Securities and Exchange Commission Suspends Trading in Global Matrechs, Inc. for Failure to Make Required Periodic Filings
The Commission announced the temporary suspension of trading in the securities of Global Matrechs, Inc. (Global), commencing at 9:30 a.m. EDT on March 30, 2009, and terminating at 11:59 p.m. EDT on April 13, 2009. The Commission temporarily suspended trading in the securities of Global due to a lack of current and accurate information about the company because it failed to file certain periodic reports with the Commission. The 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 suspension, no quotation may be entered relating to the securities of Global unless and until the broker or dealer has strictly complied 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 Global 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, John T. Dugan of the Boston Regional Office of the Securities and Exchange Commission should be telephoned at (617) 573-8936. (Rel. 34-59645)
In the Matter of Jason G. Burks
On March 27, the Securities and Exchange Commission issued an Order Instituting Administrative and Cease-and-Desist Proceedings, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order, Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934, Section 203(f) of the Investment Advisers Act of 1940, and Sections 9(b) and 9(f) of the Investment Company Act against Jason G. Burks. The Commission finds that the Burks engaged in a scheme to defraud hundreds of mutual funds and their shareholders by engaging in deceptive market timing and late trading practices on behalf of a hedge fund adviser.
The Order provides that Burks is barred from association with any broker, dealer, or investment adviser, and is prohibited from serving or acting as an employer, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter, with a right to reapply to the Commission to serve or act in any such capacities after five years from the date of the Order. Burks consented to the issuance of the Order without admitting or denying the findings therein, except he admitted the entry of the injunction.
Additional information can be found in Litigation Release No. 19027 (Jan. 10, 2005). (Rels. 34-59644A; IA-2862A; IC-28681A; File No. 3-13419)
Commission Orders Hearing on Registration Suspension or Revocation Against Global Matrechs, Inc. for Failure to Make Required Periodic Filings
In conjunction with today's trading suspension, the Commission announced the issuance of an Order Instituting Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934 (Order) against Global Matrechs, Inc. (Respondent). The Order alleges that the Respondent is delinquent in its periodic filings with the Commission, having failed to file seven periodic reports, including one annual report and six quarterly reports. Despite its representations in response to a delinquency letter sent to it by the Commission's Division of Corporation Finance requesting compliance with its periodic filing obligations, the Respondent did not cure its delinquent status.
A hearing will be held by an Administrative Law Judge to determine whether the allegations contained in the Order are true, to afford the Respondent an opportunity to establish any defenses to such allegations, and to determine whether it is necessary or appropriate for the protection of investors to suspend for a period not exceeding twelve months, or revoke the registration of each class of securities of the Respondent registered pursuant to Section 12 of the Securities Exchange Act of 1934. The Order requires the Administrative Law Judge to issue an initial decision no later than 120 days from the date of service of this Order, pursuant to Rule 360(a)(2) of the Commission's Rules of Practice. (Rel. 34-59646; File No. 3-13420)
In the Matter of Dennis Kavelman, C.A. and Arcangelo Loberto, C.A.
On March 30, the Securities and Exchange Commission issued an Order Instituting Administrative Proceedings Pursuant to Rule 102(e) of the Commission's Rules of Practice, Making Findings, and Imposing Remedial Sanctions (Order) against Dennis Kavelman, C.A. (former CFO of Research in Motion Limited (RIM)) and Arcangelo Loberto, C.A. (former VP of Finance of RIM). The Order finds that on March 25, 2009, a final judgment was entered against Kavelman and Loberto, permanently enjoining them from future violations of Section 17(a) of the Securities Act of 1933, Sections 10(b) and 13(b)(5) of the Exchange Act of 1934 (the Exchange Act) and Rules 10b-5, 13a-14 (Kavelman only), 13b2-1, and 13b2-2 thereunder, and from aiding and abetting any violation of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-16 thereunder, in the civil action entitled Securities and Exchange Commission v. Research in Motion Limited, et al., Civil Action No. 09-00301 (RBW), in the United States District Court for the District of Columbia. In the civil action, Kavelman and Loberto were ordered to pay disgorgement of their ill-gotten gains plus prejudgment interest, which was deemed satisfied based on their prior payments of these amounts to RIM, Kavelman was ordered to pay a $500,000 civil money penalty and Loberto was ordered to pay a $425,000 civil money penalty. Kavelman and Loberto each were prohibited from acting as an officer or director for five years.
