SEC News Digest

COMMISSION ANNOUNCEMENTS

Commission Meetings

Closed Meeting - Thursday, February 19, 2009 - 2:00 p.m.

The subject matter of the closed meeting scheduled for Thursday, Feb. 19, 2009, will be: institution and settlement of injunctive actions; institution and settlement of administrative proceedings of an enforcement nature; other matters 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.

ENFORCEMENT PROCEEDINGS

In the Matter of SG Americas Securities, LLC and Francois O. Barthelemy

On February 13, 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 SG Americas Securities, LLC (SGAS) and Francois O. Barthelemy (Barthelemy). The Order finds that SGAS and Barthelemy failed reasonably to supervise Guillaume Pollet (Pollet), a former managing director who violated the antifraud provisions of the federal securities laws by selling short the publicly traded securities of PIPE issuers prior to the close of the PIPE transaction in which he was contemplating investing the capital of SGAS's parent, Société Générale. In certain instances, Pollet's short-selling was contrary to specific representations in Securities Purchase Agreements (SPAs), and with respect to ten PIPE transactions, Pollet's pre-close short selling also constituted unlawful insider trading. In 2007, Pollet settled with the Commission by consenting to a final judgment, pursuant to which Pollet was permanently enjoined from violating Section 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, and ordered to pay a civil penalty in the amount of $150,000. In addition, the Commission instituted settled administrative proceedings against Pollet barring Pollet from association with any broker or dealer pursuant to Section 15(b)(6) of the Exchange Act.

SGAS failed to have a reasonable system to implement its compliance and supervisory policies to prevent and detect Pollet's unlawful trading, and its Control Room staff failed to adequately investigate suspicious trading by Pollet. Also, SGAS did not have a reasonable system to implement its policies or procedures concerning the proper retention of outside counsel, or the vetting of legal advice received from outside counsel. Barthelemy was Pollet's direct supervisor, and failed reasonably to supervise Pollet because he failed to follow up on the red flags indicating that Pollet's trading was questionable. Barthelemy was aware that Pollet's trading could present legal and regulatory concerns and he directed Pollet to obtain legal advice from counsel, but Barthelemy did not take steps to find out what the advice was or whether it was being appropriately followed. In addition, while Pollet was on vacation, Barthelemy signed two SPAs that contained false representations and failed to follow up with Pollet regarding the accuracy of those representations.

Based on the above, the Order censures SGAS pursuant to Section 15(b)(4)(E) of the Exchange Act and orders SGAS to pay disgorgement of $5,756,086.03 and prejudgment interest of $2,628,846.40. The Order suspends Barthelemy from acting in a supervisory capacity for any broker or dealer for a period of three months and orders him to pay a civil money penalty in the amount of $50,000. SGAS and Barthelemy consented to the issuance of the Order without admitting or denying any of the findings in the Order. (Rel. 34-59401; File No. 3-13372)

Commission Bars Gary M. Kornman Following His Conviction for Providing a False Statement to Commission Staff

The Commission barred Gary M. Kornman, a former owner and associated person of Heritage Securities Corp. and associated person of Heritage Advisory Group, L.L.C., from associating with a broker, dealer, or investment adviser following Kornman's criminal conviction in 2007. The Commission found that Kornman pleaded guilty to providing a false statement to Commission staff in an attempt to mislead them during an investigation into insider trading. On July 13, 2007, the United States District Court for the Northern District of Texas sentenced Kornman to two years' probation and ordered him to pay $143,465. Based on Kornman's criminal conviction and the facts underlying it, the Commission determined that the public interest required Kornman be barred, stating that his "deliberate attempt to deceive" investigators "indicates a lack of honesty and integrity," as well as a "fundamental unfitness" to transact business associated with a broker-dealer and to advise clients. The Commission further stated that "the imposition of a bar serves as a deterrent to others in the securities industry against attempts to mislead investigators during the course of their investigations." (Rels. 34-59403; IA-2840; File No. 3 12716)

Commission Sustains NYSE's Findings of Violation Against and Imposition of a 10-Year Bar on Luis Miguel Cespedes

The Commission has sustained the NYSE's findings that Luis Miguel Cespedes, formerly a registered representative with FINRA member firm A.G. Edwards and Sons, Inc., engaged in conduct inconsistent with just and equitable principles of trade, in violation of NYSE Rule 476(a)(6). The Commission found that Cespedes effected unsuitable transactions that resulted in high concentrations of technology sector investments in the accounts of fourteen of his customers, frequently using margin debt, without due consideration of the age, investment experience, financial sophistication, and personal circumstances of the customers. The Commission found that the NYSE's imposition of a 10-year bar on Cespedes for these violations was appropriate. (Rel. 34-59404; File No. 3 12988)

