SEC Suspends Trading in the Securities of Greenstone Holdings, Inc.
On June 18, as part of its Anti-Spam Initiative, the Securities and Exchange Commission ordered the temporary suspension of trading in the securities of Greenstone Holdings, Inc. (Greenstone), commencing at 9:30 a.m. EDT on June 18, 2008, and terminating at 11:59 p.m. EDT on July 1, 2008.
The Commission ordered this trading suspension because of questions that have arisen regarding the adequacy and accuracy of publicly disseminated information concerning, among other things, Greenstone's current financial condition, management, business operations, and/or promoting activity in the company's stock.
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 Greenstone.
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 in the Division of Trading and Markets, Office of Interpretation and Guidance, at (202) 551-5760. If any broker or dealer is uncertain as to what is required by Rule 15c2-11, it should refrain from entering quotations relating to the securities of Greenstone 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.
The SEC's Office of Investor Education and Advocacy has information for investors and members of the general public on topics directly related to this action by the SEC. See http://www.sec.gov/investor/antispaminitiative.htm for a compilation of helpful links.
Any broker or dealer or other person with information relating to this matter is invited to e-mail the Securities and Exchange Commission at firstname.lastname@example.org. (Rel. 34-57982)
Authorities Responsible For Regulation of Public Companies Announce Next Steps Regarding the Creation of a Group to Interact With the International Accounting Standards Committee Foundation
The world's securities authorities - represented by IOSCO, as well as the European Commission, the Japan Financial Services Agency and the U.S. Securities and Exchange Commission, the securities authorities in the world's three largest capital markets - welcome the upcoming roundtable organized by the IASCF regarding the creation of an IASCF Monitoring Group. The IASCF is the private foundation that provides public interest oversight to the International Accounting Standards Board (IASB), which promulgates IFRS.
The IASCF Monitoring Group will provide for organized interaction between national authorities responsible for the adoption or recognition of accounting standards for listed companies and the IASCF.
U.S. Securities and Exchange Commission Chairman Christopher Cox, IOSCO Executive Committee Chairperson Jane Diplock, Financial Services Agency of Japan Commissioner Takafumi Sato, and European Internal Market and Services Commissioner Charlie McCreevy stated:
"We are pleased at the progress being made in advancing interaction between securities authorities and the IASCF. The increased adoption and use of IFRS in capital markets around the world necessitates strengthening the accountability of the Foundation to the authorities responsible for setting financial disclosure requirements by public companies. In organizing the upcoming roundtable, the Foundation acknowledges the need to create a mechanism for interaction between securities authorities and the IASCF that approximates the historical relationship between securities authorities and national standard setters. This, in turn, will enable securities authorities that allow or mandate the use of IFRS to discharge their mandates relating to investor protection, market integrity and capital formation effectively."
Securities authorities have been consulting with the IASCF Trustees regarding the IASCF's Constitution review and revision. As part of the contemplated change, the IASCF Monitoring Group would participate in the selection and approval of IASCF Trustees and the IASCF Trustees would regularly report to the IASCF Monitoring Group on their oversight of the IASB. The IASCF Monitoring Group's role will be expressly designed to ensure the independence of the IASB, while reinforcing the public interest oversight provided by the IASCF Trustees. The securities authorities also look forward to further engagement with the IASCF on governance matters, as the Constitution review progresses towards improving its public accountability.
On June 19, representatives of IOSCO, the U.S. Securities and Exchange Commission, Japan Financial Services Agency, and European Commission will participate in the IASCF Roundtable regarding the IASCF Constitution Review and look forward to hearing views expressed. (Press Rel. 2008-112)
Donald M. Hoerl Named Acting Regional Director of SEC's Denver Regional Office
Securities and Exchange Commission Chairman Christopher Cox today named Donald M. Hoerl as the Acting Regional Director of the SEC's Denver Regional Office.
The Regional Director position recently became vacant when George Curtis, the previous head of the Denver office, was appointed to a Deputy Director position in the SEC's Division of Enforcement in Washington, D.C. The Denver office conducts examination and enforcement activities in Colorado, North Dakota, Kansas, South Dakota, Wyoming and New Mexico.
