Securities and Exchange Commission Suspends Trading of the Securities of International Business Ventures Group, Inc. Because of Questions Regarding the Accuracy of Statements Made to the Public
The Securities and Exchange Commission announced the temporary suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934 (Exchange Act), of trading of the securities of International Business Ventures Group, Inc. (IBVG), of Delray Beach, Florida at 9:30 a.m. EST on March 6, 2009, and terminating at 11:59 p.m. EDT on March 19, 2009.
The Commission temporarily suspended trading in the securities of IBVG because of questions that have been raised about the accuracy and adequacy of publicly disseminated information concerning, among other things, IBVG's products and business prospects.
The Commission cautions broker 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 the company.
Further, brokers and dealers should be alert to the fact that, pursuant to Rule 15c2-11 under the Exchange Act, at the termination of the trading suspension, no quotation may be entered unless and until they have strictly complied with all of the provisions of the rule. If any broker or dealer has any questions as to whether or not he has complied with the rule, he should not enter any quotation but immediately contact the staff in the Division of Trading and Markets, Office of Interpretation and Guidance, at (202) 551-5777. If any broker or dealer is uncertain as to what is required by Rule 15c2-11, he should refrain from entering quotations relating to IBVG securities until such time as he has familiarized himself with the rule and is certain that all of its provisions have been met. 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, should contact Teresa J. Verges, Assistant Regional Director, at the Miami Regional Office of the Securities and Exchange Commission, at (305) 982-6384. (Rel. 34-59523)
SEC Roundtable to Examine Oversight of Credit Rating Agencies
The Securities and Exchange Commission will hold a roundtable on April 15 relating to its oversight of credit rating agencies. Discussion topics will include issues related to recent SEC rulemaking initiatives, such as conflicts of interest, competition, and transparency.
In the fall of 2006, Congress passed the Credit Rating Agency Reform Act, providing the SEC for the first time with authority to supervise rating agencies. Using this authority that became effective in June 2007, the Commission has adopted two major rulemakings, has conducted an extensive 10-month examination of three major credit rating agencies, and has several pending proposals to further the Act's purpose of promoting accountability, transparency, and competition in the rating industry.
"Although our statutory authority to regulate rating agencies has only been effective for less than two years, it is clearly one of this agency's most important responsibilities," said SEC Chairman Mary L. Schapiro. "The SEC will hear from leading experts on credit rating agencies and the financial markets. Their insight will help the Commission as it continues its aggressive oversight of the industry, and considers whether to adopt the pending proposals."
Roundtable participants will include leaders from investor organizations, financial services associations, government agencies, credit rating agencies, and academia. A final agenda including a list of panelists will be announced at a future date.
The roundtable will be held in the auditorium at the SEC's headquarters at 100 F Street, NE, in Washington, D.C. The roundtable will be open to the public with seating on a first-come, first-served basis. The roundtable also will be webcast on the SEC Web site.
For additional information about the roundtable, contact Marlon Q. Paz in the SEC's Division of Trading and Markets at (202) 551-5756. (Press Rel. 2009-46)
Jeffrey Singdahlsen Named SEC Associate General Counsel
The Securities and Exchange Commission announced today that Jeffrey P. Singdahlsen has been named the Associate General Counsel for Legal Policy in the agency's Office of the General Counsel.
Mr. Singdahlsen has rejoined the SEC staff after serving in a variety of positions in the Department of Justice, most recently in the Appellate Section of the Criminal Division. During his previous tenure at the SEC during 2001 and 2002, he served as Senior Counselor to the General Counsel and advised the Commission and the agency's divisions and offices on legal and policy matters. Mr. Singdahlsen has returned to the SEC to fill the position previously held by Meridith Mitchell, who became the SEC's Deputy General Counsel for Legal Policy and Administrative Practice.
"Throughout his career, Jeff has distinguished himself for his judgment and strong analytical and writing abilities on complex legal questions," said SEC General Counsel David Becker. "His broad government experience and keen intellect will enable him to make great contributions to the Office and the work of the Commission. We are delighted that he is here."
