In the Matter of IAC Holdings, Inc.
The U.S. Securities and Exchange Commission today announced the institution of an administrative proceeding against IAC Holdings, Inc. (IAC) pursuant to Section 12(j) of the Securities Exchange Act of 1934 (Exchange Act). IAC is a Florida corporation headquartered in Orlando, Florida. The purpose of the proceeding is to determine whether the registration of IAC's common stock should be suspended for a period not exceeding twelve months or revoked. The Division of Enforcement (Division) alleges that IAC failed to comply with Section 13(a) of the Exchange Act and Exchange Act Rules 13a-11 and 13a-13, by not filing any periodic reports since June 13, 2008, and by failing to file a Form 8-K reporting at least one significant event.
A hearing will be scheduled to take evidence on the Division's allegations, to afford IAC the opportunity to establish defenses to the allegations, and to determine whether the registration of IAC's common stock should be suspended for a period not exceeding twelve months or revoked. The Commission ordered that the Administrative Law Judge in these proceedings issue an initial decision not later than 120 days from the date of service of the order instituting proceedings. (Rel. 34-59718; File No. 3-13431)
In the Matter of Lawrence D. Morris
The Securities and Exchange Commission announced the issuance of an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Notice of Hearing (Order) against Lawrence D. Morris (Morris or Respondent).
The Division of Enforcement alleges in the Order that, on Dec. 11, 2008, a final judgment was entered against Morris permanently enjoining him from future violations of Section 5 of the Securities Act of 1933 and Section 15(a) of the Exchange Act. The Commission's civil action was entitled Securities and Exchange Commission v. ProVision Operation Systems, Inc. et al., Civil Action Number SACV 07-1130 AHS (JWJx), and was filed in the United States District Court for the Central District of California, Southern Division on Sept. 26, 2007.
The Order further alleges that Morris had been a salesman for ProVision Operation System, Inc. (ProVision), which was a development-stage company that purportedly offered real estate and business seminars, and also purportedly operated businesses involving yachts, land development and mining. The Order alleges that, from approximately Oct. 2003 to at least Sept. 2004, Morris offered and sold ProVision stock for commission-based compensation, pursuant to a contract he made with the company. The Order alleges that Morris received nearly $540,000 in commissions from ProVision. Finally, the Order alleges that Morris was not registered with the Commission as a broker-dealer or affiliated with a registered broker-dealer, nor did he qualify for any exemptions from the broker-dealer registration requirement.
A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide the Respondent an opportunity to dispute these allegations, and to determine what, if any, remedial sanctions are appropriate and in the public interest. The Commission directed that an Administrative Law Judge issue an initial decision within 210 days from the date of service of this Order. (Rel. 34-59719; File No. 3-13432)
Court Enters Final Judgments Settling Actions Against Defendants Antonio Canova and Stephanie Jensen
The Securities and Exchange Commission announced that on April 6, 2009, the Honorable Charles R. Breyer, United States District Judge for the Northern District of California, entered Final Judgments as to defendants Antonio Canova and Stephanie Jensen, in Securities and Exchange Commission v. Gregory L. Reyes, et al., Case No. 3:06-cv-04435-CRB (N.D. Cal.), based on their respective Consents submitted to settle the action against each of them.
The Final Judgment against Canova, which he agreed to without admitting or denying the allegations against him, provides that he is enjoined from violating Sections 17(a)(2) and (3) of the Securities Act of 1933 (Securities Act) and Section 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act), and Rules 13b2-1, 13b2-2, and 13a-14, and from aiding and abetting future violations of Sections 13(a), 13(b)(2)(A) and (B) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13. Canova is further ordered to pay a civil penalty of $120,000 and to pay disgorgement, plus prejudgment interest, of $249,351. The Final Judgment against Jensen, which she agreed to without admitting or denying the allegations, enjoins her from violating Section 17(a) of the Securities Act, Sections 10(b) and 13(b)(5) of the Exchange Act, and Rules 10b-5, 13b2-1 and 13b2-2, and from aiding and abetting violations of Sections 13(a), 13(b)(2)(A) and (B) of the Exchange Act, and Rules 12b-20, 13a-1, and 13a-13. Jensen is also ordered to pay disgorgement, plus prejudgment interest, of $44,416.
The Commission's complaint, which was originally filed in July 2006, alleged that Canova and Jensen each played an important role in the years-long fraudulent stock options backdating scheme, carried out by the former CEO of Brocade Communications Systems, Inc., a San Jose computer networking company. [SEC v. Gregory L. Reyes, et al., Case No. 3:06-cv-04435-CRB (N.D. Cal.)] (LR-20989)
Beverage Creations, Inc. and its Former Officers Settle SEC Charges in Pump and Dump Case
The Securities and Exchange Commission announced today that Beverage Creations, Inc., a Minneapolis, Minnesota company, and two of its former officers settled SEC charges that they illegally sold Beverage Creations stock through certain stock promoters and promoted that stock with a false press release. On Apr. 6, 2009, the Honorable Judge Jane Boyle of the U.S. District Court in Dallas entered final judgments against Beverage Creations, Inc., former Chief Executive Officer Robert Wieden and former Chief Operating Officer Patrick Dado.