Mr. Hoerl currently serves as the Associate Regional Director for Enforcement in the Denver Regional Office, a position he has held since 1997. He will continue to carry out the responsibilities of that position during his tenure as Acting Regional Director.
Mr. Hoerl said, "I am pleased that Chairman Cox has asked me to lead the Denver Regional Office until a permanent Regional Director is named. I feel very fortunate to have this opportunity and to be able to continue to work closely with the very talented staff in the Denver Regional Office."
Mr. Hoerl began his career with the Commission in 1982 in the Denver office as a trial counsel. He has also served as District Administrator of the SEC's Philadelphia office for four years, and as the District Administrator of the SEC's Salt Lake office for six years. Before joining the SEC, Mr. Hoerl was an Assistant United States Attorney in Denver for more than five years. He received his B.A. degree from the University of California, Los Angeles and his JD degree from the University of Colorado School of Law. (Press Rel. 2008-113)
SEC Announces $103 Million Fair Fund Distribution to Investors Injured by Market Timing Involving Banc of America Capital Management and Affiliates
The Securities and Exchange Commission today distributed more than $103 million to investors who lost money because of mutual fund market timing and late trading involving Banc of America Capital Management LLC (BACAP) and several of its affiliates.
The distribution is the first in a series that will return approximately $375 million to more than 1.5 million harmed investors and more than 525 affected funds as part of the Commission's 2005 settlement with BACAP, BACAP Distributors LLC, and Banc of America Securities LLC. The firms had been charged with facilitating market timing and late trading in Nations Funds mutual funds and others.
"Today's distribution demonstrates the Commission's commitment to returning money from wrongdoers to investors under the Fair Fund provisions of the Sarbanes-Oxley Act of 2002," said Dick D'Anna, Director of the SEC's new Office of Collections and Distributions. "Our new office has been working to cut red tape and administrative costs and enhance the Commission's increasing success at using our new authority to provide financial relief to investors harmed by market timing or any other unlawful conduct in our markets."
The Sarbanes-Oxley Act gave the SEC new authority to distribute financial penalties paid by securities law violators directly to injured investors. Using this authority, the SEC already has distributed more than $3.9 billion in Fair Funds. Earlier this year, the SEC created the new office to further expedite Fair Fund distributions to harmed investors.
Today's distribution went to more than 130,000 harmed investors in the Nations Funds and more than 380 unaffiliated mutual funds.
Kay Lackey, Associate Regional Director of the SEC's New York Regional Office, said, "We are very pleased to begin the distribution of the Banc of America Fair Fund to investors harmed by market timing misconduct. This distribution further demonstrates the Commission's commitment to use disgorgement and penalties from those who violate the securities law to return money to injured investors."
The SEC brought and settled public administrative and cease-and-desist proceedings in 2005 against BACAP, BACAP Distributors and BAS. Each consented to a Commission Order charging anti-fraud violations without admitting or denying the Commission's findings. The Commission ordered the respondents to pay $250 million in disgorgement and $125 million in civil penalties for distribution through a Fair Fund. In addition to disgorgement and civil penalties, the respondents also consented to a cease-and-desist order and a censure, and agreed to undertake certain compliance and mutual fund governance reforms.
The Fair Fund Administrator responsible for distribution is Rust Consulting, Inc. Investor questions regarding the distribution may be directed to Rust at (866) 730-8148. Information regarding the distribution can also be obtained at http://www.BankofAmericaFairFund.com. (Press Rel. 2008-114)
Erik Sirri to Testify
Erik Sirri will testify before the Senate Banking Subcommittee on Securities, Insurance, and Investment on Thursday, June 19, 2008, concerning "Risk Management and Its Implications for Systemic Risk". The hearing will be held in Room 538 of the Dirksen Senate Office Building at 2:30 p.m.
Commission Revokes Registration of Securities of Wavo Corp. for Failure to Make Required Periodic Filings
On June 18, the Commission revoked the registration of each class of registered securities of Wavo Corp. (WAVO) for failure to make required periodic filings with the Commission.
