Prior to SOX, only disgorgement could be returned to investors. Since 2002, SEC enforcement actions have resulted in the return of more than $3.7 billion to investors.
On Feb. 9, 2006, the Commission filed a complaint alleging that from at least 2000 until 2005, AIG materially falsified its financial statements through a variety of sham transactions and entities and that AIG reported materially false and misleading information about its financial condition. On Feb. 17, 2006, the court entered a final judgment against AIG, to which AIG consented without admitting or denying the allegations in the Complaint. Pursuant to the final judgment, AIG paid a total of $800 million on March 3, 2006 ($700 million in disgorgement and $100 million in penalties). On June 14, 2007, the court entered an order authorizing the Commission to establish a Fair Fund to include all of the funds paid by AIG.
The Distribution Agent will commence notification of the particulars of the Distribution Plan by publishing a Summary Notice in accordance with the Distribution Plan. Questions regarding the Distribution Plan or the claim submission requirements should be directed to the Distribution Agent:
Additional materials: Litigation Release - LR-19560; AIG complaint - http://www.sec.gov/litigation/complaints/comp19560.pdf
(Press Rel. 2008-77)
In the Matter of Health Professionals, Inc.
On May 5, the Commission instituted public administrative proceedings against Health Professionals, Inc. (Health Professionals, symbol HPFS) to determine whether the registration of each class of its securities should be revoked or suspended for a period not exceeding twelve months for failure to file required periodic reports.
In the Order Instituting Proceedings (Order), the Division of Enforcement (Division) alleges that Health Professionals is delinquent in its required periodic filings with the Commission, having not made a filing in more than ten years. The Division alleges that, as a result, Health Professionals failed to comply with Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 13a-1 and 13a-13 thereunder.
In this proceeding, instituted pursuant to Exchange Act Section 12(j), a hearing will be scheduled before an Administrative Law Judge to determine whether the allegations of the Division contained in the Order are true. The judge will then determine whether the registration of Health Professional's securities should be revoked or suspended for a period not exceeding twelve months. The Commission ordered that the judge issue an initial decision not later than 120 days from the date of service of the Order. (Rel. 34-57772; File No. 3-13034)
In the Matter of Paul S. Berliner
On May 5, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions (Order) against Paul S. Berliner. The Order finds that Berliner was enjoined from future violations of Section 17(a) of the Securities Act of 1933, Sections 9(a)(4) and 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder pursuant to a final judgment that was entered by consent on April 29, 2008, in a Commission civil injunctive action.
According to the Commission's complaint in that action, on May 17, 2007, Alliance Data Systems Corp. (ADS) announced that it entered into a definitive agreement to be acquired by The Blackstone Group (Blackstone) at a price of $81.75 per share. The Commission alleged in its complaint that, on Nov. 29, 2007, Berliner drafted and disseminated a false rumor that ADS's board of directors was meeting to consider a revised proposal from Blackstone to acquire ADS at a significantly lower price of $70 per share. According to the complaint, Berliner disseminated this false rumor through instant messages to numerous individuals, including traders at brokerage firms and hedge funds. The complaint alleged that this false rumor spread rapidly across Wall Street, and various news services quickly picked up the "story." The complaint further alleged that heavy trading in ADS stock ensued, and within thirty minutes the false rumor had caused the price of ADS stock, which had been trading at approximately $77 per share, to plummet to an intraday low of $63.65 per share -- a 17% decline in the share price. The complaint alleged that Berliner profited from spreading this false rumor by short selling ADS stock at the same time he was disseminating the false rumor. The complaint further alleged that Berliner covered these short sales when the price of ADS stock began to decline. According to the complaint, Berliner made approximately $25,000 in illicit trading profits before the price of ADS stock recovered later in the day.
