Peter Uhlmann to Step Down as SEC Chief of Staff
On January 16, Peter M. Uhlmann, Chief of Staff of the Securities and Exchange Commission, announced that he will step down from his current position.
Mr. Uhlmann, who joined the Chairman's office in 2005, is one of the longest-serving Chiefs of Staff in the agency's 75-year history. As Chief of Staff, he has been centrally involved with the development and execution of the Commission's programs for promoting capital formation, healthy markets, and investor protection. In this capacity, he has served as a principal liaison to Commissioners and senior agency staff, and has been responsible for implementing initiatives to improve the organization and administration of the Commission. He has also been responsible for oversight of the agency's intergovernmental, legislative, and public affairs programs, and assisting the Chairman in managing the Commission's staff and budget.
"Peter has been a steady hand at the Commission during these challenging times," said SEC Chairman Christopher Cox. "His strong and capable management of the agency's day-to-day affairs was reinforced by his integrity, professionalism, and good humor. The nation's investors and markets are fortunate to have had the benefit of his wisdom and good judgment."
Mr. Uhlmann said, "I am grateful to Chairman Cox and the other Commissioners for the opportunity to work for the SEC over the past three-and-a-half years. It has been an honor and a privilege to work with a staff that is so talented and so dedicated to a critical mission - protecting investors and sustaining confidence in the markets."
Mr. Uhlmann will remain with the Commission for a period of time to help assure continuity of SEC operations.
Before joining the SEC in 2005, Mr. Uhlmann spent more than 13 years as a chief of staff, legislative director, public policy expert, and public affairs strategist in the U.S. Congress. He was involved in the drafting and congressional consideration of numerous laws, including the National Securities Markets Improvement Act, Gramm-Leach-Bliley Act, Sarbanes-Oxley Act, Telecommunications Act, Internet Tax Freedom Act, and Electronic Signatures in Global and National Commerce Act.
Mr. Uhlmann, 39, graduated with honors from Yale University in 1991, where he earned a double major B.A. in Political Science and in Classical Civilization. (Press Rel. 2009-8)
Andrew Vollmer Named Acting General Counsel of SEC
The Securities and Exchange Commission today announced the appointment of Andrew N. Vollmer as the agency's Acting General Counsel. Mr. Vollmer succeeds Brian Cartwright, who left the agency this week to return to the private sector.
Mr. Vollmer joined the SEC staff in 2006 to become the agency's Deputy General Counsel. As Acting General Counsel, Mr. Vollmer will be the chief legal officer of the Commission and head the Office of the General Counsel, which advises the Commission on various matters including enforcement actions, rulemakings, appellate briefs and adjudications, and provides a variety of legal services to SEC staff.
Before joining the SEC, Mr. Vollmer was a partner in the international law firm of Wilmer Cutler Pickering Hale and Dorr LLP, where he was vice chair of the firm's Securities Department and previously served as one of two partners managing the firm's London office.
Mr. Vollmer received his J.D. in 1978 from the University of Virginia School of Law, where he served as Notes Editor of the Virginia Law Review. He earned his B.A. from Miami University. (Press Rel. 2009-9)
In the Matter of Jarrod W. McMillin
On January 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 Sanctions (Order) against Jarrod W. McMillin.
The Order finds that on Jan. 8, 2009, and March 4, 2008, respectively, a final judgment and permanent injunction were entered by consent against McMillin, permanently enjoining him from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933; Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, in the civil action SEC v. Jarrod McMillin, et al., Civil Action No. 07cv2636-REB-MEH, in the United States District Court for the District of Colorado. The Commission's complaint alleged that McMillin participated in a scheme to defraud investors by soliciting investors to finance an advertising program known as American Investors Network or AIN. AIN promised to return monthly profits of $10,000 to $20,000 on each $2,000 investment. The advertising interests were investment contracts which are securities under federal law. Among other claims, the complaint alleged that McMillin knew that AIN was a Ponzi scheme and that there was no advertising program. Rather, investors who received "profit" distributions were paid with funds solicited from other investors. The complaint also alleged that McMillin acted as an unregistered broker-dealer in connection with the offer and sale of securities.
Based on the above, the Order bars McMillin from association with any broker or dealer. McMillin consented to the issuance of the Order without admitting or denying any of the findings therein except as to the Commission's jurisdiction over him and the subject matter of these proceedings. (Rel. 34-59263; File No. 3-13343)
Commission Sanctions Nature's Sunshine Products, Inc.
