SEC Announces Walter Ricciardi to Retire as Deputy Director of Enforcement Division
The Securities and Exchange Commission today announced that Walter G. Ricciardi will retire as Deputy Director of the Division of Enforcement in June. He will join the law firm of Paul, Weiss, Rifkind, Wharton & Garrison LLP as a partner in the firm's New York office.
Mr. Ricciardi, who joined the staff from PricewaterhouseCoopers LLP in April 2004 to run the Commission's Boston office, was quickly promoted by SEC Chairman Christopher Cox in October 2005 to be one of two Deputy Directors in the Enforcement Division, operating from the Commission's office in Washington, D.C. In that role, he assisted in planning and directing the Commission's investigations and other enforcement efforts. Since April 2007, when he moved to the Commission's New York office, Mr. Ricciardi additionally has had responsibility for overseeing the enforcement efforts of the Commission's 11 regional offices. Since December 2007, he has served as the sole Deputy in the Division of Enforcement.
On June 4, 2008, Mr. Ricciardi will be awarded the Commission's Stanley Sporkin Award, which recognizes those who have made "exceptionally tenacious and insightful contributions" to the enforcement of the federal securities laws.
As a hallmark of his tenure, Mr. Ricciardi fostered a close working relationship between the Enforcement Division and the Commission's other divisions and offices, as well as with other state, federal and global securities regulators and self-regulatory bodies, including FINRA and the PCAOB. He also led the SEC teams conducting a number of significant investigations, and successfully initiated and implemented major enhancements in the management and operations of the Division.
"Walter Ricciardi, as much as anyone in the Commission's modern history, has professionalized the management of the SEC's enforcement program both in Washington and in the SEC's regional offices across the country," said SEC Chairman Christopher Cox. "Working closely with Linda Thomsen, the Division Director, Walter implemented significant new technology improvements and management reforms that have knitted together the national resources of the SEC as never before. From the selection of which cases to bring, to ensuring that the best talent and resources from across the country are brought to bear in every case, to giving the SEC the capacity to move against fraud anywhere in the world in real time, Walter's contributions will long be remembered as a giant step forward for investor protection."
Linda Chatman Thomsen, Director of the SEC's Division of Enforcement, said, "It has been a great privilege and unqualified pleasure to work with Walter. He has brought enthusiasm and passion and wisdom and creativity to our work. He is a tireless advocate for investors and has devoted himself to making sure that all of us do our very best for them. We will all miss him and we wish him all the very best."
Mr. Ricciardi said, "I am very grateful for the opportunity to serve on the Commission's staff, where at the heart of every decision are the best interests of investors. The staff's integrity, passion for our mission and dedication to teamwork make me immensely proud to be their colleague."
Mr. Ricciardi led the team that brought a number of proceedings that significantly advanced the Commission's mission of protecting investors:
Mr. Ricciardi spearheaded a number of enhancements to the management of the Enforcement program. These include:
Mr. Ricciardi also devoted significant efforts to enhancing the Commission's commitment to diversity, and was a founding member of the Enforcement Division's diversity committee.
Mr. Ricciardi's career prior to joining the Commission's staff began with service as the law clerk to the Hon. Charles R. Richey, U.S. District Judge for the District of Columbia. He also was the Deputy General Counsel-Litigation for Coopers & Lybrand, and after the firm's merger with Price Waterhouse, the leader of the Litigation Practice Group of PricewaterhouseCoopers LLP, where he led the defense of the firm and its personnel with regard to litigation and investigations. At PwC, Mr. Ricciardi also was elected by the firm's partners to serve as a member of the Board of Partners and Principals, which has responsibility for partner admissions, compensation and oversight of the management of the firm. He also was elected by the partners of the PwC international member firms to serve as a member of the Global Oversight Board of the global organization of the PwC firms.
