Securities and Exchange Commission Suspends Trading in the Securities of Five Issuers for Failure to Make Required Periodic Filings
The U.S. Securities and Exchange Commission announced the temporary suspension of trading in the securities of the following issuers, commencing at 9:30 a.m. EST on Feb. 11, 2009, and terminating at 11:59 p.m. EST on Feb. 25, 2009:
The Commission temporarily suspended trading in the securities of these five issuers due to a lack of current and accurate information about the companies because they have not filed periodic reports with the Commission in over six years. This order was entered pursuant to Section 12(k) of the Securities Exchange Act of 1934 (Exchange Act).
The Commission cautions brokers, dealers, shareholders and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by this company.
Brokers and dealers should be alert to the fact that, pursuant to Exchange Act Rule 15c2-11, at the termination of the trading suspensions, no quotation may be entered relating to the securities of the subject company unless and until the broker or dealer has strictly complied with all of the provisions of the rule. If any broker or dealer is uncertain as to what is required by the rule, it should refrain from entering quotations relating to the securities of this company that has been subject to a trading suspension until such time as it has familiarized itself with the rule and is certain that all of its provisions have been met. Any broker or dealer with questions regarding the rule should contact the staff of the Securities and Exchange Commission in Washington, DC at (202) 551-5720. If any broker or dealer enters any quotation which is in violation of the rule, the Commission will consider the need for prompt enforcement action.
If any broker, dealer or other person has any information which may relate to this matter, they should immediately communicate it to the Delinquent Filings Branch of the Division of Enforcement at (202) 551-5466, or by e-mail at DelinquentFilings@sec.gov. (Rel. 34-59380)
Commission Orders Hearings on Registration Suspension or Revocation Against Nine Companies for Failure to Make Required Periodic Filings
In conjunction with this today's trading suspension, the Commission today also instituted a public administrative proceeding to determine whether to revoke or suspend for a period not exceeding twelve months the registration of each class of the securities of nine companies for failure to make required periodic filings with the Commission:
In the Order, the Division of Enforcement (Division) alleges that the respective respondents are delinquent in their required periodic filings with the Commission.
In this proceeding, instituted pursuant to Exchange Act Section 12(j), a hearing will be scheduled before an Administrative Law Judge. At the hearing, the judge will hear evidence from the Division and the respondents to determine whether the allegations of the Division contained in the Order, which the Division alleges constitute failures to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 thereunder, are true. The judge in the proceeding will then determine whether the registrations pursuant to Exchange Act Section 12 of the securities of these respondents should be revoked or suspended for a period not exceeding twelve months. The Commission ordered that the Administrative Law Judge in this proceeding issue an initial decision not later than 120 days from the date of service of the order instituting proceedings. (Rel. 34-59381; File No. 3-13368)
In the Matter of Ronald M. Bandyk, CPA
On February 11, the Commission issued an Order of Suspension Pursuant to Rule 102(e)(2) of the Commission's Rules of Practice (Order) against Ronald M. Bandyk, CPA. The Order finds that Bandyk, a Registered Certified Public Accountant in Illinois, was convicted of one count of criminal securities fraud for conduct that occurred while Bandyk was a vice president of Anicom, Inc. The Order also finds that Bandyk's conviction was a felony within the meaning of 102(e)(2).
Based on the above, the Order forthwith suspends Bandyk from appearing or practicing before the Commission. (Rel. 34-59390; AAE Rel. 2933; File No. 3-13369)
Court Enters Permanent Injunction, Officer and Director Bar, and Penny Stock Bar Against Marc T. Duchesne in Market Manipulation Case
The Commission today announced that, on Feb. 3, 2009, the Honorable John D. Bates of the United States District Court for the District of Columbia entered a final judgment of permanent injunction and other relief, including a permanent officer and director bar and a permanent bar against participating in offerings of penny stocks, against Marc T. Duchesne. The final judgment was entered by default after Duchesne failed to answer in the civil action that was filed by the Commission against Duchesne and others on Aug. 16, 2007.
The Commission's complaint alleged that, in August and September 2002, Duchesne and others carried out a scheme to manipulate the stock price of Nationwide Capital Corporation, a now-defunct company whose shares traded on the Over-the-Counter Bulletin Board. The scheme began with a matched trade between Duchesne and Jeffery Hayden that artificially inflated Nationwide's stock price from pennies to $9.35 per share. The complaint further alleged that, thereafter, Duchesne, Hayden and others bought or sold Nationwide shares at inflated prices to increase the price of Nationwide stock, to generate volume, and to stimulate market demand for the manipulated shares. In addition, Duchesne and others disseminated false and misleading financial information and business prospects to further the scheme. The scheme collapsed on Oct. 1, 2002, when the Commission suspended trading in Nationwide securities.