Without admitting or denying the findings in the order, except as to jurisdiction, which it admitted, WAVO consented to the entry of an Order Making Findings and Revoking Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of 1934 as to Wavo Corp. finding that it had failed to comply with Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 13a-1 and 13a-13 thereunder and revoking the registration of each class of WAVO's securities pursuant to Section 12(j) of the Exchange Act. This order settled the charges brought against WAVO in the Matter of Advanced Precision Technology, Inc. (n/k/a Exact Identification Corp.), et al., Administrative Proceeding File No. 3-13014.
Brokers and dealers should be alert to the fact that Exchange Act 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 . . . .
For further information see Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934, In the Matter of Advanced Precision Technology, Inc. (n/k/a Exact Identification Corp.), et al., Administrative Proceeding File No. 3-13014, Exchange Act Release No. 57692 (April 21, 2008). (Rel. 34-57983; 3-13014)
Delinquent Filers' Stock Registrations Revoked
The registrations of the stock of Respondents e.Spire Communications, Inc., Empire of Carolina, Inc., Genfinity Corp., NVID International, Inc., and USCI, Inc., have been revoked. None had filed any annual or quarterly reports with the Securities and Exchange Commission for more than six years. Thus, each 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 revocations were ordered in an administrative proceeding before an administrative law judge. (Rel. 34-57984; File No. 3-13045)
In the Matter of Stanislav Shpigelman
On June 18, 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 Stanislav Shpigelman (Shpigelman). The Order finds that from late 2004 to the summer of 2005, Shpigelman was employed as a Mergers and Acquisitions Analyst at Merrill Lynch & Co., Inc. (Merrill Lynch), a broker-dealer registered with the Commission. On July 14, 2006, Shpigelman pled guilty to one count of securities fraud in violation of Title 15, United States Code, Sections 78j(b) & 78ff; Title 18, United States Code, Section 2; and Title 17, Code of Federal Regulations, Section 240.10b-5. United States v. Shpigelman, 06 Cr. 00584-KMK (S.D.N.Y.) On May 29, 2008, a final judgment was entered by consent against Shpigelman, permanently enjoining him from future violations of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 promulgated thereunder, in the civil action entitled Securities and Exchange Commission v. Sonja Anticevic, et al., 05 Civ. 6991 (KMW), in the United States District Court for the Southern District of New York.
Based on the above, the Order bars Shpigelman from association with any broker or dealer. Shpigelman consented to the issuance of the Order without admitting or denying any of the findings in the Order. (Rel. 34-57985; File No. 3-13074)
In the Matter of NEXT Financial Group, Inc.
An Administrative Law Judge has issued an Initial Decision in the Matter of NEXT Financial Group, Inc. The Order Instituting Proceedings (OIP) alleges that NEXT Financial Group, Inc. (NEXT), a registered broker and dealer, willfully violated Regulation S-P, 17 C.F.R. Part 248, by disclosing nonpublic personal information about its customers to nonaffiliated third parties without notice or a reasonable opportunity to opt out of such disclosure, by allowing registered representatives to disseminate customer nonpublic personal information to other brokerage firms when leaving NEXT, and by failing to safeguard customer records and information. The OIP also alleges that NEXT willfully aided and abetted and caused violations of Regulation S-P by other, non-party brokers and dealers. According to the OIP, NEXT did so by encouraging and, in many cases, helping registered representatives from other brokerage firms (recruits) to disclose their customers' nonpublic personal information to NEXT without proper notice to customers and without affording the customers a reasonable opportunity to opt out of such disclosure.