Mr. Singdahlsen said, "The SEC's mission, and the imperative to protect investors, has never been more critical. I am honored and privileged to be here, and pleased to be working again with the talented and dedicated members of the General Counsel's Office and the Commission as a whole."
Mr. Singdahlsen served for several years in the Justice Department's Office of Legal Counsel, where he received the prestigious John Marshall Award for excellence in the provision of legal advice. During his previous work in the Office of the General Counsel at the SEC, he received the Capital Markets Award for his efforts on matters related to 9/11.
Among Mr. Singdahlsen's other previous positions were as an associate at Wilmer, Cutler & Pickering, where he focused on securities enforcement, securities litigation and general litigation. Prior to that, he was a law clerk to Hon. Edward R. Becker, U.S. Court of Appeals for the Third Circuit, and Hon. Richard L. Williams, U.S. District Court for the Eastern District of Virginia.
Mr. Singdahlsen earned his J.D. from the University of Virginia Law School, where he was Articles Editor of the Virginia Law Review and Order of the Coif. He received the Margaret G. Hyde Award for excellence in scholarship, character and extra-curricular activities. He received an A.B. magna cum laude from Dartmouth College. (Press Rel. 2009-47)
Mark Cahn Named Deputy General Counsel at SEC
The Securities and Exchange Commission announced today that Mark D. Cahn has been named a Deputy General Counsel in the SEC's Office of the General Counsel, and he will join the agency staff next week.
Mr. Cahn comes to the SEC from the Washington office of WilmerHale LLP, where he has been a partner in the firm's Securities Department. In his new role at the SEC, Mr. Cahn will be the Deputy General Counsel for Litigation and Adjudication and will help oversee enforcement matters, appellate cases, and adjudications.
"I'm pleased to welcome Mark to the Commission and the Office of the General Counsel," said SEC General Counsel David Becker. "Mark is a splendid lawyer with a breadth of experience that will serve investors and the Commission well. He will be a terrific public servant."
Mr. Cahn said, "I have a deep respect for the work of the Commission and its dedicated staff. I am honored to have the opportunity to join David and the Office of the General Counsel on the many matters of great importance that face the SEC and the investing public during these challenging times."
Mr. Cahn fills a position previously held by Andrew Vollmer, who announced last month that he will soon be leaving the SEC to return to the private sector.
Mr. Cahn has been a member of the Securities Litigation and Enforcement Practice at WilmerHale, a firm he joined in 1988. Mr. Cahn has worked on matters involving public companies, financial institutions, and individuals as well as the SEC, FINRA, and other regulatory bodies. His expertise in securities law and enforcement ranges from financial reporting, accounting and disclosure issues to supervision matters and internal corporate investigations.
Prior to joining WilmerHale, Mr. Cahn clerked for the Honorable John J. Gibbons, U.S. Court of Appeals for the Third Circuit, in 1987, and for the Honorable Herbert J. Stern, U.S. District Court for the District of New Jersey, in 1986.
Mr. Cahn, 47, has been admitted to both the New York and District of Columbia bars. He earned his J.D. in 1986 from Yale Law School, where he was editor of the Yale Journal on Regulation. Mr. Cahn earned his B.A., summa cum laude, from Tufts University in 1983. (Press Rel. 2009-48)
SEC Approves Exemptions Allowing ICE US Trust LLC to Operate As Central Counterparty For Credit Default Swaps
The Securities and Exchange Commission today took action to help improve transparency in the multi-trillion dollar credit default swap market by approving conditional exemptions that will allow ICE US Trust LLC to operate as a central counterparty for clearing credit default swaps.
"It is critical that we bring increased transparency to credit default swaps by developing efficient and effective oversight of credit default swap clearing agencies," said SEC Chairman Mary L. Schapiro. "These conditional exemptions will help enhance competition in the market for the central clearing of credit default swaps, and ensure greater protections for investors through SEC regulatory oversight of the central counterparty."