Mr. Ricciardi received an A.B. from Columbia College in 1975, and a J.D. cum laude from New York University School of Law in 1978. He served as a Note and Comment Editor of the New York University Law Review. He also is an Adjunct Professor of Law at NYU School of Law, where he teaches a seminar on the liability of professionals under the securities laws. (Press Rel. 2008-103)
RULES AND RELATED MATTERS
Proposed Rules to Enhance Financial Reporting by Requiring Filers to Provide Financial Statements Using Interactive Data
The Commission has proposed rules to improve the usefulness of financial information to investors by requiring domestic and foreign companies to provide to the Commission a new exhibit with their financial statements, including the footnotes and schedules to the financial statements, in interactive data format. Interactive data would supplement, but not replace or change, disclosure using the traditional electronic filing formats in ASCII or HTML. Interactive data would be required with a filer's annual and quarterly reports, transition reports, and Securities Act registration statements, and on its corporate web site, if it maintains one. The requirements would be phased in, beginning next year with approximately 500 of the largest companies. For further information, contact James C. Lopez, Legal Branch Chief, Division of Corporation Finance at (202) 551 3790; Mark W. Green, Senior Special Counsel (Regulatory Policy), Division of Corporation Finance at (202) 551-3430; Jeffrey W. Naumann, Assistant Director, Office of Interactive Disclosure at (202) 551 5352; or Melanie Jacobsen, Office of the Chief Accountant at (202) 551-5300. (Rels. 33-8924; 34-57896; 39-2455; IC-28293; File No. S7-11-08)
In the Matter of Dover Petroleum Corp.
An Administrative Law Judge has issued an Order Making Findings and Revoking Registration by Default as to Paradigm Advanced Technologies, Inc., in the matter of Dover Petroleum Corp. The Order, issued pursuant to Section 12(j) of the of the Securities Exchange Act of 1934 (Exchange Act), is based on a ruling that the company is delinquent in twenty-three periodic filings required by Section 13(a) of the Exchange Act and Exchange Act Rules 13a-1 and 13a-13. (Rel. 34-57897; File No. 3-13015)
Delinquent Filer's Stock Registration Revoked
The registration of the stock of Respondent Health Professionals, Inc. has been revoked. It had not filed any annual or quarterly reports with the Securities and Exchange Commission for more than ten years. Thus, it violated a crucial provision of the federal securities laws that requires public corporations to publicly disclose current, accurate financial information so that investors may make informed decisions. The revocation was ordered in an administrative proceeding before an administrative law judge. (Rel. 34-57898; File No. 3-13034)
In the Matter of Robert Wildeman
On June 2, 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 Robert Wildeman (Wildeman). The Order finds that on May 2, 2008, the United States District Court for the Southern District of New York entered a final judgment against Wildeman permanently enjoining him from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act in a matter entitled Securities and Exchange Commission v. Northshore Asset Management LLC, et al. 05 civ. 2192.
Based on the above, the Order bars Wildeman from association with any investment adviser. Wildeman consented to the issuance of the Order without admitting or denying any of the findings in the Order. (Rel. IA-2738; File No. 3-13051)
Former Centerpulse Chief Financial Officer Settles Fraud Charges With SEC
The Commission today announced that Urs Kamber, the former Chief Financial Officer of Centerpulse Ltd., agreed to settle the Commission's charges against him arising from his alleged involvement in the fraudulent inflation of Centerpulse's income during the third and fourth quarters of 2002. Without admitting or denying the Commission's allegations against him, Kamber has consented to the entry of a final judgment in the Commission's litigation pending in the U.S. District Court for the District of Columbia. The final judgment, which is subject to approval by the Honorable John D. Bates, orders Kamber to pay a $50,000 civil penalty, $65,013 in disgorgement, and $22,824 in prejudgment interest. The final judgment also bars Kamber for five years from acting as an officer or director of any public company that has securities registered with, or is required to file reports with, the Commission, and permanently enjoins him from violating the antifraud, falsification of books and records, and annual certification provisions of the federal securities laws - Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act), and Exchange Act Rules 10b-5, 13a-14 and 13b2-1 - and from aiding and abetting violations of the reporting, books and records and internal controls provisions of the federal securities laws - Exchange Act Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) and Exchange Act Rules 12b-20, 13a-1 and 13a-16.