In the Matter of Randall W. Banks

On February 13, the United States Securities and Exchange Commission (Commission) issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Section 203(f) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions (Order) against Randall W. Banks. The Order finds that on Aug. 12, 2008, Banks, a former representative of a firm registered with the Commission as a broker dealer and investment adviser, pled guilty to 36 counts of theft by taking, in violation of O.C.G.A. § 16-8-2, before the Superior Court of Troup County, Georgia, in State of Georgia v. Randall Wesley Banks, Docket No. 08-R-543 (2008). The Order further finds that the indictment indicates that Banks committed his violations while associated with the firm and that the counts to which Banks pled guilty alleged that he "did while being in lawful possession, appropriate United States currency, with a value exceeding $500.00…with the intention of depriving [the] owners of said property, contrary to the laws of the State of Georgia, the good order, peace and dignity thereof."

Based on the above, the Order bars Banks from association with any broker dealer or investment adviser. Banks consented to the issuance of the Order without admitting or denying any of the findings in the Order, except he admitted to the jurisdiction of the Commission and admitted to the 36 counts cited above. (Rels. 34-59408; IA-2841; File No. 3-13373)

SELF-REGULATORY ORGANIZATIONS

Proposed Rule Changes

The International Securities Exchange filed a proposed rule change (SR-ISE-2009-04) relating to the $1 Strike Program. Publication is expected in the Federal Register during the week of February 16. (Rel. 34-59377)

The Chicago Board Options Exchange filed a proposed rule change (SR-CBOE-2009-001) relating to the $1 Strike Program. Publication is expected in the Federal Register during the week of February 16. (Rel. 34-59378)

The Depository Trust Company filed a proposed rule change (SR-DTC-2009-04) under Section 19(b)(1) of the Exchange Act that would allow DTC to revise its fee schedule for Security Position Reports (SPRs). Publication is expected in the Federal Register during the week of February 16. (Rel. 34-59387)

The Depository Trust Company filed a proposed rule change (SR-DTC-2009-02) under Section 19(b)(1) of the Exchange Act that would implement a Maturity Presentment Pend function to replace the Maturity Presentment Contingency System. Publication is expected in the Federal Register during the week of February 16. (Rel. 34-59388)

NYSE Alternext US filed a proposed rule change (SR-NYSEALTR-2009-11) to amend Rule 903 regarding the $1 Strike Program. Publication is expected in the Federal Register during the week of February 16. (Rel. 34-59394)

NYSE Arca filed a proposed rule change (SR-NYSEArca-2009-10) to amend Rule 6.4 regarding the $1 Strike Program. Publication is expected in the Federal Register during the week of February 16. (Rel. 34-59395)

Immediate Effectiveness of Proposed Rule Changes

A proposed rule change (SR-CBOE-2009-002) filed by the Chicago Board Options Exchange relating to broker-dealer transaction fees for AIM executions 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 February 16. (Rel. 34-59379)

The Options Clearing Corporation filed a proposed rule change (SR-OCC-2009-02) under Section 19(b)(1) of the Exchange Act, which became effective upon filing, to clarify that an individual may serve as an Exchange Director for more than one exchange and that that individual counts as a separate director for each exchange so represented for purposes of OCC's by-laws, including quorum and voting purposes. Publication is expected in the Federal Register during the week of February 16. (Rel. 34-59385)

A proposed rule change and Amendment No. 1 thereto filed by NASDAQ OMX PHLX (SR-Phlx-2009-12) to amend the Exchange's fee schedule 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 February 16. (Rel. 34-59393)

A proposed rule change (SR-NASDAQ-2009-004) filed by NASDAQ Stock Market consolidating into a single rule certain requirements for products traded on the exchange pursuant to unlisted trading privileges 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 February 16. (Rel. 34-59396)

Approval of Proposed Rule Changes

The Commission approved a proposed rule change submitted by the Financial Industry Regulatory Authority (SR-FINRA-2008-064) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 to amend NASD Interpretive Material (IM) 2110-2 (Trading Ahead of Customer Limit Order). Publication is expected in the Federal Register during the week of February 16. (Rel. 34-59382)

The Commission granted approval of a proposed rule change (SR-DTC-2008-06) filed by The Depository Trust Company under Section 19(b)(1) of the Exchange Act that allows DTC to modify its end of day settlement procedures relating to settlement acknowledgement cut-off times for settling banks. Publication is expected in the Federal Register during the week of February 16. (Rel. 34-59386)

SECURITIES ACT REGISTRATIONS

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