On Dec. 23, 2008, the SEC approved temporary exemptions allowing LCH.Clearnet Ltd. to operate as a central counterparty for credit default swaps. The Commission has worked in close consultation with the Board of Governors of the Federal Reserve System and the Commodity Futures Trading Commission, executing a Memorandum of Understanding in November 2008 to lay out a framework related to central counterparties for credit default swaps.
The SEC is soliciting public comment on all aspects of these exemptions to assist in its consideration of any further action that may be needed in this area. (Press Rel. 2009-49)
Closed Meeting - Thursday, March 12, 2009 - 2:00 p.m.
The subject matter of the closed meeting scheduled for Thursday, March 12, will be: institution and settlement of injunctive actions; institution and settlement of administrative proceedings of an enforcement nature; an adjudicatory matter; and 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.
In the Matter of Minex Resources, Inc.
An Administrative Law Judge has issued an Order Making Findings and Revoking Registrations by Default as to Four Respondents (Default Order) in Minex Resources, Inc., Administrative Proceeding No. 3-13370. The Order Instituting Proceedings alleged that Minex Resources, Inc., Powerhouse Resources, Inc., SA Telecommunications, Inc., Thorn Apple Valley, Inc., and Universal Seismic Associates, Inc. (n/k/a Seismic Universal Associates, Inc.), each failed repeatedly to file required annual and quarterly reports while their securities were registered with the Securities and Exchange Commission.
The proceeding has ended as to Respondent Minex Resources, Inc. Minex Resources, Inc., Exchange Act Release No. 59465 (Feb. 27, 2009).
The Default Order finds the allegations to be true as to the remaining four Respondents. It revokes the registrations of each class of registered securities of Powerhouse Resources, Inc., SA Telecommunications, Inc., Thorn Apple Valley, Inc., and Universal Seismic Associates, Inc. (n/k/a Seismic Universal Associates, Inc.), pursuant to Section 12(j) of the Securities Exchange Act of 1934. (Rel. 34-59526; File No. 3-13370)
In the Matter of Newbridge Securities Corp., Guy S. Amico, Scott H. Goldstein, Eric M. Vallejo, and Daniel M. Kantrowitz
On March 6, the Commission issued an Order Making Findings and Imposing a Cease-and-Desist Order and Remedial Sanctions Pursuant to Section 8A of the Securities Act of 1933 and Sections 15(b) and 21C of the Securities Exchange Act of 1934 as to Newbridge Securities Corp. The Commission also issued an Order Making Findings and Imposing Remedial Sanctions Pursuant to Section 15(b) of the Securities Exchange Act of 1934 as to Eric M. Vallejo. The Orders find that in 2003 and 2004, Newbridge Securities Corp. (Newbridge) and Vallejo failed reasonably to supervise Newbridge registered representative Daniel M. Kantrowitz while Kantrowitz was engaged in the manipulation of two stocks. The Order as to Newbridge further found that Newbridge failed reasonably to supervise Kantrowitz while he was engaged in the unregistered distribution of one of the stocks, failed to supervise other registered representatives who sent emails to customers during the waiting periods of two initial public offerings, and itself violated Sections 5(a) and (c) of the Securities Act of 1933 (Securities Act).
Based on the foregoing, the Newbridge Order censures Newbridge and orders it to cease and desist from committing or causing any violations and any future violations of the Sections 5(a) and (c) of the Securities Act; orders the firm to pay disgorgement of $206,711 plus prejudgment interest of $1,722, and a civil penalty of $80,000; and directs Newbridge to comply with an undertaking to retain an independent consultant to review its written supervisory procedures and supervisory systems, and implement changes to those procedures and systems the independent consultant recommends. The Vallejo Order suspends Vallejo from acting in a supervisory capacity with any broker or dealer for a period of nine months; and orders Vallejo to pay disgorgement of $12,919 plus prejudgment interest of $172.79, and a civil penalty of $20,000. Newbridge and Vallejo each consented to the issuance of the Orders without admitting or denying the findings in the Orders. (Rel. 33-9011A; 34-59528A; 34-59529A; File No. 3-13099)
SEC Files Application for Order to Show Cause Against James G. Ossie
On Feb. 20, 2009, the Commission filed an Application for Order to Show Cause why Defendant James G. Ossie (Ossie) should not be held in civil contempt for his violation of the Court's January 15, 2009 order freezing assets.