As part of this settlement, and following the entry of the proposed final judgment against him, Kamber (who is a Chartered Accountant in Switzerland) has consented, without admitting or denying the Commission's allegations against him, to the issuance of an administrative order pursuant to Rule 102(e) of the Commission's Rules of Practice, suspending him from appearing or practicing before the Commission as an accountant, with the right to apply for reinstatement after five years.
The Commission's complaint alleges that Kamber, along with two other former Centerpulse executives, (1) fraudulently inflated Centerpulse's third quarter 2002 income by improperly deferring recognition of a $25 million expense, refusing to write down $3.4 million in costs associated with an impaired asset, and approving $3.6 million in improper reserve adjustments; and (2) fraudulently inflated Centerpulse's fourth quarter and fiscal 2002 income by refusing to increase a reserve to cover at least $18 million in liabilities, improperly using anticipated refund credits to offset another $5 million in expenses, and again refusing to write down $3.4 million in costs associated with an impaired asset.
In related administrative proceedings, Dennis L. Hynson, CPA, Christopher W. Kelford and Paula J. Norbom, CPA, the former vice presidents of finance for Centerpulse's three U.S. divisions, have consented to the entry of cease-and-desist orders relating to improper accounting decisions they made during the third quarter of 2002. See Administrative Proceeding No. 3-13047 / Accounting and Auditing Enforcement Release No. 2832 / Release No. 57889 (May 30, 2008); Administrative Proceeding No. 3-13048 / Accounting and Auditing Enforcement Release No. 2833 / Release No. 57890 (May 30, 2008); and Administrative Proceeding No. 3-13049 / Accounting and Auditing Enforcement Release No. 2834 / Release No. 57891 (May 30, 2008).
The Commission's litigation against former Centerpulse Controller Stephan Husi and the former group vice president of finance, tax counsel and treasurer of Centerpulse USA Holding, Richard May, is ongoing. See Litigation Release No. 20336 (Oct. 17, 2007) / Accounting and Auditing Enforcement Release No. 2741 (Oct. 17, 2007). [SEC v. Urs Kamber, Stephan Husi and Richard Jon May, Civil Action No. 1:07-CV-01867 (JDB) (D.D.C.)] (LR-20605; AAE Rel. 2835)
Final Judgments of Permanent Injunction and Other Relief Entered Against Defendants Terry E. Provence and DT Capital LLC
The Commission announced that on May 29, 2008, the Honorable Alan S. Gold, United States District Judge for the Southern District of Florida, entered final judgments of permanent injunction and other relief against Terry E. Provence and DT Capital LLC for their involvement in a fraudulent options trading scheme.
Provence and DT Capital consented to the entry of an order enjoining them from future violations of Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 15(a)(1) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition, Provence was ordered to disgorge $175,677.75 representing his ill-gotten gains plus prejudgment interest, and to pay a civil penalty of $130,000. The money will be paid to the Court-appointed Receiver out of funds frozen by Court order at the outset of this case, and used as part of a distribution to defrauded investors. The Commission dismissed its disgorgement and civil penalty claims against DT Capital. [SEC v. Charles O. Morgan, Jr., as Personal Representative of the Estates of Frederick J. Kunen; SEC v. Terry E. Provence and DT Capital LLC, Case No. 07-22204-CIV-GOLD (S.D. Fla.)] (LR-20606)
Court Enters Final Consent Judgments Against Plotkin, Shpigelman, Smith, and Santana in Widespread Insider Trading Scheme
On May 22, 2008, the United States District Court for the Southern District of New York, entered final consent judgments against defendants Eugene Plotkin and Jason C. Smith, and on May 29, 2008, the Court entered final consent judgments against defendants Stanislav Shpigelman and Elvis Santana, in an action filed in 2005 by the Securities and Exchange Commission, charging 17 defendants with collectively engaging in a widespread and brazen insider trading scheme, which netted almost $7 million in illicit gains, through trading in at least 26 stocks.
