Closed Meeting - Thursday, August 28, 2008 - 2:00 p.m.
The subject matter of the closed meeting scheduled for Thursday, Aug. 28, 2008, will be: formal orders of investigation; institution and settlement of injunctive actions; institution and settlement of administrative proceedings of an enforcement nature; resolution of litigation matters; and other matters relating to enforcement proceedings.
At times, changes in Commission priorities require alterations in the scheduling of meeting items. For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact: The Office of the Secretary at (202) 551-5400.
In the Matter of Nicholas Thompson
On August 21, the Commission issued an Order Making Findings and Imposing Remedial Sanctions and a Cease-and-Desist Order Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 as to Nicholas Thompson (Order), a former branch manager of registered broker-dealer vFinance Investments, Inc. (vFinance).
The Order finds that Thompson willfully aided and abetted and caused vFinance's failure to preserve records and produce them promptly to the Commission staff by repeatedly failing to produce records located in his branch office and by deliberately deleting data from his hard drive relating to a matter under investigation by the Commission. Thompson, without admitting or denying the findings, consented to the issuance of the Order, under which the Commission barred Thompson from association with any broker or dealer with the right to reapply after five years, ordered Thompson to pay a civil penalty of $30,000 and ordered Thompson to cease and desist from causing any violations and any future violations of the document retention and production requirements of Section 17(a) of the Securities Exchange Act of 1934 and Rules 17a-4(b)(4) and 17a-4(j) thereunder. (Rel. 34-58403; File No. 3-12918)
Jury Finds Former Hayes Lemmerz International CEO and CFO Liable for Securities Fraud Arising from Accounting Scheme
The Commission announced today that on Aug. 20, 2008, a federal jury returned a verdict in the SEC's favor on securities fraud charges against Ranko Cucuz, the former Chief Executive Officer of automobile parts manufacturer Hayes Lemmerz International, Inc., and William D. Shovers, the former Chief Financial Officer of the company. The verdict followed a two-week jury trial in Detroit, Michigan, before the Honorable Arthur J. Tarnow, United States District Judge for the United States District Court for the Eastern District of Michigan. The Commission's complaint, filed on April 25, 2006, alleged that Hayes, acting through former senior officers and employees, engaged in a fraudulent scheme to achieve corporate earnings targets and mask declining operating results. The complaint alleged that as a result of the fraudulent accounting scheme, Hayes made materially false filings with the Commission in fiscal years 1999 and 2000 and for the first quarter of 2001, including the company's annual report on Form 10-K for the fiscal year ending Jan. 31, 2001, and the quarterly reports on Forms 10-Q for the quarterly periods ended April 30, 2000, July 31, 2000, Oct. 31, 2000 and April 30, 2001.
The complaint also alleged that, upon learning of the fraudulent accounting scheme, Cucuz and Shovers made affirmative misrepresentations to the company's outside independent auditor about Hayes' financial statements and caused Hayes to make Commission filings containing material misrepresentations. The complaint further alleged that Cucuz and Shovers took affirmative steps to conceal information about the improper accounting practices from Hayes' outside independent auditor and Hayes' Audit Committee and Board of Directors. Finally, the complaint alleged that Cucuz and Shovers made material misrepresentations about Hayes' financial condition in connection with a $300 million Rule 144A bond offering by Hayes in June 2001.
Cucuz and Shovers are the last two remaining defendants in this action. Previously, the Commission reached settlements with the company, Ronald Lee Kolakowski (the former President of Hayes' North American Wheel Group), and Jesus Bonilla-Valdez (former Vice President of Hayes' Aluminum Wheel Group). Moreover, in previously settled related administrative proceedings, the Commission issued Orders Instituting Administrative Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings and Imposing Remedial Sanctions against three other former Hayes employees: Allen Buntin, James Jarrett, and Greg Jones. [SEC v. Ranko Cucuz, William D. Shovers, Jesus Bonilla-Valdez, Ronald Lee Kolakowski, and HLI Operating Company, Inc., f/k/a Hayes Lemmerz International, Inc., Civil Action No. 2:06-CV-11935 (E.D. Mich.)] (LR-20686; AAE Rel. 2864)
INVESTMENT COMPANY ACT RELEASES
Cohen & Steers Advantage Income Realty Fund, Inc, et al.
An order has been issued on an application filed by Cohen & Steers Advantage Income Realty Fund, et al., under Section 6(c) of the Investment Company Act, for an exemption from Section 19(b) of the Act, and Rule 19b-1 under the Act. The order permits certain registered closed-end management investment companies to make periodic distributions of long-term capital gains (i) with respect to their common stock as part of a managed distribution plan as frequently as twelve times each year, and (ii) with respect to their preferred stock as frequently as required by the terms of such preferred stock. (Rel. IC-28358 - August 19)
Deregistrations Under the Investment Company Act
Orders have been issued under Section 8(f) of the Investment Company Act declaring that each of the following has ceased to be an investment company:
SEI Insurance Products Trust
An order has been issued pursuant to Section 8(f) of the Investment Company Act declaring that SEI Insurance Products Trust has ceased to be an investment company. (Order: Rel No. IC-28362) - August 20)
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change (SR-CBOE-2008-83) filed by the Chicago Board Options Exchange related to complex order price check parameters 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 August 25. (Rel. 34-58387)
A proposed rule change (SR-NYSEArca-2008-83) filed by NYSE Arca amending the Schedule of Fees and Charges for Exchange Services to add a credit that applies to indications of interest that result in routed and executed orders 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 August 25. (Rel. 34-58397)
Proposed Rule Changes
The Commission issued notice of a proposed rule change submitted by NYSE Arca (SR-NYSEArca-2008-85), through its wholly owned subsidiary, NYSE Arca Equities, Inc., relating to listing and trading shares of the PowerShares Active U.S. Real Estate Fund. Publication is expected in the Federal Register during the week of August 25. (Rel. 34-58395)
NYSE Arca, through its wholly owned subsidiary, NYSE Arca Equities, Inc., filed with the Securities and Exchange Commission a proposed rule change (SR-NYSEArca-2008-86) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 relating to listing of the WisdomTree Dreyfus Emerging Markets Fund. Publication is expected in the Federal Register during the week of August 25. (Rel. 34-58396)
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