The Commission's application for an order to show cause alleged that, after the Court entered an Order freezing Ossie's assets on Jan. 15, 2009, and after Ossie was served with the Order, Ossie violated the terms of the Order by selling a BMW 750 to Carmax, Inc. for $51,000, depositing the check from Carmax into a brokerage account, and then instructing the brokerage firm to transfer $45,000 of the money into a bank account controlled by Ossie's wife.
In the pending litigation, the Commission alleged that, since at least early 2008, CRE Capital Corporation (CRE) and Ossie have raised at least $25 million from over 120 investors. As alleged in the Complaint, CRE offers "30 Day Currency Trading Contracts," which promise a guaranteed ten percent (10%) return (ROI) in thirty days. The Complaint also alleged that CRE and Ossie claim that they generate profits sufficient to pay these guaranteed returns by trading United States and Japanese currency contracts as the exchange rate fluctuates. Further, the Complaint alleged that CRE and Ossie told investors that the program involves very little risk because CRE has established a large, defensive reserve fund from which to pay back the 10% ROI, plus redeemed principal. In fact, as alleged in the Complaint, CRE does not generate sufficient returns from currency trading to pay the promised returns. The Complaint alleged that the defendants claim CRE and its program were audited by an outside accounting firm which concluded that the investment program was not a Ponzi scheme. In fact, according to the Complaint, CRE operated as a Ponzi scheme by paying all returns to investors from funds contributed by new investors. [SEC v. CRE Capital Corporation and James G. Ossie, Civil Action No. 1:09-CV-0114-RWS (N.D. Ga.)] (LR-20932)
SEC Charges Former CSK Auto Corporation Management With Accounting Fraud
The Commission filed a civil injunctive action in the United States District Court in Phoenix, Arizona against two former senior officers, Martin G. Fraser and Don W. Watson, the former controller, Edward W. O'Brien, and a former supervisor, Gary M. Opper, of Phoenix-based CSK Auto Corporation (CSK). The Commission's complaint alleges that the defendants orchestrated a multi-million dollar accounting scheme to inflate the company's financial results and overstate its net income in 2002 through 2004. At the time of the fraud, CSK was one of the nation's largest auto parts retailers with over 1000 stores located throughout the western United States. In July 2008, CSK became a wholly owned subsidiary of O'Reilly Automotive, Inc.
Rosalind R. Tyson, Director of the SEC's Los Angeles Regional Office, stated, "This case demonstrates the Commission's resolve to hold corporate officers accountable when they defraud shareholders by falsifying their financial results. This extends to all levels of management who participate in the misdeeds."
According to the complaint, CSK had a program by which it obtained allowances from its vendors that decreased CSK's costs of goods sold and, as a result, increased the company's pre-tax income. The complaint alleges that from 2002 through 2004, CSK could not collect tens of millions of dollars in vendor allowances it had previously recognized, and that instead of writing off those uncollectible receivables, Watson, O'Brien, and Opper hid them using a variety of methods, including improperly moving vendor allowance collections between years, making unsubstantiated journal entries, and incorrectly accounting for amounts paid back to vendors. The Commission alleges that the defendants all participated in preparing and filing false financial statements that overstated CSK's pre-tax income in 2002 by approximately 47%, or $11 million; in 2003 by approximately $34 million, reporting pre-tax income instead of an actual pre-tax loss; and in 2004 by approximately 65%, or $21 million. The complaint further alleges that in order to hide their misconduct, the defendants repeatedly lied to the company's independent auditors and provided false documentation in support of CSK's inappropriate accounting.
