In the Matter of David Scott Cacchione
On April 22, 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 David Scott Cacchione. The Order, which is based on the entry of an injunction on March 31, 2009, in SEC v. David Scott Cacchione (Civil Action Number CV-09-01259 CRB) in the United States District Court for the Northern District of California, finds that the Commission filed a complaint against Cacchione, who was the Managing Director of Client Services at registered broker-dealer Merriman Curhan Ford & Co. (Merriman) from December 2005 through June 4, 2008. The Commission's complaint alleges that Cacchione engaged in unauthorized trading in his customers' accounts, supplied the account statements of unknowing Merriman customers to another customer and friend so that his friend could fraudulently pledge the securities in the accounts as collateral for loans, and signed lending agreements fraudulently certifying that the securities held by several unknowing Merriman customers belonged to another customer and friend. On March 31, 2009, the court entered a final judgment against Cacchione, by consent, permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
Based on the above, the Order bars David Scott Cacchione from association with any broker or dealer. Cacchione consented to the issuance of the Order without admitting or denying any of the findings in the Order, except that he admitted the entry of the injunction. (Rel. 34-59812; File No. 3-13455)
SEC Obtains Asset Freeze of Florida-Based Investment Adviser Defrauding Investors
On April 20, the Securities & Exchange Commission obtained an emergency asset freeze and the appointment of a receiver over a Naples, Fla.-based investment adviser that has been charged with defrauding investors by misrepresenting the nature of $550 million in investments. The receivership and asset freeze also extend to the funds managed by the investment adviser.
The SEC's complaint, filed in federal court in Fort Myers, Fla., alleges that William L. Gunlicks and his firm, Founding Partners Capital Management Company, made misrepresentations about the risk of investments in loans made by the funds.
According to the SEC's complaint, Gunlicks and Founding Partners misrepresented to investors that their primary fund loaned money to two companies that purchased primarily short-term, highly liquid account receivables that fully secured the loans. The companies instead purchased account receivables that were longer-term, less liquid, and much riskier in nature. The complaint also alleges that Gunlicks and Founding Partners solicited new investors for their primary fund without disclosing that the fund was facing significant redemption requests.
The SEC also charged Gunlicks and Founding Partners with misusing fund assets to pay personnel expenses, and misrepresenting that its funds had audited financial statements for 2007 when they did not. Additionally, the SEC alleges that Gunlicks and Founding Partners failed to disclose to all investors and to comply with a prior Commission order entered against them.
The Honorable John E. Steele of the U.S. District Court for the Middle District of Florida granted the SEC's request for an asset freeze and other emergency relief on April 20, 2009. The court also appointed Leyza F. Blanco, an attorney in the law firm Gray Robinson, P.A. of Miami, Fla., as receiver over Founding Partners and its managed funds. Among other things, the receiver is responsible for marshaling and safeguarding assets held by these entities.
The SEC's complaint alleges that Gunlicks and Founding Partners violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1), (2), and (4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. The SEC also alleges that they violated a prior Commission order requiring that they cease and desist from committing or causing any violations and any future violations of Section 17(a)(2) of the Securities Act. In addition to emergency relief, the SEC's complaint seeks disgorgement of the defendants' ill-gotten gains, prejudgment interest, and financial penalties. [SEC v. Founding Partners Capital Management Company, William Gunlicks, Sun Capital, Inc., Sun Capital Healthcare, Inc., Founding Partners Stable-Value Fund, LP, Founding Partners Stable-Value Fund II, LP, Founding Partners Global Fund, Ltd., and Founding Partners Hybrid-Value Fund, LP., Case No. 2:09-CV-229-FtM-29SPC (M.D. Fla.)] (LR-21010)
INVESTMENT COMPANY ACT RELEASES
MONY Series Fund, Inc.
An order has been issued pursuant to Section 8(f) of the Investment Company Act declaring that MONY Series Fund, Inc. has ceased to be an investment company. (Rel. IC-28701 - April 22)
William Blair & Company, L.L.C. and Wilblairco II, L.L.C.
A notice has been issued giving interested persons until May 19, 2009, to request a hearing on an application filed by William Blair & Company, L.L.C. (Blair) and Wilblairco II, L.L.C. Applicants request an order to exempt certain limited partnerships and other investment vehicles formed for the benefit of eligible employees of Blair and its affiliates from certain provisions of the Investment Company Act. Each limited partnership or other investment vehicle will be an "employees' securities company" within the meaning of Section 2(a)(13) of the Act. (Rel. IC-28700 - April 22)
Approval of Proposed Rule Changes
The Commission approved a proposed rule change (SR NASDAQ-2006-064), as modified by Amendments No. 2 and 3 thereto, submitted by the NASDAQ Stock Market to modify the fee for connecting to a Nasdaq data center over the Internet. Publication is expected in the Federal Register during the week of April 27. (Rel. 34-59795)
The Commission approved a proposed rule change [SR-FICC-2009-03] filed by the Fixed Income Clearing Corporation under Section 19(b)(1) of the Exchange Act. The approved rule change will impose a charge on members with a fail-to-deliver position in treasury securities. Publication is expected in the Federal Register during the week of April 27. (Rel. 34-59802)
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed by the NYSE Amex amending NYSE Amex Equities Rules 13, 902, 903, 904, 905 and 906 to eliminate certain order types from the off-hours trading facility (SR-NYSEAmex-2009-07) 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 April 27. (Rel. 34-59799)
A proposed rule change filed by Financial Industry Regulatory Authority (FINRA-2009-027) making non-substantive, technical changes to FINRA Trade Reporting Rules upon implementation of SR-FINRA-2008-011 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 April 27. (Rel. 34-59805)
A proposed rule change filed by the NASDAQ Stock Market relating to order routing (SR-NASDAQ-2009-036) 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 April 27. (Rel. 34-59807)
The Commission issued notice of filing and immediate effectiveness of proposed rule change (SR-NYSEArca-2009-31) filed by NYSE Arca under Rule 19b-4 of the Securities Exchange Act of 1934 implementing fee change. Publication is expected in the Federal Register during the week of April 27. (Rel. 34-59808)
Proposed Rule Change
NASDAQ OMX BX filed a proposed rule change (SR-BX-2009-020) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 and Rule 19b-4 thereunder regarding market maker obligations. Publication is expected in the Federal Register during the week of April 27. (Rel. 34-59804)
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