Didem Nisanci Named SEC Chief of Staff
Securities and Exchange Commission Chairman Mary L. Schapiro announced today that Didem A. Nisanci has been named SEC Chief of Staff.
Ms. Nisanci most recently served as Staff Director for the U.S. Senate Banking Subcommittee on Securities, Insurance, and Investment chaired by U.S. Senator Jack Reed. As staff director, she developed and implemented the subcommittee's legislative and oversight agenda. She will begin working at the SEC later this week.
"I am pleased Didem has agreed to bring her extensive background, knowledge, experience, and leadership skills to the SEC during this critical time," said Chairman Schapiro. "Didem has been vital to Senate oversight of the SEC during the past few years, and now she will help lead the agency as we work with other financial regulators and Congress to improve investor confidence in the markets."
Ms. Nisanci said, "I am honored to have the opportunity to join the SEC and its team of talented and dedicated professionals. These are extraordinary economic times and the Commission plays a vital role in improving investor protections and bolstering our financial markets. Under Chairman Schapiro's stewardship, and together with the Commission's dedicated staff, we will build a stronger SEC."
As Staff Director for the Senate Banking Subcommittee on Securities, Insurance, and Investment, Ms. Nisanci played a key role in the successful Congressional effort to increase the SEC's budget for fiscal year 2009 in order to enhance the agency's risk management, examination, and enforcement efforts. During her tenure, the subcommittee held hearings examining the root causes of the financial crisis, over-the-counter derivatives, credit rating agencies, risk management, consolidated supervised entities, and off balance sheet accounting. Ms. Nisanci also served as a lead staff negotiator for key provisions of the Emergency Economic Stabilization Act of 2008 and the Housing and Economic Recovery Act of 2008.
Ms. Nisanci served at the U.S. Department of the Treasury as Deputy to the Assistant Secretary of Legislative Affairs and Public Liaison. She received the Treasury Secretary's Award for Meritorious Service, the Treasury Secretary's Certificate for development of the Administration's money laundering strategy and legislation, the Treasury Secretary's Certificate for the passage of financial modernization legislation, and the Treasury Secretary and Undersecretary Certificate for Debt Management.
Ms. Nisanci earned a B.A. in Economics and Government from Smith College in 1995. (Press Rel. 2009-64)
SEC Announces Panelists and Agenda for Credit Rating Agencies Roundtable
The Securities and Exchange Commission today announced the expected panelists for its April 15 roundtable relating to its oversight of credit rating agencies.
The roundtable will be held at the SEC's Washington, D.C., headquarters and will begin at 10 a.m. ET with opening remarks from SEC Chairman Mary L. Schapiro.
"The roundtable will thoroughly review relevant aspects of regulating credit rating agencies," said Chairman Schapiro. "Insight from leading experts on credit rating agencies and the financial markets will assist the Commission as it continues to pursue aggressive oversight of the industry."
Discussion topics will include issues related to recent SEC rulemaking initiatives, such as conflicts of interest, competition, and transparency. The roundtable will consist of four panels.
Roundtable participants will include leaders from investor organizations, financial services associations, credit rating agencies, and academia.
10:10 a.m. - Panel One: Current NRSRO Perspectives: What Went Wrong and What Corrective Steps Is the Industry Taking?
11:30 a.m. - Panel Two: Competition Issues: What are Current Barriers to Entering the Credit Rating Agency Industry?
12:30 p.m. - Lunch Break
1:15 p.m. - Panel Three: Users' Perspectives
2:45 p.m. - Panel Four: Approaches to Improve Credit Rating Agency Oversight
The roundtable is expected to end at approximately 4:15 p.m. with concluding remarks by Erik R. Sirri, Director of the SEC's Division of Trading & Markets.
In the fall of 2006, Congress passed the Credit Rating Agency Reform Act, providing the SEC for the first time with authority to supervise credit 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.
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. 2009-65)
SEC Obtains Emergency Asset Freeze to Halt Ongoing Fraud
The Securities and Exchange Commission today obtained an emergency court order to halt an ongoing scheme by a Palmdale, California company and two individuals who have defrauded investors through a series of false claims including that Warren Buffett is associated with the company.
According to the SEC's complaint, International Realty Holdings, Inc. (IRH), Ottoniel Medrano (a prison guard at California City Correctional Center), and Leticia Isabel Medrano have raised hundreds of thousands of dollars from investors in several states since October 2008. The defendants defrauded investors by falsely claiming, among other things, that Warren Buffett is IRH's "Honorary Chairman," that Berkshire Hathaway and Credit Suisse are involved in the investment, and that IRH has $4.8 billion in total assets and owns various properties throughout Asia. After obtaining money from investors, the Medranos transferred funds to offshore bank accounts.