The complaint alleges that in 2005, CSK filed a restatement of its previously reported financial statements in connection with its accounting for vendor allowances. The Commission's complaint further alleges that the defendants knew, or were reckless in not knowing, that CSK falsely ascribed the restatement solely to "errors in estimation in earlier periods" and "imprecise estimates, bookkeeping errors and recording allowances in the incorrect periods." In addition, the complaint alleges that the restatement failed to write off all the uncollectible vendor allowance receivables. As a result, the defendants tried to collect approximately $15 million in vendor allowances that CSK was not actually owed in order to conceal these uncollectible receivables from CSK's auditors and shareholders.
The Commission's complaint charges Fraser, age 53, of Phoenix, Ariz., Watson, age 53, of Gilbert Ariz., O'Brien, age 46, of Cave Creek, Ariz., Opper, age 56, of Mesa Ariz., with violating the anti-fraud, reporting, books and records, and internal controls provisions of the federal securities laws. The complaint further alleges that Watson signed certifications required by the Sarbanes-Oxley Act that were false. The Commission is seeking a permanent injunction from future violations, disgorgement, prejudgment interest, and civil penalties against all the defendants, and an order barring Fraser, Watson, and O'Brien from serving as a director or officer of a public company.
The Commission's investigation is ongoing. [SEC v. Martin G. Fraser, Don W. Watson, Edward W. O'Brien, and Gary M. Opper, Case No. 2:09-cv-00443-LOA (D. Ariz.) (LR-20933A; AAER No. 3024)
SEC Charges Gary Richetelli With Scheme to Obtain Stock in the NewAlliance Bancshares IPO
The Securities and Exchange Commission today announced the filing of civil fraud charges on March 5, against Gary Richetelli in connection with the initial public offering of Connecticut-based NewAlliance Bancshares, Inc. The Commission previously filed similar charges against eight other individuals in connection with the NewAlliance IPO. The most recent charges arise out of a scheme by Richetelli in which he illegally funded the purchase of NewAlliance stock during its IPO in violation of the federal securities laws. The SEC's action was brought in the United States District Court for the District of Connecticut.
According to the Commission's complaint, the action arises out of the April 2004 conversion of New Haven Savings Bank (NHSB) from a mutual form of organization to a stock form of organization. Because mutual banks are owned by their depositors, the depositors are given first priority in receiving the shares arising out of the conversion's initial public offering. The Commission's complaint alleges that Richetelli entered into illegal arrangements with six NHSB depositors (which were hidden from NHSB) pursuant to which he funded their purchase of shares of NewAlliance stock in exchange for 90% of the profits earned on the sales of such shares. The complaint further alleges that Richetelli also illegally funded the purchase of additional shares of the stock using his mother's NHSB account, retaining 100% of the profits derived from the sales of those shares. The complaint further alleges that, through his scheme and at the expense of other NHSB bank depositors, Richetelli illegally obtained hundreds of thousands in proceeds from the sale of New Alliance stock that had been purchased in the IPO.
In its complaint, the Commission alleges that Richetelli violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and seeks a permanent injunction, disgorgement of ill-gotten gains plus prejudgment interest, and a civil penalty. [SEC v. Gary Richetelli, Civil Action No. 3:09-CV-00361 (CFD), USDC, D. Conn.] (LR-20934)
Proposed Rule Change
NASDAQ OMX BX filed a proposed rule change (SR-BX-2009-015) under Section 19(b)(1) of the Securities Exchange Act of 1934 to reduce certain order handling and exposure periods on the Boston Options Exchange Facility from three seconds to one second. Publication is expected in the Federal Register during the week of March 9. (Rel. 34-59497)
Immediate Effectiveness of Proposed Rule Change
A proposed rule change filed by the Fixed Income Clearing Corporation (SR-FICC-2009-01) to amend the appendix of a cross-margining agreement between FICC and the Chicago Mercantile Exchange, Inc., and to make additional technical changes and corrections has become effective pursuant to Section 19(b)(3)(A)(iii) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of March 9. (Rel. 34-59498)
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