Closed Meeting - Tuesday, December 16, 2008 - 11:30 a.m.
The subject matter of the closed meeting held on Tuesday, December 16, was: A matter 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.
Elizabeth Murphy Named Secretary of Securities and Exchange Commission
On December 15, the Securities and Exchange Commission announced that Elizabeth "Betsy" Murphy will become Secretary of the Commission. Murphy is currently the head of the Office of Rulemaking in the SEC's Division of Corporation Finance. She will replace Nancy Morris, who left the position in May 2008 to rejoin the private sector.
"In her more than 20 years at the SEC, Betsy has demonstrated her outstanding qualifications for this position," said SEC Chairman Christopher Cox. "We are very pleased that she will be filling this important role. Her deep understanding of the law, excellent organizational and managerial skills, strong relationships with the Commissioners and staff, and personal commitment to the work of the Commission will help ensure that all of the complicated work of the Commission runs smoothly."
Ms. Murphy added, "It is a great honor to be named to this position. In these times, the work of the Commission has never been more important in protecting investors, maintaining fair and orderly markets, and facilitating capital formation. I look forward to working with all of the Commissioners to advance that critical mission."
The Secretary of the Commission is responsible for the procedural administration of Commission meetings, rulemaking, practice, and procedure. Among the responsibilities of the office are the scheduling and recording of Commission meetings; the administration of the "seriatim" process by which the Commission takes action without convening a meeting; the administration of the duty-officer process; and the maintenance of records of Commission actions and enforcement proceedings. The office also provides advice to the Commission and the staff on questions of practice and procedure.
The Secretary reviews all SEC documents submitted by the staff to the Commission. These include rulemaking releases, SEC enforcement orders and litigation releases, SRO rulemaking notices and orders, and actions taken by SEC staff pursuant to delegated authority. In addition, the Secretary receives and tracks documents filed in administrative proceedings, requests for confidential treatment, and comment letters on rule proposals. The office is responsible for publishing official documents and releases of Commission actions in the Federal Register and the SEC Docket, and it posts them on the SEC Web site. The office also monitors compliance with the Government in the Sunshine Act.
Since 2000, Murphy has been Chief of the Office of Rulemaking in the Division of Corporation Finance. In that position, she was responsible for preparing rules and interpretive guidance on behalf of the division. Murphy joined the Division of Corporation Finance in 1986 as an Attorney Advisor, and in 1987 was promoted to the position of Special Counsel. She was made a Special Counsel in the Office of the Chief Counsel in 1996, and later served as Counsel to Commissioner Laura S. Unger. Murphy received her law degree from the University of Notre Dame Law School in 1985. She graduated in 1982 with a B.S. from the University of Virginia. (Press Rel. 2008-295)
Delinquent Filer's Stock Registration Revoked
The registration of the stock of Pacific Industrial Corp. has been revoked. It had not filed any annual or quarterly reports with the Securities and Exchange Commission for more than eight 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. 34-59093; File No. 13292)
In the Matter of Graystone World Wide, Inc., and Keratoplanetes Corp.
An Administrative Law Judge issued an Order Making Findings and Revoking Registrations by Default as to Graystone World Wide, Inc., and Keratoplanetes Corp. (Default Order) in Graystone World Wide, Inc., Admin. Proc. 3-13290, (Dec. 15, 2008). The Default Order finds that Respondents failed to comply with Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 13a-1 and 13a-13 thereunder by failing to file required periodic reports since 2000. Based on these findings, the Default Order revokes the registration of each class of registered securities of Graystone World Wide, Inc., and Keratoplanetes Corp. pursuant to Section 12(j) of the Exchange Act. (Rel. 34-59103)
In the Matter of David Lee
On December 16, 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 Sanction (Order) against David Lee, age 36, and a resident of New Jersey.