In Mar. 2008, the SEC sued Beverage Creations, Inc. and several stock promoters alleging that they sold 30 million shares of stock to the public without a registration statement filed or in effect. According to the complaint, the stock promoters (1) purchased shares directly from Beverage Creations, Inc., (2) touted Beverage Creations, Inc. to investors through a nationwide marketing campaign, and (3) immediately dumped their shares into the public market at grossly inflated prices. The SEC also charged that Beverage Creations, Inc. participated in the touting by issuing a false press release denying any relationship between the company and one of the stock promoters. In Dec. 2008, the SEC amended its complaint to add Beverage Creations, Inc. officers Robert Wieden and Patrick Dado. According to the amended complaint, Wieden and Dado were responsible for Beverage Creations, Inc.'s public offering, and they authored and approved the false press release. The SEC charged Beverage Creations, Inc., Wieden and Dado with violations of Section 5 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
Without admitting or denying the allegations, Beverage Creations, Inc., Wieden and Dado settled the action by consenting to entry of a court order that permanently bars them from violating Section 5 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition, Wieden and Dado will pay civil penalties of $20,000 each. The SEC's action against the remaining defendants is ongoing. [SEC v. Ryan M. Reynolds, et al., Case No. 3-08 CV-438-B (N.D. Tex.)] (LR-20990)
SEC Shuts Down Unregistered Broker-Dealer in Emergency Action
The Securities and Exchange Commission today announced that it has halted the fraudulent conduct of an unregistered West Covina, California broker-dealer and its president Robert Tringham.
The Commission's complaint alleges that Tringham and his broker-dealer, Finbar Securities Corp., fraudulently raised at least $6.4 million from investors in the U.S. and abroad, and falsely represented that Finbar was "a licensed Securities Dealer." The complaint further alleges that Finbar provided false account statements to an investor as recently as March 13 that displayed the National Association of Securities Dealers' (NASD) logo, despite the fact that the use of the NASD name ceased in July 2007, and cited to non-existent CUSIP numbers purportedly representing the investor's securities holdings. The complaint alleges that Finbar has not been registered with the Commission and that Tringham has not been associated with any registered broker or dealer.
According to the complaint, filed in federal court in Los Angeles, Tringham, a United Kingdom national who resides in Diamond Bar, California, and Portland, Oregon, has operated Finbar since at least 2006. The complaint alleges that as part of his scheme, Tringham appropriated the identity of a now defunct Oregon corporation, also called Finbar, that was registered with the Commission as a broker-dealer from 1987 to 2006, and which Tringham had unsuccessfully attempted to purchase. The complaint alleges Tringham told investors Finbar sold debt instruments and high yield risk-free investment opportunities.
On April 3, the Commission obtained an order freezing the assets of Finbar and Tringham, appointing a temporary receiver over Finbar, requiring accountings, prohibiting the destruction of documents, granting expedited discovery, and temporarily enjoining Finbar and Tringham from violating Section 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and (2) of the Investment Advisers Act of 1940. A hearing on whether a preliminary injunction should be issued against the defendants is scheduled for April 13. The Commission also seeks permanent injunctions, disgorgement, and civil penalties against Tringham and Finbar.
The Commission acknowledges the assistance of the California Department of Justice in the investigation of this matter. [SEC v. Finbar Securities Corp., et al., United States District Court for the Central District of California, Case No. CV 09-2325 ODW] (LR-20991)
INVESTMENT COMPANY ACT RELEASES
Phoenix Life Insurance Company, et al.
A notice has been issued giving interested persons until April 27, 2009, to request a hearing on an application filed by Phoenix Life Insurance Company, et al. for an order under Section 12(d)(1)(J) of the Investment Company Act for an exemption from Sections 12(d)(1)(A) and (B) of the Act and under Sections 6(c) and 17(b) of the Act for an exemption from Section 17(a) of the Act. The order would amend and supersede a prior order that permits certain registered open-end management investment companies to acquire shares of other registered open-end management investment companies and unit investment trusts both within and outside the same group of investment companies. The amended order would subject applicants to different conditions than the prior order and delete a condition of the prior order. (Rel. IC-28686 - April 3)
ING USA Annuity and Life Insurance Company, et al.
An order has been issued pursuant to Section 6(c) the Investment Company Act to ING USA Annuity and Life Insurance Company, Separate Account B of ING USA Annuity and Life Insurance Company, and Directed Services LLC (collectively, Applicants) granting exemptions from the provisions of Sections 2(a)(32), 22(c) and 27(i)(2)(A) of the Act and Rule 22c-1 thereunder, to the extent necessary to permit recapture, under specified circumstances, of certain bonuses applied to purchase payments made under deferred variable annuity contracts described in the application (Contracts), as well as under other variable annuity contracts that are substantially similar to the Contracts that Applicants, or its successors in interest may issue in the future. (Rel. IC-28687 - April 3)
Immediate Effectiveness of Proposed Rule Change
A proposed rule change filed by NASDAQ OMX PHLX to increase the options transactions charge for customer executions and to remove the per trade per side fee cap in U.S. Dollar-Settled Foreign Currency Options (SR-Phlx-2009-30) has become 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 April 6. (Rel. 34-59704)
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