The SEC's complaint, filed in federal district court in Los Angeles, CA, charges IRH and the Medranos with raising at least $485,000 and likely more than $700,000 in selling preferred stock in IRH. The rate at which the defendants have raised funds has increased substantially over the last two months, averaging about $250,000 per month. According to IRH's offering materials, defendants intended to raise up to $6 billion in the offering.
In its lawsuit, the SEC obtained an order (1) freezing the assets of IRH and the Medranos; (2) requiring the repatriation of assets; (3) requiring accountings; (4) prohibiting the destruction of documents; (5) granting expedited discovery; and (6) temporarily enjoining IRH and the Medranos from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC also seeks preliminary and permanent injunctions, disgorgement, and civil penalties against IRH and the Medranos. A hearing on whether a preliminary injunction should be issued against the defendants is scheduled for April 2, 2009 at 2:00 p.m. [SEC v. International Realty Holdings, Inc., Ottoniel Medrano, and Leticia Isabel Medrano, Civil Action No. CV 09-01945 DDP (JWJx) (C.D. Cal.)] (LR-20968; Press Rel. 2009-63)
SEC Obtains Emergency Asset Freeze to Halt Oil and Gas Investment Scheme
The Securities and Exchange Commission charged a Los Angeles man and two of his companies with securities fraud, and obtained an emergency court order to freeze their assets and halt an alleged ongoing oil and gas investment scheme they have been operating out of a boiler room in Los Angeles.
According to the SEC's complaint, Clement Ejedawe, a/k/a Clement Chad and his companies, Innova Energy LLC and Innova Leasing and Management, raised at least $1.3 million from over 30 investors by promising guaranteed returns on working interests in oil and gas leases or oil and gas drilling equipment. In fact, according to the SEC's complaint, the defendants did not use investor funds for the oil and gas business but rather to pay Ejedawe's personal expenses, including cash withdrawals, his apartment rent, and donations to his church. According to the complaint, Ejedawe is the subject of at least seven separate cease-and-desist or desist-and refrain orders relating to his unregistered offerings of securities, including orders from California, Alabama, Pennsylvania, Maryland, Kansas, and Washington. Defendants both misrepresented and failed to disclose these state orders to prospective investors.
The SEC's complaint, filed in federal district court in Los Angeles, alleges that since December 2006, the defendants solicited investors by cold-calling them from a boiler room in Los Angeles, California. Defendants are alleged to have falsely represented to investors that their money would be invested in either working interests in oil and gas leases or interests in oil and gas drilling equipment and to have promised monthly payments of $4,000 to $5,000 for each $50,000 invested. Contrary to these representations, defendants used investor funds to pay undisclosed commissions to sales representatives, to pay for Ejedawe's personal expenses, and to make some small payments to complaining investors.
Yesterday, the SEC obtained an order (1) freezing the assets of Innova Energy, Innova Leasing and Management, and Ejedawe; (2) requiring accountings; (3) prohibiting the destruction of documents; and (4) granting expedited discovery; and (5) temporarily enjoining the Innova entities and Ejedawe from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. A hearing on whether a preliminary injunction should be issued against the defendants is scheduled for April 6, 2009 at 9:00 a.m. The SEC also seeks permanent injunctions, disgorgement, and civil penalties against Ejedawe and the Innova entities.
The SEC acknowledges the assistance of the Alabama Securities Commission. [SEC v. Innova Energy LLC, et al., Civil Action No. CV 09-01947 R (AJWx) (Central District of California)] (LR-20969)
SEC Charges Former Managing Director at Brokerage Firm Merriman Curhan Ford & Co. With Defrauding Customers and Helping Bilk Lenders Out of $45 Million
The Securities and Exchange Commission filed today a civil injunctive action in federal district court in San Francisco against David "Scott" Cacchione, a former Managing Director at San Francisco-based brokerage firm Merriman Curhan Ford & Co. (Merriman), alleging that he helped a friend bilk banks and private lenders out of approximately $45 million in 2007 and 2008. The SEC alleges that Cacchione provided Silicon Valley venture capitalist William J. "Boots" Del Biaggio III with Merriman customer account statements, which Del Biaggio doctored and used as collateral to obtain fraudulent loans. In the action, the SEC also charged Cacchione with defrauding his own customers by purchasing risky penny stocks in their accounts without their permission.
According to the SEC complaint, Cacchione engaged in two distinct securities fraud schemes. First, the complaint alleges that Cacchione helped concoct a fraudulent financing scheme with Del Biaggio, a friend and customer who had previously loaned Cacchione over $2 million. The SEC alleges that, beginning in August 2007, Cacchione emailed account statements of several unknowing Merriman customers to Del Biaggio, who falsified the account statements to make it appear that he owned the assets in the accounts. Using the doctored statements, the SEC contends that Del Biaggio was able to obtain $45 million in personal loans from banks and private lenders (part of which he used to purchase an interest in a professional hockey team). According to the SEC, Cacchione furthered the deception by signing documents falsely confirming that Del Biaggio owned the assets in the innocent customers' accounts.