Plotkin was one of the two primary architects of three related insider schemes, involving trading on confidential non-public information stemming from Merrill Lynch & Co., Inc., Business Week magazine, and federal grand jury proceedings in New Jersey. The Honorable Kimba M. Wood, Chief United States District Judge, entered an order permanently enjoining Plotkin from further violations of the antifraud provisions of the federal securities laws. Plotkin is currently serving a 57 month prison sentence imposed in a parallel criminal proceeding.
Shpigelman was the source of confidential non-public information stemming from Merill Lynch. The Court entered an order permanently enjoining Shpigelman from further violations of the antifraud provisions of the federal securities laws, and ordered him to pay disgorgement in the amount of $12,000, plus prejudgment interest in the amount of $724.36, for a total of $12,724.36. Shpigelman is currently serving a 37 month prison sentence imposed in a parallel criminal proceeding.
Smith was the source of confidential non-public information stemming from the grand jury proceedings. The Court entered an order permanently enjoining Smith from further violations of the antifraud provisions of the federal securities laws. Smith is currently serving a 33 month prison sentence imposed in a parallel criminal proceeding.
Santana was a tippee who traded on confidential non-public information stemming from Merrill Lynch and Business Week magazine. The Court entered an order permanently enjoining Santana from further violations of the antifraud provisions of the federal securities laws, and ordered him to pay disgorgement in the amount of $475,151.79, together with prejudgment interest in the amount of $23,172.26, plus any additional monies currently held in a brokerage account owned by Santana that the Commission had frozen in 2005 as part of the initial injunctive relief it obtained in the underlying action. The Court's order requires Santana to satisfy his disgorgement obligation by relinquishing all rights to the contents of the account.
For further information, see Litigation Release No. 19327 (Aug. 5, 2005), Litigation Release No. 19340 (Aug. 19, 2005), Litigation Release No. 19374 (Sept. 14, 2005), Litigation Release No. 19775 (July 26, 2006), Litigation Release No. 19696 (May 11, 2006), Litigation Release No. 19650 (April 11, 2006), Litigation Release No. 19966 (Jan. 12, 2007). [SEC v. Sonja Anticevic, et al., 05 Civ. 6991 (KMW) (S.D.N.Y.)] (LR-20607)
Proposed Rule Change
A proposed rule change has been filed by the Chicago Board Options Exchange (SR-CBOE-2008-53) to amend the Exchange's rules pertaining to the imposition of fines for minor rule violations under Section 19(b)(2) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of June 2. (Rel. 34-57883)
Immediate Effectiveness of Proposed Rule Change
A proposed rule change filed by the Boston Stock Exchange relating to exchange fees and charges (SR-BSE-2008-31) 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 June 2. (Rel. 34-57887)
Approval and Accelerated Approval of Proposed Rule Changes
The Commission granted approval of a proposed rule change (SR-CBOE-2005-11), as modified, submitted by the Chicago Board Options Exchange under Rule 19b-4 of the Securities Exchange Act of 1934, and issued notice of and granted accelerated approval to proposed rule changes (SR- Amex-2008-15; SR-ISE-2008-12; SR-NYSEArca-2008-52; and SR-Phlx-2008-17), as modified, submitted by the American Stock Exchange, International Securities Exchange, Philadelphia Stock Exchange, and NYSE Arca relating to listing and trading options on the SPDR Gold Trust. Publication is expected in the Federal Register during the week of June 2. (Rel. 34-57894)
Approval of Proposed Rule Change
The Commission granted approval of a proposed rule change (SR-OCC-2008-07) filed by the Options Clearing Corporation under Section 19(b)(1) of the Securities Exchange Act of 1934 to clarify the manner in which options and security futures on SPDR Gold Shares will be treated and cleared by adding an interpretation to the definition of "fund share" in OCC's By-Laws. Publication is expected in the Federal Register during the week of June 2. (Rel. 34-57895)
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