The matter was the subject of a four-day public hearing in Houston, Texas, in December 2007. The Initial Decision sustains most of the charges in the OIP. It dismisses charges that NEXT violated Rule 30(a)(3) of Regulation S-P. It further concludes that Regulation S-P does not impose on NEXT a duty to encrypt e-mail traffic with recruits. The Initial Decision orders NEXT to cease and desist from committing or causing violations of Rules 4, 6, 10, and 30(a)(1) of Regulation S-P, 17 C.F.R. §§ 248.4, .6, .10, and .30(a)(1). It also orders NEXT to pay a second-tier civil penalty of $125,000. (Initial Decision No. 349; File No. 3-12738)
In the Matter of Clifford Financial Associates
The Commission announced that it obtained a Temporary Restraining Order and Asset Freeze Against Steven F. Clifford (Clifford). The Commission's complaint alleges that Clifford, of Plymouth, raised at least $2.9 million from at least eight investors in Massachusetts and Florida in connection with a scheme to defraud investors in an advisory business he called Clifford Financial Associates (CFA), and that on June 4, 2008, while under arrest on unrelated charges, he made statements to the police indicating that he defrauded his investors of $3 million.
The Commission's complaint alleges that Clifford violated Sections 17(a) of the Securities Act of 1933, 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 of 1940. The Honorable Richard G. Stearns issued a temporary restraining order against further violations of the securities laws, an order freezing Clifford's assets, an order prohibiting the acceptance of additional investor funds, an accounting of assets and an order prohibiting the alteration or destruction of relevant documents, as well as other relief. The Commission also seeks the entry of a permanent injunction, disgorgement of ill-gotten gains, plus pre-judgment interest and the imposition of civil monetary penalties against Clifford.
The Commission acknowledges the assistance of Massachusetts Secretary of State William Francis Galvin's Securities Division, which simultaneously brought an administrative cease-and-desist action against Clifford, and the Bourne, Massachusetts Police Department. [SEC v. Stephen F. Clifford, Civ. Action. No. 09-08-CA-11023 (RGS), USDC, D. Mass.] (LR-20622)
SEC Charges Five Individuals With Insider Trading in Connection With Aviall, Inc.'s Merger Announcement
On June 17, the Commission filed a complaint against Robert Wayne Tedder, Joseph Wayne Tedder, Phillip Brian Gunn, Gregory Carl Gunn, and Brian Patrick Carr (Defendants) in the United States District Court for the Northern District of Texas alleging that they engaged in unlawful trading on the basis of material, nonpublic information in the securities of Aviall, Inc. (Aviall) before a May 1, 2006 merger announcement with The Boeing Company. According to the Commission's complaint, two Aviall employees, Robert Tedder and Brian Carr, became aware of material, nonpublic information concerning the impending acquisition of Aviall in the course of their employment at Aviall's Dallas headquarters. The complaint also alleges that Robert Tedder tipped his father, Joseph Wayne Tedder, and a business associate, Phillip Gunn. Finally, the complaint alleges that Phillip Gunn passed on the material, nonpublic information concerning the acquisition of Aviall to his brother, Gregory Gunn, a registered representative.
According to the complaint, between March 21, 2006 and April 28, 2006, the Defendants purchased Aviall common stock and Aviall call option contracts while in possession of information related to the acquisition of Aviall that was not available to the public. On the day of the merger announcement, Aviall's common stock closing price of $46.96 was nearly 25% higher than the preceding day's closing price of $37.70. As a result of their trading in Aviall common stock and call options, the Defendants collectively reaped hundreds of thousands of dollars in profits.
The Commission thanks the Philadelphia Stock Exchange for their cooperation in this matter. [SEC v. Robert W. Tedder, et. al., Civil Action No. 3:08-CV-1013-G, USDC, NDTX, Dallas Division)] (LR-20623)
SEC Charges Two Former Sentinel Management Group Executives With Orchestrating Fraud
The Commission announced today that it has charged two former Sentinel Management Group, Inc. (Sentinel) executives, Eric A. Bloom (Bloom) and Charles K. Mosley (Mosley), for their roles in devising and carrying out a fraud that has resulted in several hundred million dollars in losses to Sentinel's clients. Prior to its August 2007 bankruptcy, Sentinel was a registered investment adviser that primarily managed short-term cash investment portfolios (Client Portfolios) for various types of advisory clients, including Futures Commission Merchants, hedge funds, financial institutions, pension funds, and individuals. In an amended complaint filed today in federal court in Chicago, the Commission added Bloom and Mosley as defendants in the action it instituted against Sentinel on Aug. 20, 2007. Bloom was the President and Chief Executive Officer of Sentinel from approximately October 1988 until August 2007. He controlled the day-to-day operations at Sentinel. Mosley was Senior Vice President, head trader and portfolio manager of Sentinel from approximately October 2002 until August 2007. He was responsible for Sentinel's investing and trading activities. The Commission's amended complaint also added new causes of action against Sentinel, which is now under the control of a bankruptcy trustee, in connection with Sentinel's pre-bankruptcy conduct.
