Closed Meeting - Thursday, November 6, 2008 - 2:00 p.m.
The subject matter of the closed meeting scheduled for Thursday, Nov. 6, 2008, will be: formal orders of investigation; institution and settlement of injunctive actions; institution and settlement of administrative proceedings of an enforcement nature; adjudicatory 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.
RULES AND RELATED MATTERS
Order Approving and Declaring Effective a Proposed Plan for the Allocation of Regulatory Responsibilities Pursuant to Rule 17d-2
The Commission approved and declared effective a proposed plan between the Financial Industry Regulatory Authority and BATS Exchange for the allocation of regulatory responsibilities pursuant to Rule 17d-2 (File No. 4-569). Publication is expected in the Federal Register during the week of October 27. (Rel. 34-58818)
Commission Declares Decision as to Jamie L. Solow Final
The Commission declared final the initial decision of an administrative law judge barring Jamie L. Solow from associating with any broker or dealer. The initial decision found that on May 14, 2008, the United States District Court for the Southern District of Florida entered a judgment against Solow, SEC v. Solow, 554 F. Supp. 2d 1356 (S.D. Fla. 2008), enjoining him from violating the antifraud provisions of the federal securities laws and ordered disgorgement in the amount of $2,646,485.99. The initial found that Solow's conduct was egregious and recurrent. (Rel. 34-58831; File No. 3-13066)
SEC v. Raymond Thomas and Strictly Stocks Investment Company, Inc.
On October 22, the Commission filed a complaint alleging that Raymond Thomas (Thomas) and his company, Strictly Stocks Investment Company, Inc. (Strictly Stocks) operated a fraudulent offering scheme that raised at least $620,000 from at least 26 investors, many of whom were retired police officers and firefighters.
The SEC's civil injunctive complaint, filed in the U.S. District Court, Northern District of Ohio, alleges that Thomas and Strictly Stocks raised at least $620,000 between 1997 and 2006 from investors while acting as unregistered investment advisers. According to the complaint, Thomas, who is himself a retired police officer, preyed upon Cleveland area active and retired police officers and firefighters, as well as his friends and family. The complaint alleges that Thomas and Strictly Stocks told investors that their funds would be invested in stocks and options. The complaint goes on to allege that Thomas instead misappropriated the funds and, among other things, used the funds to support his own private business ventures, including a limousine company and a title company, and for his own personal use.
The SEC complaint alleges violations of Section 17(a) of the Securities Act of 1933 (Securities Act), Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 (Advisers Act) by Thomas and Strictly Stocks. As part of this action, the SEC seeks an order of permanent injunction against Thomas and Strictly Stocks as well as the payment of disgorgement of ill-gotten gains, prejudgment interest and civil penalties. [SEC v. Raymond Thomas and Strictly Stocks Investment Company, Inc., Civil Action No. 1:08-cv-02503-CAB (N.D. Ohio) (Boyko, J.)] (LR-20787)
Former Peregrine Systems President Settles SEC Charges for His Role in Corporate Accounting Fraud
The Commission announced today that on Oct. 20, 2008, United States District Judge John A. Houston approved the Commission's settlement with former Peregrine Systems, Inc. (Peregrine) president Gary L. Lenz. The Commission's action, filed in 2004, charged Lenz with, among other things, securities fraud, in connection with his participation in a revenue inflation scheme with other senior officers of Peregrine, a San Diego software company that has since been acquired by Hewlett-Packard Company. To settle the Commission's case, Lenz agreed to pay a $110,000 civil penalty and to be barred from serving as an officer or director of any public company.
The Commission's complaint includes the following allegations: Lenz joined Peregrine in 2000, and later that year became company president. To meet Peregrine's revenue forecasts, senior company officers exploited relationships with third parties by entering into sham reseller agreements with them. Lenz participated in some of these fraudulent agreements, including one for approximately $500,000 and another for approximately $1 million. Lenz knew, or was reckless in not knowing, that Peregrine was improperly recording revenue on the agreements. Lenz also helped arrange for an agreement to be backdated so that Peregrine could improperly record approximately $3 million in revenue in the wrong quarter. After engaging in these activities, in April 2001 Lenz signed a letter that misrepresented to Peregrine's independent auditors that the company's financial statements were in accordance with generally accepted accounting principles.
In January 2008, Lenz entered a guilty plea in a related criminal case in the Southern District of California. He pleaded guilty to one count of making materially false statements to the FBI, in violation of 18 U.S.C. §1001. Lenz was sentenced to three years probation, a $5,000 fine and 200 hours of community service.