The Commission found that Nature's Sunshine Products, Inc. violated Section 13(a) of the Securities Exchange Act of 1934 and Rules 13a-1 and 13a-13 thereunder by failing to file required periodic reports due between 2005 and 2007. The Commission determined that a necessary and appropriate sanction for the protection of investors, the standard set forth in Exchange Act Section 12(j), is revocation of the registration of Nature's Sunshine's common stock. The Commission found that Nature's Sunshine's conduct with respect to its reporting obligations was serious and recurrent. It also found that while Nature's Sunshine has made efforts to ensure future compliance, its efforts to remedy its past violations have been inadequate. In ordering revocation, the Commission reiterated that the "[f]ailure to file periodic reports violates a central provision of the Exchange Act." (Rel. 34-59268; File No. 3-12684)
Delinquent Filer's Stock Registration Revoked
The registration of the securities of Respondent Meditecnic, Inc. (f/k/a Viking Broadcasting Corp.), has been revoked. Meditecnic repeatedly failed to file required annual and quarterly reports with the Securities and Exchange Commission. Although Meditecnic has been working to return to compliance, and has filed past-due and current periodic reports, its filings are materially deficient. 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. (Initial Decision No. 368; File No. 3-13184)
In the Matter of Alberto W. Vilar and Gary Alan Tanaka
On January 16, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 203(f) of the Investment Advisers Act of 1940 (Advisers Act) and Notice of Hearing (Order) against Alberto W. Vilar (Vilar) and Gary Alan Tanaka (Tanaka).
The Division of Enforcement (Division) alleges in the Order that Vilar and Tanaka were tried before a jury in the United States District Court for the Southern District of New York, in U.S. v. Alberto William Vilar and Gary Alan Tanaka, S3 05 Cr. 621 (RJS), and on November 19, 2008: (a) Vilar was found guilty on 2 counts of securities fraud; 2 counts of wire fraud; 4 counts of money laundering; 1 count of investment adviser fraud; 1 count of mail fraud; 1 count of making false statements; and 1 count of conspiracy to commit securities fraud, investment adviser fraud, wire fraud, mail fraud and money laundering; and (b) Tanaka was found guilty on 1 count of securities fraud; 1 count of investment adviser fraud; and 1 count of conspiracy to commit securities fraud, investment adviser fraud, wire fraud, mail fraud and money laundering. Further, counts of the criminal indictment to which Vilar and Tanaka were found guilty alleged that Vilar and Tanaka engaged in a scheme to defraud that involved (a) misappropriation of millions of dollars of investor assets and (b) misrepresentation to investors of how their money was being invested.
A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide Vilar and Tanaka an opportunity to dispute the allegations, and to determine what, if any, remedial action is appropriate and in the public interest. The Order requires the Administrative Law Judge to issue an initial decision no later than 210 days from the date of service of the Order, pursuant to Rule 360(a)(2) of the Commission's Rules of Practice.
For more information about earlier developments in this matter, please see Litigation Release Number 19245 / June 2, 2005; Litigation Release Number 19470 / Nov. 17, 2005. (Rel. IA-2832; File No. 3-13345)
Receiver Appointed and Assets Frozen in "Hedge Fund" Ponzi Scheme
On January 20, a Texas U.S. District Judge appointed a receiver and froze the assets of a former bail bondsman who is purportedly managing a hedge fund worth at least $45 million on behalf of 31 individual investors. Defendant Rod Cameron Stringer, of Lamesa, Texas, claims that his stock trading strategy has generated annual returns as high as 61%, and total returns in excess of 600%. In truth, the Commission's complaint alleges that Stringer has been operating a fraudulent scheme since at least 2001, during which he has misappropriated millions of dollars of investor funds to support an extremely lavish lifestyle and to make Ponzi payments to earlier investors with new investor funds. Many of Stringer's investors are elderly.
Specifically, the complaint alleges that defendant Stringer used less than 20% of the investors' funds to engage in securities transactions, and those transactions have resulted in substantial losses, not gains, as reported to investors. While Stringer's alleged fraudulent scheme began as early as 2001, an expedited investigation by the Federal Bureau of Investigation (FBI) and the Commission focused on Stringer's activities since January 2007. Since that time, the complaint alleges that Stringer raised at least $8.5 million from approximately 12 -15 investors. Contrary to Stringer's representations, only approximately $1.5 million of this amount made its way into three securities brokerage accounts, each of which is maintained in Stringer's personal name. The exact disposition of the remaining funds is presently unknown, but it is clear that Stringer used substantial amounts of investor funds to, among other things, finance a horse racing partnership, purchase a luxury boat, build a swimming pool at his office, purchase several pieces of jewelry, pay off mortgages on at least two houses, and purchase several expensive cars and trucks. Further, since January 2007, the complaint alleges that Stringer has used at least $2.4 million of the $8.5 million invested by his hedge fund clients to pay distributions and purported profits to other investors.