Based on the above, the Order bars Berliner from association with any broker or dealer. Berliner consented to the issuance of the Order without admitting or denying the Commission's findings, except as to entry of the injunction. (Rel. 34-57774; File No. 3-13035)
SEC Obtains Civil Contempt Sanctions Against Sherwin P. Brown and Jamerica Financial, LLC
The Commission announced that on May 1, 2008, the Honorable John R. Tunheim of the United States District Court for the District of Minnesota ordered that Sherwin P. Brown (Brown), Jamerica Financial, Inc. (Jamerica) be held in contempt of court for violating the terms of the Agreed Order of Preliminary Injunction and Asset Freeze. Judge Tunheim's ruling affirmed the Feb. 14, 2008 recommendation of Magistrate Judge Franklin L. Noel who ruled that Brown and Jamerica be held in contempt by failing to provide the Commission with financial records and other records relating to the customer accounts of Jamerica. Judge Tunheim ordered that Brown and Jamerica immediately make all their books and records available to the Commission for inspection.
On Nov. 14, 2007, the Commission moved for a rule to show cause against Brown and Jamerica for violating the terms of the preliminary injunction order. The Commission alleged that Brown and Jamerica, without proper disclosure to the Commission, impermissibly moved their customers into a new third-party account trustee and altered the billing structure that was established under the preliminary injunction order. The Commission also alleged that Brown and Jamerica opened a new bank account to serve as Jamerica's operating account without disclosing it to the Court or the Commission. The Commission further alleged that Brown and Jamerica failed to produce financial records that they were required to provide under the preliminary injunction order. On Dec. 6, 2007, Magistrate Judge Noel granted the Commission's motion, and ordered Brown and Jamerica to appear on Dec. 17, 2007, to show cause why they should not be held in contempt.
The Commission brought an emergency enforcement action on March 29, 2006, against Brown, Jamerica and Brawta Ventures, LLC (Brawta), in connection with an alleged fraudulent scheme to misappropriate funds from investors, a number of whom are retired or near retirement. On April 14, 2006, the Court entered an agreed preliminary injunction order and asset freeze, which enjoined the defendants from future violations of the federal securities laws and placed limitations on the assets of the defendants in order to preserve and protect investor equity. On July 7, 2006, upon the motion of the Commission, the Court appointed Nauni Jo Manty as Receiver over Brawta.
According to allegations in the Commission's civil injunctive complaint, Brown is the majority owner and President of Jamerica, a Minneapolis, Minnesota-based investment advisor. Brown was also manager of Brawta, a purported private investment fund formed by Brown and Jamerica. The Commission's complaint alleges that Brown, Jamerica and Brawta raised at least $1.65 million from 53 investors and defrauded the investors of Brawta by misappropriating at least $569,950 of investor funds, and using the diverted proceeds to pay for Brown's personal expenses and Jamerica's business expenses.
The Commission's complaint alleged that the defendants' conduct violated the antifraud and record keeping provisions of the federal securities laws. In addition to an injunction and asset freeze, the Commission's complaint also seeks the disgorgement of any investor funds defendants may have misappropriated as well the imposition of civil penalties. v. Sherwin P. Brown, Jamerica Financial and Brawta Ventures, LLC, Civil Action No. 06-1213 (D. Minn.) (Tunheim, J.)] (LR-20553)
SEC Obtains Asset Freeze, Halts San Diego Hedge Fund Fraud
On April 28, 2008, the Commission filed an emergency action to halt an ongoing $30 million hedge fund fraud by an investment adviser located in San Diego. Named in the Commission's complaint are El Cajon, Calif.-based Plus Money, Inc. (Plus Money) and Matthew La Madrid (La Madrid), age 41 and a resident of Jamul, Calif. The Honorable Roger T. Benitez, United States District Court Judge for the Southern District of California, issued an order on April 30 temporarily freezing the assets of the defendants and the relief defendants.
The Commission's complaint alleges that since at least May 2004, the defendants have managed hedge funds (the Premium Return Funds) that raised more than $30 million from over 300 investors by telling them they would engage in a covered call options trading strategy. The complaint further alleges that, unbeknownst to investors, in the fall 2007 Plus Money and La Madrid abandoned the covered call trading strategy, emptied out the monies in the Premium Return Funds' brokerage accounts, and dissipated the money through a series of illicit transfers.
The Commission's complaint alleges that investors were not told that in the fall 2007, La Madrid and Plus Money transferred nearly all monies from the Premium Return Funds' brokerage accounts to Vision Quest Investments, a La Madrid dba, which in turn transferred $10 million to relief defendant Palladium Holding Company. The complaint further alleges that Palladium:
According to the Commission's complaint, Plus Money failed to make monthly payments to the Premium Return Funds' investors beginning in February 2008.