In addition to the financial penalty and officer and director bar, without admitting or denying the Commission's allegations, Lenz agreed to be enjoined from violating Section 17(a) of the Securities Act of 1933, Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934, and Exchange Act Rules 10b-5, 13b2-1 and 13b2-2; and from aiding and abetting violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, and Exchange Act Rules 12b-20, 13a-1 and 13a-13. [SEC v. Stephen P. Gardner, et al., Civil Action No. 04 CV 2002 JAH (RBB) (S.D. Cal.)] (LR-20788)
SEC Charges Owner of Hayden Communications, Inc. with Insider Trading
The Securities and Exchange Commission today charged Brett C. Maas with insider trading in the stock of Michigan-based Manatron, Inc., prior to the announcement of its pending acquisition by Chicago-based Thoma Cressey Bravo.
At the time of his trading, Maas was the owner of Hayden Communications, Manatron's investor relations firm. Maas has agreed to the entry of a final judgment that will enjoin him from violating certain provisions of the federal securities laws and will require him to pay a total of $88,615.
The SEC's complaint, filed in U.S. District Court for the District of Arizona, alleges that on Jan. 14, 2008, through his position as owner of Hayden Communications, Maas learned of Thoma Cressey Bravo's pending acquisition of Manatron. Shortly thereafter and in contravention of a confidentiality agreement with Manatron, Maas purchased 20,000 shares of Manatron stock. Prior to the market opening on Jan. 15, 2008, Manatron issued a press release announcing the pending acquisition and the closing price of Manatron's stock increased 32 percent on the day of the announcement. Maas sold all 20,000 of his Manatron shares that same day, realizing a profit of $59,077.31.
The SEC's complaint charges Maas with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. To settle the SEC's charges, Maas has consented, without admitting or denying the allegations in the complaint, to the entry of a final judgment permanently enjoining him from committing future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Maas has also agreed to pay $59,077, representing the disgorgement of his illegal trading profits and prejudgment interest, and a financial penalty of $29,538, for a total payment of $88,615. The Commission took into consideration Maas's cooperation during the staff's investigation.
The Commission acknowledges the assistance of the Financial Industry Regulatory Authority (FINRA). [SEC v. Brett C. Maas, United States District Court for the District of Arizona, Civil Action No. 2:08-cv-01947-MHM] (LR-20789)
INVESTMENT COMPANY ACT RELEASES
Aberdeen Asset Management Inc., et al.
An order has been issued on an application filed by Aberdeen Asset Management Inc., et al., under Section 6(c) of the Investment Company Ac for an exemption from Rule 12d1-2(a) under the Act. The order permits registered open-end management investment companies relying on Rule 12d1-2 under the Act to invest in certain financial instruments. (Rel. IC-28443 - October 21)
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change (SR-CBOE-2008-105) filed by the Chicago Board Options Exchange relating to the Registered Representative Fee and an Options Regulatory Fee 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 October 27. (Rel. 34-58817)
A proposed rule change (SR-BSE-2008-47) filed by the Boston Stock Exchange relating to a change in the percentage ownership interest in the Boston Options Exchange Group, LLC 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 October 27. (Rel. 34-58822)
A proposed rule change (SR-NYSEALTR-2008-02) filed by NYSE Alternext US LLC amending NYSE Alternext Equities Rule 123D(4) to expand the Rule's trading halt condition to cover all structured products 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 October 27. (Rel. 34-58824)
A proposed rule change filed by the NASDAQ Stock Market (SR-NASDAQ-2008-083) relating to a new service and fee changes has become immediately 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 October 27. (Rel. 34-58827)
A proposed rule change filed by Chicago Board Options Exchange (SR-CBOE-2008-107) amending CBOE rules relating to the minimum size requirement for quotations 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 October 27. (Rel. 34-58828)
A proposed rule change filed by Chicago Board Options Exchange (SR-CBOE-2008-108) to immediately add two new VIX option series within five days of expiration 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 October 27. (Rel. 34-58829)
Approval of Proposed Rule Changes
The Commission approved a proposed rule change (SR-CBOE-2007-30) filed by the Chicago Board Options Exchange regarding a proposal to amend CBOE Rule 9.21 (Communications to Customers). Publication is expected in the Federal Register during the week of October 27. (Rel. 34-58823)
The Commission granted approval of a proposed rule change (SR-NYSEArca-2008-89) submitted pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 by NYSE Arca, through its wholly owned subsidiary, NYSE Arca Equities, Inc., amending NYSE Arca Equities Rule 5.2(j)(3) in connection with generic listing standards for Multiple Fund Shares and Inverse Fund Shares. Publication is expected in the Federal Register during the week of October 27. (Rel. 34-58825)
SECURITIES ACT REGISTRATIONS
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