The Commission's amended complaint alleges that from approximately 2003 through August 2007, Sentinel, through the actions of Bloom and Mosley, exposed its clients to substantial risks by engaging in an undisclosed investment strategy that relied extensively on leverage and repurchase transactions. Additionally, the Commission's amended complaint alleges that Sentinel, Bloom, and Mosley misused Client Portfolio assets to finance risky leveraged trading for the benefit of Sentinel's house portfolio (House Portfolio), which was owned by Sentinel insiders, including Bloom and Mosley. The amended complaint also alleges that Mosley, with the knowledge and approval of Bloom, caused Sentinel to record huge returns -- annualized gains of 100% or more -- for its leveraged trading in the House Portfolio, partly through misuse of Client Portfolio assets. The Commission's amended complaint also alleges that as part of their fraud, Bloom and Mosley improperly used Client Portfolio assets to collateralize a bank line of credit to Sentinel, thus subjecting clients to the risk that the lender would assert a security interest in the assets and sell them if Sentinel could not meet its loan obligations.
The Commission's amended complaint alleges that, as a result of Defendants' conduct, they violated Section 17(a) of the Securities Act of 1933, Sections 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, or, in the alternative as to Bloom and Mosley, aiding and abetting of Sentinel's violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The amended complaint also alleges that Sentinel violated Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-2 thereunder and that Bloom and Mosley aided and abetted Sentinel's violations of these provisions. The amended complaint seeks a permanent injunction against the Defendants and also seeks disgorgement, prejudgment interest, and civil penalties against Bloom and Mosley. [SEC v. Sentinel Management Group, Inc., Eric A. Bloom, and Charles K. Mosley, Civil Action No. 1:07-CV-4684 (N.D. Ill.) (Kocoras, J.)] (LR-20624)
INVESTMENT COMPANY ACT RELEASES
Matrix Capital Group, Inc. and Matrix Defined Trusts
An order has been issued on an application filed by Matrix Capital Group, Inc. (Depositor) and Matrix Defined Trusts under Section 6(c) of the Investment Company Act for exemptions from Sections 2(a)(32), 2(a)(35), 14(a), 19(b), 22(d) and 26(a)(2)(C) of the Act and Rules 19b-1 and 22c-1 under the Act, and under Sections 11(a) and 11(c) of the Act to approve certain offers of exchange and rollover privileges. The order would permit certain unit investment trusts to: (a) impose sales charges on a deferred basis and waive the deferred sales charge in certain cases; (b) publicly offer units without requiring the Depositor to take for its own account or place with others $100,000 worth of units; (c) offer unitholders certain exchange and rollover privileges; and (d) distribute capital gains resulting from the sale of portfolio securities within a reasonable time after receipt. (Rel. IC-28300 - June 17)
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed by the International Securities Exchange (SR-ISE-2008-44) regarding fees for Enhanced Sentiment Market Data 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 23. (Rel. 34-57972)
A proposed rule change and Amendment No. 1 thereto filed by The NASDAQ Stock Market regarding Nasdaq Last Sale Data Feeds (SR-NASDAQ-2008-050) 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 23. (Rel. 34-57973)
The Commission issued notice of immediate effectiveness of a proposed rule change (SR-NYSEArca-2008-62) filed by NYSE Arca under Rule 19b-4 of the Securities Exchange Act of 1934 relating to the listing and trading of shares of the First Trust ISE Global Wind Energy Index Fund. Publication is expected in the Federal Register during the week of June 23. (Rel. 34-57975)
A proposed rule change filed by The NASDAQ Stock Market to modify the opening of trading on the NASDAQ Options Market (SR-NASDAQ-2008-052) 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 23. (Rel. 34-57977)
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