The Final Judgment (i) permanently enjoins Duchesne from violations of Section 17(a) of the Securities Act of 1933 (Securities Act), violations of Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Exchange Act Rule 10b-5, and aiding and abetting violations of Section 15(d) of the Exchange Act; (ii) permanently bars him from serving as an officer or director; (iii) permanently bars him from participating in any future offerings of penny stocks, and (iv) orders him to pay disgorgement of $664,995, together with prejudgment interest of $302,106.
The Commission acknowledges the assistance of the Unites States Attorney's Office for the District of Columbia and the Federal Bureau of Investigation, which conducted a separate, parallel criminal investigation. [SEC v. Marc T. Duchesne, Jeffrey A. Hayden, Gregory A. Moffit, Robert S. Parsley, and Nationwide Capital Corp., Civil Action No. 1:07-CV-1475 (JDB) (D.D.C.)] (LR-20894)
SEC Settles Insider Trading Charges against Four Individuals
The Commission announced that on Feb. 6, 2009, the Honorable Arthur J. Schwab, U.S. District Court Judge for the Western District of Pennsylvania entered Final Judgments against four individuals charged with insider trading in advance of Dick's Sporting Goods Inc.'s June 21, 2004, announcement that it intended to acquire Galyan's Trading Company, Inc. via a tender offer. The complaints, which the SEC filed on Sept. 30, 2008, alleged:
The day after the public announcement, Galyan's stock closed at $16.68, a 50.3% increase from the previous day's closing price of $11.10.
Without admitting or denying the allegations in the complaint, Federico, Simao, Costello and Marretti consented to the entry of a Final Judgment in which they are permanently enjoined from future violations of the antifraud provisions of the securities laws, Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder. Federico also agreed to pay disgorgement of $23,326.00, plus prejudgment interest of $7,540.22, and a one-time civil penalty for trading in the amount of $23,326.00. Simao agreed to pay disgorgement of $13,390.00, plus prejudgment interest of $4,328.37, and a one-time civil penalty for his trading in the amount of $13,390.00. Costello agreed to pay disgorgement of $9,540.00, plus prejudgment interest of $3,083.85, and a one-time civil penalty for his trading in the amount of $9,540.00. Finally, Marretti agreed to pay disgorgement of $9,552.00, plus prejudgment interest of $3,150.92, and a civil penalty for trading and tipping a colleague in the amount of $54,817.00. The Commission has now obtained settlements from nine of the sixteen defendants.
For additional information, please see Litigation Release No. 20765 (Oct. 1, 2008). [SEC v. Joseph J. Queri Jr., Gary M. Gosson, et al., Case No. 2:08-CV-01361-AJS (W.D. Penn.); SEC v. Joseph J. Queri Jr., Joseph J. Queri Sr., et al., Case No. 2:08-CV-01367-AJS (W.D. Penn.)] (LR-20895)
SEC Files Settled Charges Against ITT Corporation for Violations of the Books and Records and Internal Controls Provisions of the Foreign Corrupt Practices Act
The Commission today filed a settled civil injunctive action in the U.S. District Court for the District of Columbia against ITT Corporation (ITT), a New York-based global multi-industry company, alleging violations of the books and records and internal controls provisions of the Securities Exchange Act of 1934 (Exchange Act). These provisions are part of the Foreign Corrupt Practices Act. The Commission's complaint alleges that ITT's violations of the provisions resulted from payments to Chinese government officials by ITT's wholly-owned Chinese subsidiary, Nanjing Goulds Pumps Ltd. (NGP). From 2001 through 2005, NGP's illicit payments to employees of Chinese state-owned entities totaled approximately $200,000. The customers associated with those illicit payments generated over $4 million in sales to NGP, from which ITT realized improper profits of more than $1 million.
ITT, without admitting or denying the allegations in the Commission's complaint, consented to the entry of a final judgment permanently enjoining it from future violations of the books and records and internal control provisions of the Exchange Act; disgorgement of $1,041,112, together with prejudgment interest thereon of $387,538.11; and a $250,000 civil penalty. The Commission considered that ITT self-reported, cooperated with the Commission's investigation, and instituted subsequent remedial measures. [SEC v. ITT Corporation, Civil Action No. 1:09-cv-00272 (RJL) (D.D.C.)] (LR-20896; AAE Rel. No. 2934)
SEC Charges KBR, Inc. with Foreign Bribery; Charges Halliburton Co. and KBR, Inc. with Related Accounting Violations - Companies to Pay Disgorgement of $177 Million; KBR Subsidiary to Pay Criminal Fines of $402 Million; Total Payments to be $579 Million
The Commission today announced settlements with KBR, Inc. and Halliburton Co. to resolve SEC charges that KBR subsidiary Kellogg Brown & Root LLC bribed Nigerian government officials over a 10-year period, in violation of the Foreign Corrupt Practices Act (FCPA), in order to obtain construction contracts. The SEC also charged that KBR and Halliburton, KBR's former parent company, engaged in books and records violations and internal controls violations related to the bribery.