In the second scheme, according to the SEC's complaint, Cacchione bought highly risky, thinly-traded stocks in several of his customers' brokerage accounts without his customers' permission, and then pocketed more than $30,000 in commissions from the trades. The SEC alleges that between 2006 and 2007, Cacchione made at least twenty unauthorized trades in the account of a local children's charity and also traded without permission in the account of an elderly customer.
Cacchione, without admitting or denying the complaint's allegations, has agreed to a permanent injunction from violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. In addition, Cacchione has consented to the institution of public administrative proceedings against him in which he will be barred permanently, pursuant to Section 15(b) of the Exchange Act, from working as a registered representative at a brokerage firm. Finally, Cacchione also has agreed that, at a later date, the court in this matter shall determine the amount of ill-gotten gains (disgorgement) and civil monetary penalties that Cacchione will be required to pay. [SEC v. David Scott Cacchione, Case No. CV- 09- 1259 (JL) (N.D. Cal)] (LR-20970)
INVESTMENT COMPANY ACT RELEASES
IndexIQ ETF Trust, et al.
An order has been issued on an application filed by IndexIQ ETF Trust, IndexIQ Advisors LLC and ALPS Distributors, Inc. to permit (a) series of registered open end management investment companies whose portfolios will consist of the component securities of certain domestic and international equity securities indexes to issue shares (Shares) that can be redeemed only in large aggregations (Creation Units); (b) secondary market transactions in Shares of the series to occur at negotiated market prices; (c) certain series to pay redemption proceeds, under certain circumstances, more than seven days after the tender of Shares for redemption; (d) certain affiliated persons of the series to deposit securities into, and receive securities from, the series in connection with the purchase and redemption of Creation Units; and (e) certain registered management investment companies and unit investment trusts outside of the same group of investment companies as the series to acquire Shares of certain series. (Rel. IC-28653 - March 20)
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed by NYSE Arca (SR-NYSEArca-2009-21) amending Rule 6.62 to provide additional order types 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 March 23. (Rel. 34-59603)
A proposed rule change filed by NYSE Arca (SR-NYSEArca-2009-23) amending Rule 6.47 to remove obsolete text related to the SizeQuote Pilot Program 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 March 23. (Rel. 34-59609)
A proposed rule change filed by NASDAQ OMX PHLX (SR-Phlx-2009-22) relating to administration of certain rules in respect of index data dissemination 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 March 23. (Rel. 34-59611)
A proposed rule change filed by the New York Stock Exchange amending NYSE Rule 124 to execute the odd-lot portion of a part of a round-lot order pursuant to the same pricing methodology used for odd-lot orders (SR-NYSE-2009-27) 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 March 23. (Rel. 34-59613)
A proposed rule change filed by the NYSE Alternext US amending NYSE Alternext Equities Rule 124 to execute the odd-lot portion of a part of a round-lot order pursuant to the same pricing methodology used for odd-lot orders (SR-NYSEALTR-2009-27) 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 March 23. (Rel. 34-59614)
The Commission issued notice of filing and immediate effectiveness of a proposed rule change (SR-NYSEArca-2009-19) filed by NYSE Arca under Rule 19b-4 of the Securities Exchange Act of 1934 amending rule 6.37A - obligations of market makers-OX. Publication is expected in the Federal Register during the week of March 23. (Rel. 34-59617)
Accelerated Approval of Proposed Rule Change
The Depository Trust Company filed a proposed rule change (SR-DTC-2009-06) under Section 19(b)(1) of the Exchange Act that would allow DTC to amend its Certificate of Incorporation to provide for the issuance of an additional 250,000 shares of DTC Series A Preferred Stock. The Commission has approved the proposed rule change on an accelerated basis. Publication is expected in the Federal Register during the week of March 23. (Rel. 34-59612)
Proposed Rule Change
The Financial Industry Regulatory Authority (f/k/a the National Association of Securities Dealers, Inc.) filed a proposed rule change (SR-FINRA-2009-008) under Section 19(b)(1) of the Securities Exchange Act of 1934 relating to proposed changes to Forms U4 and U5. Publication is expected in the Federal Register during the week of March 23. (Rel. 34-59616)
Approval of Proposed Rule Change
The Commission granted approval of a proposed rule change (SR-DTC-2009-04) filed by the Depository Trust Company under Section 19(b)(1) of the Exchange Act that allows DTC to revise its fee schedule for Security Position Reports (SPRs). Publication is expected in the Federal Register during the week of March 23. (Rel. 34-59618)
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