The complaint alleges that Stringer violated the anti-fraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks preliminary and permanent injunctions, disgorgement together with prejudgment interest, and civil penalties. [SEC v. Rod Cameron Stringer, individually and d/b/a RCS Hedge Fund Civil Action No. 5-09CV0009-C (U.S.D.C./N.D. Texas, Lubbock Division)] (LR-20857)
SEC Files Charges Against Missing Trader and Others for Defrauding Investors at Six Sarasota, Florida Based Hedge Funds
On January 21, the Commission filed a civil injunctive action in the United States District Court for the Middle District of Florida charging Arthur Nadel with fraud in connection with six hedge funds (the Funds) for which he acted as the principal investment advisor. According to the Commission's complaint, Nadel provided false and misleading information for dissemination to investors about the Funds' historical returns and falsely overstated the value of investments in the Funds by approximately $300 million. In contrast, the Funds appear to have total assets of less than $1 million. Nadel has been missing since Jan. 14, 2009.
The Commission's complaint also alleges that two entities with which Nadel was associated, and which separately or together provided investment advice to all of the Funds, also engaged in fraud as a result of Nadel's actions.
The Commission's complaint alleges that the defendants provided false and misleading information to the relief defendants for dissemination to investors through account statements and through offering memoranda. For example:
The Commission's complaint also alleges that defendant Nadel recently transferred at least $1.25 million from two of the funds to secret bank accounts that he controlled.
The complaint charges Nadel, Scoop Capital, LLC and Scoop Management, Inc. with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and seeking a temporary restraining order, an asset freeze, and preliminary injunction against Nadel and preliminary injunctions and asset freezes against Scoop Capital and Scoop Management. In addition, the complaint seeks permanent injunctions, disgorgement plus prejudgment interest, and civil money penalties against all the defendants. Without admitting or denying the allegations of the complaint, defendants Scoop Capital and Scoop Management consented to the entry of, among other things, preliminary injunctions, asset freezes, and the appointment of a Receiver.
The complaint also names as relief defendants two investment management companies, Valhalla Management, Inc. and Viking Management, LLC, and the six Funds, Scoop Real Estate, L.P., Valhalla Investment Partners, L.P., Victory IRA Fund, Ltd., Victory Fund, Ltd, Viking IRA Fund, LLC, and Viking Fund, LLC. The complaint seeks disgorgement plus prejudgment interest against each of the relief defendants. Without admitting or denying the allegations of the complaint, the relief defendants consented to asset freezes and the appointment of a Receiver. The Commission recognizes cooperation that has been provided by defendants Scoop Capital and Scoop Management, and by the relief defendants.
Also on January 21, United States District Judge Richard A. Lazzara granted all of the emergency relief requested by the SEC and appointed a Receiver.
The staff's investigation is continuing. [SEC v. Arthur Nadel, et al., U.S. District Court for the Middle District of Florida, Civil Action No. 8:09-CV-00087-RAL-TBM] (LR-20858)
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed by the New York Stock Exchange to extend until March 9, 2009, the operation of interim NYSE Rule 128 (SR-NYSE-2009-02), which permits the Exchange to cancel or adjust clearly erroneous executions if they arise out of the use or operation of any quotation, execution or communication system owned or operated by the Exchange, including those executions that occur in the event of a system disruption or system malfunction, has become immediately 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 January 19. (Rel. 34-59255)
A proposed rule change filed by NASDAQ OMX BX (SR-BX-2009-003) to establish a Post-Only order 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 January 19. (Rel. 34-59259)
A proposed rule change filed by The NASDAQ Stock Market (SR-NASDAQ-2009-001) to modify Rule 7050 governing pricing for Nasdaq members using the NASDAQ Options Market 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 January 19. (Rel. 34-59260)
Proposed Rule Change
The Financial Industry Regulatory Authority filed a proposed rule change (SR-FINRA-2008-020) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 and Rule 19b-4 thereunder that proposes to require a member that engages in a private placement of unregistered securities issued by the member or a control entity to (1) disclose to investors in a private placement memorandum, term sheet or other offering document the intended use of offering proceeds and the offering expenses, (2) file such offering document with FINRA, and (3) commit that at least 85 percent of the offering proceeds will be used for business purposes, which shall not include offering costs, discounts, commissions and any other cash or non-cash sales incentives. Publication is expected in the Federal Register during the week of January 19. (Rel. 34-59262)
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