Mary Schapiro Sworn in as Chairman of SEC
The Securities and Exchange Commission today announced that Mary L. Schapiro was sworn in this morning as the 29th Chairman of SEC. The oath of office was administered by SEC Commissioner Elisse B. Walter at SEC headquarters, where Chairman Schapiro was joined by her husband, Chas Cadwell, and senior SEC staff.
"Seventy-five years after this great agency was founded, the SEC must play a critical role in rebuilding investor confidence, reviving our markets, and rejuvenating our economy," said Chairman Schapiro. "I'm honored and grateful to be entrusted with leading this agency during such an important time - when the SEC must effusively be the investor's advocate. Working with my fellow Commissioners and the agency's talented staff, we will be committed to reinvigorating a financial regulatory system that must protect investors and vigorously enforce the rules. We will work to deepen the SEC's commitment to transparency, accountability, and disclosure while always keeping the needs and concerns of investors front and center."
Chairman Schapiro was appointed by President Barack Obama on Jan. 20, 2009, and unanimously confirmed by the U.S. Senate. She is the first woman to serve as the agency's permanent Chairman.
Chairman Schapiro previously served as a Commissioner at the SEC from December 1988 to October 1994. She was appointed by President Ronald Reagan, reappointed by President George H.W. Bush in 1989, and named Acting Chairman by President Bill Clinton in 1993. She left the SEC when President Clinton appointed her Chairman of the Commodity Futures Trading Commission, where she served until 1996.
Immediately prior to her new SEC appointment, Chairman Schapiro was CEO of the Financial Industry Regulatory Authority (FINRA), the largest non-governmental regulator for all securities firms doing business with the U.S. public. She joined the organization in 1996 as President of NASD Regulation, and was named Vice Chairman in 2002. In 2006, she was named NASD's Chairman and CEO. The following year, she led the organization's consolidation with NYSE Member Regulation to form FINRA.
Chairman Schapiro is an active member of the International Organization of Securities Commissions (IOSCO). She was Chairman of the IOSCO SRO Consultative Committee from 2002 to 2006.
A 1977 graduate of Franklin and Marshall College in Lancaster, Pa., Chairman Schapiro earned a Juris Doctor degree (with honors) from George Washington University in 1980. Chairman Schapiro was named the Financial Women's Association Public Sector Woman of the Year in 2000. She received a Visionary Award from the National Council on Economic Education (NCEE) in 2008, honoring her as a "champion of economic empowerment." (Press Rel. 2009-11)
In the Matter of Robert Johnson
On January 27, the Commission issued an Order Instituting Administrative Proceedings Pursuant to 15(b) of the Securities Exchange Act of 1934, Making Findings and Imposing Remedial Sanction (Order) against Robert Johnson, age 45 and a resident of Somers, New York. The Order finds that in May 2007, Johnson became associated with Met Life Securities, Inc., a broker-dealer registered with the Commission. The Order further finds that on Dec. 3, 2008, Johnson pled guilty to two counts of conspiracy to commit securities fraud and wire fraud in violation of Title 18 United States Code, Section 1349 before the United States District Court for the Eastern District of New York, in U.S. v. Robert Johnson, Crim. Indictment No. 08-CR-336. The counts of the criminal indictment to which Johnson pled guilty alleged, inter alia, that in or about and between June 1997 and December 2004, Johnson, together with others, did knowingly and intentionally conspire to execute a scheme and artifice to defraud Morgan Stanley & Co., Inc. and JP Morgan Chase & Co. of money and property in connection with securities of issuers with a class of securities registered under Section 12 of the Securities Act of 1934.
Based on the above, the Order bars Johnson from association with any broker or dealer. Johnson consented to the issuance of the Order without admitting or denying any of the Commission's findings, except he admits to the Commission's jurisdiction over him and the subject matter of the proceedings and his guilty plea on Dec. 3, 2008. (Rel. 34-59301; File No. 3-13352)
Final Judgment Entered Against Defendants in SEC Enforcement Action Charged With Fraudulent Offering of CD-Like Securities
The Commission announced today that on Jan. 23, 2009, a final judgment by consent was entered against defendants Michael P. Luckett, 37, a former resident of Boston, Massachusetts, and Transnational Fund, Inc. in a previously-filed Commission enforcement action. Luckett and Transnational Fund were enjoined from violating the antifraud and registration provisions of the federal securities laws and held liable for disgorgement of $312,400 plus prejudgment interest of $17,250. Luckett previously pled guilty to related criminal charges and was sentenced to 36 months imprisonment in a prosecution brought by the U.S. Attorney for the District of Massachusetts.
