In the Matter of Webservices Innovations, Ltd.
An Administrative Law Judge has issued an Order Making Findings and Revoking Registration of Securities by Default in Webservices Innovations, Ltd., Admin. Proc. No. 3-13196 (Default Order). The Default Order finds that Westar Financial Services, Inc., Winsor & Eton Golf Concepts, Inc., and Wiskers Acquisition Corp. failed to file required periodic reports with the Securities and Exchange Commission since 2001. Because of these reporting failures, Respondents failed to comply with Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) and Exchange Act Rules 13a-1 and 13a-13. The Default Order finds it necessary and appropriate for the protection of investors to revoke the registration of each class of each Respondent's securities. (Rel. 34-58930; File No. 3-13196)
Blue Coat Systems and Former CFO Settle Charges of Stock Option Backdating
The Commission today charged Sunnyvale, California, network security company Blue Coat Systems, Inc. and its former chief financial officer Robert P. Verheecke, alleging that they backdated stock option grants to executives and employees and reported false financial information to shareholders.
The SEC's complaint, filed in federal court in San Jose, alleges that Blue Coat regularly used hindsight to select favorable exercise prices for employee and officer stock option grants without accurately reporting the grants to investors. Blue Coat was required to record an expense for options issued at below-market prices ("in-the-money" options). In order to avoid these expenses, Blue Coat allegedly identified dates on which its stock was trading at historically low prices, then created documents making it look like options had been granted on those earlier dates. In March 2007, after an internal investigation, Blue Coat corrected its financial statements for fiscal years 2000 through 2005, recording nearly $50 million in additional expenses for misdated options.
Verheecke served as CFO from May 2001 through May 2005. According to the SEC's complaint, at various times Verheecke used hindsight to pick stock option grant dates, prepared or distributed misleading option paperwork, and approved Blue Coat's false and misleading financial statements and SEC filings. The SEC alleges that Verheecke personally exercised backdated options for $30,000 in excess profits.
Without admitting or denying the SEC's allegations, Verheecke consented to a permanent injunction against violations of Section 17(a) of the Securities Act of 1933, Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), 13(b)(5), and 14(a) of the Securities Exchange Act of 1934, and Rules 10b-5, 12b-20, 13a-1, 13a-11, 13a-13, 13a-14, 13b2-1, 13b2-2, and 14a-9 thereunder. Verheecke also consented to disgorgement and prejudgment interest of $35,946, a financial penalty of $150,000, and five-year bars from serving as an officer or director of a public company and appearing or practicing as an accountant before the SEC.
Blue Coat consented to be enjoined from violating Section 17(a) of the Securities Act, Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), and 14(a) of the Exchange Act, and Rules 10b-5, 12b 20, 13a-1, 13a-11, 13a-13, and 14a-9. [SEC v. Blue Coat Systems, Inc. and Robert P. Verheecke, Case No. CV 08-5127 JF (RS) (N.D. Cal.)] (LR-20801; AAE Rel. 2897)
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change (SR-NYSEArca-2008-100) filed by NYSE Arca relating to Rules 6.100 and 6.82 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 November 10. (Rel. 34-58888)
A proposed rule change (SR-Phlx-2008-68) filed by NASDAQ OMX PHLX relating to settlement values and spot prices for foreign currency options 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 November 10. (Rel. 34-58915)
Proposed Rule Changes
The Options Clearing Corporation filed a proposed rule change (SR-OCC-2008-06) under Section 19(b) of the Exchange Act relating to the Stock Loan/Hedge Program. Publication is expected in the Federal Register during the week of November 10. (Rel. 34-58901)
International Securities Exchange filed a proposed rule change under Rule 19b-4 (SR-ISE-2008-85) relating to changes to the ISE Stock Exchange governing documents in connection with ISE's purchase of equity interests in Direct Edge Holdings, Inc. Publication is expected in the Federal Register during the week of November 10. (Rel. 34-58918)
Approval of Proposed Rule Change
The Commission granted approval to a proposed rule change, as modified by Amendment Nos. 1 and 2, (SR-FINRA-2008-011) submitted by the Financial Industry Regulatory Authority to amend the trade reporting structure and require submission of non-tape reports that identify other members who participated in agency and riskless principal transactions. Publication is expected in the Federal Register during the week of November 10. (Rel. 34-58903)
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