The Order finds that from 2000 to 2007, Lee was a natural gas options trader employed by BMO Capital Markets Corp., a wholly-owned subsidiary of Bank of Montreal (BMO) and a broker-dealer registered with the Commission. The Order further finds that on November 18, 2008, the Commission filed a complaint against Lee and others in the United States District Court for the Southern District of New York alleging that they violated and/or aided and abetted violations of the antifraud, corporate reporting, recordkeeping and internal controls provisions of the federal securities laws, SEC v. Lee, et al., 08-civ-9961. The Commission's complaint alleges, among other things, that during the course of Lee's employment with BMO, he knowingly engaged in a scheme to overvalue BMO's portfolio of natural gas options by mismarking his trading positions and colluding with others to have an independent commodities brokerage firm falsely validate those inflated values. The Order further finds that on November 20, 2008, the court entered a partial final consent judgment against Lee which, inter alia, permanently enjoined him from violating Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5 and 13b2-1, and from aiding and abetting violations of Sections 13(a) and 13(b)(2) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-16.
Based on the above, the Order bars Lee from association with any broker or dealer. Lee consented to the issuance of the Order without admitting or denying any of the Commission's findings, except the court's entry of the partial final consent judgment on Nov. 20, 2008. (Rel. 34-59107; File No. 3-13311)
SEC Seeks Contempt Against Jeffrey G. Turino for Violating Penny Stock Bar and Obtains Ex Parte Asset Freeze and Extension of Penny Stock Bar
Following an ex parte hearing held on Dec. 4, 2008, Judge Elizabeth A. Kovachevich of the U.S. District Court for the Middle District of Florida issued an order directing Jeffrey G. Turino to show cause why the Court should not hold him in contempt for violating a five-year penny stock bar entered against him on Dec. 5, 2003, as part of a settlement of an earlier Commission enforcement action. The penny stock bar prohibited Turino from participating in any penny stock offering. In its order, the Court finds that the Commission had made a sufficient and proper showing that Turino had violated this bar by participating in penny stock offerings of Biotech Medics, Inc., Equitable Mining Corp., Global Diamond Exchange, Inc., Grand Entertainment and Music, Inc. and OMDA Oil and Gas, Inc. The Commission had previously issued orders temporarily suspending the trading in the securities of two of these companies, Equitable Mining Corp. and Global Diamond Exchange.
The order directs Turino to show cause why the Court should not hold him in contempt, should not require him to disgorge the unlawful proceeds from selling shares obtained in penny stock offerings, and should not make him subject to a permanent penny stock bar. Further, the order freezes certain bank and brokerage accounts held or controlled by, or in the name of Melissa Spooner, Robert Leslie, Mountain Passages, Inc., Austin Funding, LLC and CRL Holdings, Inc. Finally, the order extends the penny stock bar against Turino pending a final hearing on the show cause order.
The penny stock bar against Turino resulted from the Commission's May 8, 2002, enforcement action against Turino, Vincent Lo Castro, and a company they controlled, Pinnacle Business Management, Inc. SEC v. Pinnacle Business Management, Inc. et al., Civ. No. 8:02-CV-822-T-EAK (M.D. Fla.) The Commission's complaint alleged that Turino and the other defendants had made materially false and misleading statements in connection with a proposed spin-off of a Pinnacle business division, and charged them with violating the antifraud provisions of the federal securities laws (Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder). On December 5, 2003, Turino consented to the entry of a final judgment that permanently enjoined him from further violations of these provisions and imposed a $60,000 civil penalty, a permanent officer and director bar, and a five-year penny stock bar. [SEC v. Pinnacle Business Management, Inc. et al., Civ. No. 8:02-CV-822-T-EAJ (M.D. Fla.] LR-20830)
Proposed Rule Change
The NYSE Arca filed a proposed rule change (SR-NYSEArca-2008-135) under Section 19(b)(1) of the Securities Exchange Act of 1934 to reduce the exposure period in Rule 6.47A from three seconds to one second. Publication is expected in the Federal Register during the week of December 15. (Rel. 34-59082)
Immediate Effectiveness of Proposed Rule Change
A proposed rule change (SR-CBOE-2008-124) filed by the Chicago Board Options Exchange to increase the class quoting limit in one option class 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 December 15. (Rel. 34-59086)
Approval of Proposed Rule Changes
The Commission approved a proposed rule change (SR-FINRA-2008-031) filed by the Financial Industry Regulatory Authority to amend the arbitration Uniform Submission Agreement and related rules. Publication is expected in the Federal Register during the week of December 15. (Rel. 34-59091)
The Commission approved a proposed rule change (SR-FINRA-2008-04) submitted by the Financial Regulatory Authority relating to the supervision of market letters. Publication is expected in the Federal Register during the week of December 15. (Rel. 34-59096)
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