The court issued an order temporarily enjoining defendants from future violations of the antifraud provisions of the Investment Advisers Act of 1940 (Sections 206(1), (2), and (4) of the Advisers Act and Rule 206(4)-8 thereunder). The court also issued orders freezing the defendants and relief defendants' assets and prohibiting the defendants from destroying documents.
Also named in the complaint as relief defendants based on their receipt of investor funds are the three purported hedge funds (The Premium Return Fund Limited-Liability Limited Partnership, The Premium Return Fund II Limited-Liability Limited Partnership, The Premium Return Fund III Limited-Liability Limited Partnership); six entities created by Plus Money (Return Fund, LLC, Return Fund II, LLC, Return Fund III, LLC, Return Fund IV, LLC, Return Fund V, LLC, Return Fund VI, LLC); Donald Lopez of Denver, Colo.; and Palladium Holding Company, an entity formed and controlled by Lopez.
The Commission's complaint seeks preliminary and permanent injunctions, return of ill-gotten gains with prejudgment interest, and penalties against the defendants. The complaint also alleges that the defendants transferred significant amounts of investor monies to the relief defendants and seeks the return of those monies.
A hearing on whether a preliminary injunction should be issued against the defendants and whether a permanent receiver should be appointed is scheduled for May 14. [SEC v. Plus Money, Inc., and Matthew La Madrid, et al., Case No. 3:08-CV-00764-BEN-NLS (S.D. Cal.)] (LR-20554)
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change (SR-CBOE-2008-49) filed by the Chicago Board Options Exchange related to Off-Floor LMMs 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 May 5. (Rel. 34-57747)
A proposed rule change (SR-CBOE-2008-51) filed by the Chicago Board Options Exchange lowering the appointment cost of SPX Options 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 May 5. (Rel. 34-57752)
A proposed rule change filed by The NASDAQ Stock Market to modify fees for members using the Nasdaq Market Center (SR-NASDAQ-2008-036) 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 May 5. (Rel. 34-57753)
A proposed rule change (SR-CHX-2008-06) and Amendment No. 1 thereto filed by the Chicago Stock Exchange regarding the definition of Qualified Contingent Trade 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 May 5. (Rel. 34-57767)
Proposed Rule Changes
The Boston Stock Exchange filed a proposed rule change (SR-BSE-2008-23) relating to the acquisition of BSE by The NASDAQ OMX Group, Inc. Publication is expected in the Federal Register during the week of May 5. (Rel. 34-57757)
The Boston Stock Exchange filed a proposed rule change (SR-BSE-2008-02) amending the Certificate of Incorporation of Boston Stock Exchange, Incorporated. Publication is expected in the Federal Register during the week of May 5. (Rel. 34-57760)
The Nasdaq Stock Market filed a proposed rule change (SR-NASDAQ-2008-035) to amend the By-Laws of The NASDAQ OMX Group, Inc. in connection with acquisitions of Boston Stock Exchange, Incorporated and Philadelphia Stock Exchange, Inc. Publication is expected in the Federal Register during the week of May 5. (Rel. 34-57761)
The Boston Stock Exchange filed a proposed rule change (SR-BSE-2008-25) relating to proposal to transfer Boston Stock Exchange, Inc.'s ownership interest in Boston Options Exchange Group, LLC. Publication is expected in the Federal Register during the week of May 5. (Rel. 34-57762)
Accelerated Approval of Proposed Rule Changes
The Commission granted accelerated approval to a proposed rule change (SR-CBOE-2008-44), as modified by Amendment No. 1 thereto, submitted by the Chicago Board Options Exchange relating to Equity Linked Term Notes. Publication is expected in the Federal Register during the week of May 5. (Rel. 34-57758)
The Commission has granted accelerated approval to an amended proposed rule change (SR-DTC-2007-10) filed by The Depository Trust Company under Section 19(b)(1) of the Exchange Act to implement the New Issue Information Dissemination Service for municipal securities. Publication is expected in the Federal Register during the week of May 5. (Rel. 34-57768)
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