Trading Suspended in Securities of Affinity Networks, Inc.
The Commission announced the temporary suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934 (Exchange Act), of trading of the securities of Affinity Networks, Inc. (Affinity) (stock symbol AFFN), a Nevada corporation, at 9:30 a.m. EDT, May 28, 2008, through 11:59 p.m. EDT, on June 10, 2008.
The Commission temporarily suspended trading in the securities of Affinity because there is a lack of current and accurate information concerning its securities. Affinity is quoted on the Pink Sheets under the ticker symbol AFFN.
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, 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 of the Securities and Exchange Commission in Washington, D.C. If any broker or dealer is uncertain as to what is required by Rule 15c2-11, it should refrain from entering quotations relating to Affinity 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 that 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 Eric Busto, Assistant Regional Director, Miami Regional Office of the Securities and Exchange Commission at (305) 982-6362, or by e-mail at firstname.lastname@example.org. (Rel. 34-57876)
RULES AND RELATED MATTERS
Regional Office Reorganization
The Securities and Exchange Commission is amending its rules to reflect the reorganization of its former five regional and six district offices into eleven regional offices reporting directly to SEC Headquarters. The Commission also is correcting addresses appearing in its rules. (Rel. 34-57877)
SEC Halts Florida Clearing Firm's Fraudulent Use of Customer Funds
The Commission today announced that it has obtained an asset freeze and other emergency relief to protect investors whose funds were at risk due to fraudulent misconduct at North American Clearing, Inc., a Longwood, Florida based general securities and clearing brokerage firm. North American Clearing services approximately 40 correspondent brokers and clears transactions for over 10,000 customer accounts.
The SEC requested the relief when it filed a complaint on May 27, 2008, against North American Clearing, its founder and director Richard L. Goble, its president Bruce B. Blatman, and its former financial and operations principal Timothy J. Ward, charging them with fraud and other securities laws violations. The SEC's complaint alleges that the defendants engaged in illegal activities, including the misuse of customer funds, in order to hide North American Clearing's financial problems and to pay for its daily business operations.
In addition to the asset freeze, the SEC obtained a temporary restraining order against the defendants and an order appointing a receiver over North American Clearing.
The SEC's complaint alleges that the defendants' fraud began earlier this year, when North American Clearing began experiencing severe financial problems. To ease its financial difficulties, North American Clearing secured a bank loan using customer securities as collateral. To comply with the federal securities laws and remain in operation, North American Clearing increased its reserves in an account it maintained for the benefit of customers, which limited funds available to North American Clearing to meet its daily operating expenses.
According to the SEC's complaint, on several occasions in March and April 2008, North American Clearing improperly sold customer money market funds as a means of temporarily freeing up funds that it then used to pay for daily operating expenses. The SEC's complaint also alleges that on May 13, 2008, the defendants manipulated North American Clearing's processing system to overstate net customer money market purchases. This enabled North American Clearing to illegally withdraw more than $3 million from the reserves it was required to maintain for the benefit of customers.
The SEC's complaint, filed in the United States District Court for the Middle District of Florida in Orlando, seeks preliminary and permanent injunctions, disgorgement of ill-gotten gains against North American Clearing and Goble, and civil penalties against all defendants. The SEC's complaint alleges that the defendants violated the antifraud, customer protection and books and records provisions of the Securities Exchange Act of 1934 (Exchange Act). Specifically, the SEC alleges that North American Clearing violated Sections 10(b), 15(c), and 17(a) of the Exchange Act and Rules 10b-5, 15c3-3, and 17a-3 thereunder, and that Goble, Blatman, and Ward violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and aided and abetted North American Clearing's violations of Sections 15(c) and 17(a) of the Exchange Act and Rules 15c3-3, and 17a-3 thereunder.
On May 27, 2008, the Honorable Gregory A. Presnell granted the SEC's ex parte motion for emergency relief, entering a temporary restraining order against the defendants and freezing North American Clearing's assets. The order also provides for a sworn accounting from North American Clearing and preservation of its records. The Court further appointed Peter J. Anderson, an attorney in the law firm of Sutherland Asbill & Brennan LLP of Atlanta, Georgia, as a receiver over North American Clearing. Among other things, the receiver is responsible for marshaling and safeguarding assets held by North American Clearing. A show cause hearing has been set for June 6, 2008, to determine whether the emergency asset freeze and other relief should remain in effect. [SEC v. North American Clearing, Inc., et al., Civil Case No. 6:08-cv-829-Orl-31-GJK, USDC, M.D. Fla.] (LR-20602)
STANDARDS SETTING BOARDS
The Commission published for comment a rule amendment (PCAOB-2008-02) submitted by the Public Company Accounting Oversight Board adjusting the implementation schedule for PCAOB Rule 3523, Tax Services For Persons in Financial Reporting Oversight Roles. The rule amendment has been designated by the PCAOB as constituting a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule under Section 19(b)(3)(A)(i) of the Securities Exchange Act of 1934, which renders the proposal effective upon filing with the Commission. Publication of the proposed rule amendment is expected in the Federal Register during the week of June 2. The comment period will end 21 days after the rule amendment is published in the Federal Register. (Rel. 34-57874)
Immediate Effectiveness of a Proposed Rule Change
A proposed rule change (SR-Phlx-2008-38) filed by the Philadelphia Stock Exchange relating to its payment for order flow 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 May 26. (Rel. 34-57851)
Proposed Rule Change
The Financial Industry Regulatory Authority filed a proposed rule change as modified by Amendment No. 1 thereto (SR-FINRA-2007-026) to adopt a FINRA policy to expand disseminated Trade Reporting and Compliance Engine (TRACE) data. Publication is expected in the Federal Register during the week of May 26. (Rel. 34-57866)
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