The Order further finds that the Commission's civil complaint alleged, among other things, that Kavelman and Loberto illegally granted undisclosed, in-the-money options to RIM executives and employees by backdating stock option grants, they made false and misleading disclosures about how RIM priced and accounted for options, they took steps to hide the backdating from the Company's auditors, U.S. and Canadian regulators and RIM's outside lawyer, and they circumvented internal accounting controls and falsified books and records with regard to the backdated option grants.
Based on the above, the Order suspends Kavelman and Loberto from appearing or practicing before the Commission as accountants, with the right to apply for reinstatement after five years. Kavelman and Loberto consented to the entry of the Order without admitting or denying the findings in the Order. (Rel. 34-59648; AAE Rel. 2958; File No. 3-13421)
Court Enters Contempt Order After Andrew S. Mackey and Inger L. Jensen Fail to Respond to SEC Subpoenas
Marshals Service Arrests Mackey and Jensen
The Securities and Exchange Commission today announced that, under the authority of an order entered by the Honorable Orinda D. Evans of the United States District Court for the Northern District of Georgia on March 12, 2009, the United States Marshals Service has executed warrants for the arrest of defendants Andrew S. Mackey (Mackey) and Inger L. Jensen (Jensen). The March 12, 2009 order found Mackey and Jensen in contempt for failure to comply with Judge Evans' order of Sept. 22, 2008 and amended order of September 24, 2008, both of which compelled Mackey and Jensen to comply with the Commission's staff's administrative subpoenas. The March 12, 2009 order further directed the Marshals Service to incarcerate Mackey and Jensen until the contempt is resolved.
This action resulted from the Commission's Feb. 6, 2009 application for an order to show cause why Mackey and Jensen should not be held in civil contempt for their failure to comply with the Court's prior orders. The Court held a show cause hearing on March 5, 2009. Neither defendant appeared for the hearing. The Court announced its preliminary findings at that time and issued an Order of Civil Contempt and Coercive Incarceration on March 12, 2009.
The Commission had previously filed a subpoena enforcement action in the United States District Court for the Northern District of Georgia against Mackey and Jensen on June 20, 2008. Pursuant to subpoenas served on the defendants, Mackey and Jensen were obligated to produce documents to the staff and appear for testimony at the Atlanta Regional Office of the Commission. Neither Mackey nor Jensen produced any documents pursuant to the subpoenas, and neither appeared for testimony as required. The Court subsequently entered its Sept. 22, 2008 and Sept. 24, 2008 orders directing Mackey and Jensen to comply with the subpoenas. See also: LR 20887 (Feb. 6, 2009); LR 20627 (June 23, 2008). [SEC v. Andrew S. Mackey and Inger L. Jensen, Civil Action No. 1:08-CV-2068 (N.D. Ga.)] (LR-20977)
Final Judgments Entered Against Individuals and Entities Responsible for Investment Scheme Targeting Cambodian Immigrants
The Securities and Exchange Commission announced today that on March 26, 2009, the United States District Court for the District of Massachusetts entered final judgments against five defendants in a civil action filed in November 2005 involving a fraudulent investment scheme targeting Cambodian immigrants. The Commission's action charged that defendants WMDS, Inc. (WMDS), OneUniverseOnLine, Inc. (1UOL), James Bunchan, Seng Tan and Christian Rochon falsely promised members of the Cambodian immigrant community guaranteed monthly returns on investments that purportedly would pass on to future generations. The complaint alleged that the defendants emphasized their shared Cambodian heritage with their victims, and that certain written solicitation documents drew a parallel between investing in WMDS and fulfilling the American dream. In fact, according to the complaint, the defendants were operating a fraudulent pyramid scheme that ceased making the promised monthly payments in mid-2005.
The complaint alleged that the defendants violated the anti-fraud provisions of the federal securities laws, specifically Section 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and also violated the registration provisions of Sections 5(a) and 5(c) of the Securities Act. On Jan. 24, 2006, the Commission amended its complaint to add Bunchan's former wife as a relief defendant. The Commission's case is pending as to the relief defendant.
The final judgments entered by the Court against Bunchan, Tan, Rochon, WMDS and 1UOL came in response to a Commission motion for default judgments and (1) permanently enjoin the defendants from future violations of Sections 17(a) and 5(a) and 5(c) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; and (2) require the defendants, jointly and severally, to disgorge $26,261,133.16 in ill-gotten gains, such amount to be reduced by any amount forfeited or paid as part of a related criminal proceeding.