KBR and Halliburton have agreed to pay $177 million in disgorgement to settle the SEC's charges. Kellogg Brown & Root LLC has agreed to pay a $402 million fine to settle parallel criminal charges brought today by the U.S. Department of Justice.
Kellogg Brown & Root LLC's predecessor entities (Kellogg, Brown & Root, Inc. and The M.W. Kellogg Company) were members of a four-company joint venture that won the construction contracts worth more than $6 billion. In September 1998, Halliburton acquired Dresser Industries, Inc., the parent company of The M.W. Kellogg Company.
Without admitting or denying the SEC's allegations, KBR and Halliburton have consented to the entry of a court order that (i) permanently enjoins KBR from violating the anti-bribery and records falsification provisions in Sections 30A, 13(b)(5) and Rule 13b2-1 of the Securities Exchange Act of 1934, and from aiding and abetting violations of the record-keeping and internal control provisions in Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act; (ii) permanently enjoins Halliburton from violating the record-keeping and internal control provisions of the Exchange Act; (iii) orders the companies to disgorge $177 million in ill-gotten profits derived from the scheme; (iv) imposes an independent monitor for KBR for a period of three years to review its FCPA compliance program, and (v) imposes an independent consultant for Halliburton to review its policies and procedures as they relate to compliance with the FCPA. The proposed settlements are subject to the court's approval.
In the related criminal proceeding announced today, the U.S. Department of Justice filed a criminal action against Kellogg Brown & Root LLC, charging one count of conspiring to violate the FCPA and four counts of violating the anti-bribery provisions of the FCPA. Kellogg Brown & Root LLC has pled guilty to each of these counts. Under its plea agreement, Kellogg Brown & Root LLC is required to pay a criminal fine of $402 million and to retain a monitor to review and evaluate KBR's policies and procedures as they relate to compliance with the FCPA.
The Commission acknowledges the assistance of the U.S. Department of Justice, Fraud Section; the Federal Bureau of Investigation; and foreign authorities in Europe, Asia, Africa and the Americas. The Commission's investigation is continuing. [SEC v. Halliburton Company and KBR, Inc., 4:09-CV-399, S.D. Tex. (Houston)] (LR-20897A; AAE Rel. 2935A)
INVESTMENT COMPANY ACT RELEASES
Calamos Convertible Opportunities and Income Fund, et al.
An order has been issued on an application filed by Calamos Convertible Opportunities and Income Fund, et al. (Funds) under Section 6(c) of the Investment Company Act for an exemption from Sections 18(a)(1)(A) and 18(a)(1)(B) of the Act for a period from the date of the order until Oct. 31, 2010. The order permits each Fund to issue or incur debt subject to asset coverage of 200% that would be used to refinance the Fund's issued and outstanding auction preferred shares issued prior to Feb. 1, 2008 that are outstanding at the time of the order. The order also permits each Fund to declare dividends or any other distributions on, or purchase, capital stock during the term of the order, provided that any such debt has asset coverage of at least 200% after deducting the amount of such transaction. (Rel. IC-28615 - February 10)
Eaton Vance Enhanced Equity Income Fund, et al.
A notice has been issued giving interested persons until March 9, 2009, to request a hearing on an application filed by Eaton Vance Enhanced Equity Income Fund, et al., for an order under Section 6(c) of the Investment Company Act for an exemption from Section 19(b) of the Act and rule 19b-1 under the Act. The order would permit certain registered closed-end investment companies to make periodic distributions of long-term capital gains with respect to their outstanding common shares as frequently as twelve times each year, and as frequently as distributions are specified by or in accordance with the terms of any preferred shares that such investment companies may issue. (Rel. IC-28616 - February 10)
Approval of Proposed Rule Change
The Commission approved a proposed rule change (SR-NYSEArca-2008-139) submitted pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 by NYSE Arca amending the minor rule plan to increase certain sanctions. Publication is expected in the Federal Register during the week of February 16. (Rel. 34-59376)
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