The Commission filed its Complaint on Sept. 21, 2007, and obtained a temporary restraining order, asset freeze, and other relief that same day. The Commission's Complaint alleged that, from July 20, 2007, through the date of the complaint, Transnational and Luckett conducted a fraudulent offering of unregistered securities known as "Transnational Certificates" using Transnational's websites, which the court ordered Luckett and Transnational to cease operating. According to the Commission's complaint, the defendants promised to pay investors at a rate of 6.35% annual percentage yield in nine months. The Complaint alleged that at least 15 investors in six different states, including Arizona, Kansas, Michigan, Missouri, Pennsylvania, and Texas, purchased these Certificates, investing a total of at least $432,400. The Complaint further alleged that, in soliciting investors, Transnational and Luckett made material misrepresentations and omissions in that they: (1) failed to disclose to investors and potential investors that Luckett would use investor funds for personal purposes; (2) misrepresented that Transnational was just like a bank; and (3) misrepresented that Transnational had been in business for years. The Complaint alleged that Luckett took thousands of dollars from at least one Transnational bank account into which he had deposited investor funds and used the money to pay, among other things, rent on a luxury condominium in Boston and the lease on a Toyota automobile. According to the Complaint, he also used bankcards issued on bank accounts holding investor funds for various personal living expenses.
The final judgment enjoined Luckett and Transnational Fund from violating Sections 5 and 17 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Based on their financial condition, the defendants were not ordered to pay a civil penalty, and payment of all by $222,901.22 of the disgorgement and prejudgment interest was waived. Luckett and Transnational consented to the entry of the final judgment without admitting or denying the allegations of the Complaint. [SEC v. Transnational Fund, Inc., a/k/a National Savings, and Michael Luckett, Civil Action No. 07-CA-11774-RWZ (D. Mass.)] (LR-20867)
Final Judgments Entered Against Defendants University Lab Technologies, Inc., and George Theodoropoulos in South Florida Offering Fraud
The United States District Court for the Southern District of Florida on Jan. 13, 2009, entered final judgments, by consent, against Defendants University Lab Technologies, Inc. (ULT) and George Theodoropoulos, a/k/a George Theodore. The final judgments, under which Theodore and ULT neither admitted nor denied the allegations of the Commission's complaint, contain permanent injunctions enjoining both defendants from future violations of Sections 5(a) and (c) and 17(a) of the Securities Act of 1933 and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. The final judgment against Theodore further orders: a 10-year officer-and-director bar; a penny stock bar; disgorgement of $422,577.93, representing his gains as a result of the conduct alleged in the complaint; prejudgment interest on disgorgement of $36,407.71; and a civil penalty of $60,000.
The Commission dismissed its claims for disgorgement and a civil penalty against ULT, which is now in receivership, has ceased business operations, and has no assets.
The Commission's complaint filed on Sept. 14, 2007, alleged that ULT and Theodore were violating the federal securities laws by engaging in the unregistered offer and sale of securities and misrepresenting the use of sales proceeds. From December 2006 through May 2007, the complaint alleged ULT and Theodore raised more than $1 million from approximately 46 investors nationwide and in Canada by offering and selling unregistered units of ULT stock. On Sept. 12, 2007, the Court entered an Order freezing ULT's and Theodore's assets and approving a Receiver over ULT. [SEC v. University Lab Technologies, Inc., and George Theodoropoulos, a/k/a George Theodore.] (LR-20868A)
Court Awards Commission Over $642,000 from Defendants in Stock Manipulation Scheme
The Commission announced today that on January 13, the United States District Court for the Southern District of New York entered a final judgment against former Connecticut resident Janette Diller Stone (aka Janette Dillerstone) in which it ordered her to pay a total of $462,247.21 in disgorgement and prejudgment interest and a $60,000 penalty for her alleged involvement in a 2005 microcap market manipulation scheme. Diller Stone earlier agreed to a partial settlement of the Commission's charges in which, without admitting or denying the Commission's allegations, she consented to imposition of an injunction permanently enjoining her from violating the antifraud, registration, and other provisions of the federal securities laws.
This judgment follows the Court's entry of a default judgment on Nov. 25, 2008, against Diller Stone's husband, Jeffery Steven Stone, a convicted felon, in which the Court found that Stone had violated the antifraud, registration, and other provisions of the federal securities laws. The Court permanently enjoined Stone from further securities law violations and ordered him to pay $462,247.21 in disgorgement and prejudgment interest and a $120,000 penalty. Stone and Diller Stone were ordered to pay the disgorgement and prejudgment interest together with two entities they controlled, Pedracar, Inc. and Crescent Fund, LLC, against which default judgments were entered in March 2007.
The Commission's complaint alleges that Stone and Diller Stone, through Pedracar and Crescent Fund, bought 288 million shares from WebSky, Inc., a San Francisco-based penny stock company, under false pretenses. Within days, the two began selling the shares to third parties. Stone and Diller also engineered a spam email campaign that falsely portrayed WebSky - a start-up company with virtually no revenues or profits - as having a successful joint venture in Argentina that would result in over $40 million in annual revenues. After artificially inflating WebSky's stock price, Stone and Diller Stone sold their shares into the unsuspecting market at a profit. Combined with proceeds from other stock sales during the scheme, Stone and Diller grossed more than $1 million in proceeds.
The Commission previously reached a settlement with WebSky and its CEO, Douglas Haffer, of Oakland, California, in which, without admitting or denying the Commission's allegations, they agreed to disgorge $35,000 received in a subsequent unregistered transaction with Stone and Diller Stone. Haffer also paid a $25,000 civil penalty. See Litigation Release No. 19805. [SEC v. Jeffery Steven Stone, et al., Case No. 06-CIV-6258 (HB), USDC, SDNY] (LR-20869)
SECURITIES ACT REGISTRATIONS
RECENT 8K FILINGS