On Nov. 28, 2007, Bunchan and Tan each were sentenced by the United States District Court for the District of Massachusetts in a related criminal action after being convicted of mail fraud, conspiracy and money laundering in connection with the fraudulent investment scheme. Bunchan was sentenced to 35 years in prison and Tan was sentenced to 20 years in prison. On August 7, 2008, Rochon was sentenced by the same court based on his June 4, 2007 guilty plea to mail fraud, conspiracy and money laundering in connection with the fraudulent investment scheme. Rochon was sentenced to 5 years probation, with the first year to be served in home confinement. [SEC v. WMDS, Inc. One Universe Online, Inc., Seng Tan, James Bunchan and Christian Rochon (United States District Court for the District of Massachusetts, Civil Action No. 05-12268-RCL)] (LR-20978; AAE Rel. 2956)
CEO receives 97-month sentence for promoting stock touting a bogus Homeland Security deal and ensuing cover-up
The Securities and Exchange Commission today announced that on March 23, 2009, the Honorable Norma L. Shapiro sentenced James E. Plant to serve 97 months in federal prison for securities fraud, making false statements to the SEC, witness tampering, and obstruction of an agency proceeding, charges to which Jim Plant pled guilty on June 30, 2008.
Plant was arrested on March 13, 2007, in St. George, Utah, by agents of the Federal Bureau of Investigation's Philadelphia Economic Crimes Squad and the United States Postal Inspection Service on charges of securities fraud and aiding and abetting securities fraud. That same month, the Commission charged CyberKey Solutions, Inc. and Plant for engaging in an ongoing unregistered offering of CyberKey shares while promoting a bogus purchase order from the U.S. Department of Homeland Security (DHS) for more than 150,000 USB "thumb" drives. Plant falsely claimed that this purchase order was worth more than $24 million, and resulted in net profits of more than $12 million in 2006. In fact, CyberKey had practically no revenues or profits and had never received any purchase order from DHS (or any other governmental agency).
In late 2006 and early 2007, Plant unsuccessfully tried to cover up his fraud by providing the SEC with numerous fake and fraudulent documents, including bogus purchase orders, wire transfers, and bank statements meant to verify the multi-million dollar DHS order. On March 7, 2007, in sworn testimony before the Commission, Plant repeated the false claims that CyberKey had a multi-million dollar contract with DHS and had been receiving payments of several million dollars pursuant to that contract. In addition, when asked by the SEC staff why DHS had no record of any business relationship with CyberKey, Plant fabricated another story, claiming falsely that CyberKey's DHS purchase order was actually through another company, Kikomac.
Finally, after the testimony concluded, Plant convinced a CyberKey employee to provide a false confession to federal law enforcement and to take sole responsibility for the creation of the bogus DHS contract as well as the phony documents submitted to the SEC.
A restitution hearing is set for April 28, 2009, to determine Plant's responsibility for the monetary damages he caused by perpetrating his scheme.
For more information, see Litigation Release No. 20171 and Litigation Release No. 20049. [SEC v. CyberKey Solutions, Inc. and James E. Plant, Civ. Action No. 07 1084 (CMR) (E.D. Pa, filed March 20, 2007); Crim No. 07-375 (E.D. Pa.)] (LR-20979)
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed by Chicago Board Options Exchange (SR-CBOE-2009-021) relating to the Penny Pilot Program 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 30. (Rel. 34-59630)
A proposed rule change filed by The NASDAQ Stock Market (SR-Nasdaq-2009-30) to extend the Options Penny Pilot for The NASDAQ Options Market 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 30. (Rel. 34-59632)
A proposed rule change filed by International Securities Exchange (SR-ISE-2009-14) relating to an extension of the Penny Pilot Program 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 30. (Rel. 34-59633)
Proposed Rule Change
The Commission issued a notice of filing of a proposed rule change by the Municipal Securities Rulemaking Board pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934, relating to the establishment of a Primary Market Disclosure Service and Trade Price Transparency Service of the Electronic Municipal Market Access system (EMMA®) and amendments to MSRB Rules G-32 and G-36 (SR-MSRB-2009-02). Publication is expected in the Federal Register during the week of March 30. (Rel. 34-59636)
Accelerated Approval of Proposed Rule Change
The Commission has granted accelerated approval of a proposed rule change submitted by NASDAQ OMX BX (SR-BX-2009-015) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 to reduce certain order handling and exposure periods on Boston Options Exchange Facility from three seconds to one second. Publication is expected in the Federal Register during the week of March 30. (Rel. 34-59638)
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