Securities and Exchange Commission Suspends Trading in Fortel, Inc., n/k/a Envit Capital Group, Inc., for Failure to Make Required Periodic Filings
The United States Securities and Exchange Commission announced the temporary suspension of trading in the securities Fortel, Inc., now known as Envit Capital Group, Inc. (the Company), commencing at 9:30 a.m. EDT on May 12, 2009, and terminating at 11:59 p.m. EDT on May 26, 2009. The Commission temporarily suspended trading in the securities of the Company 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 the Company unless and until the broker or dealer has strictly complied with 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 the Company 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. 34-59900)
SEC, DOL to Hold Joint Hearing Examining Target Date Funds
The Securities and Exchange Commission and the Department of Labor will hold a joint one-day hearing on June 18 to explore issues relating to target date or lifecycle funds and other similar investment options.
The hearing will be held at the U.S. Department of Labor, 200 Constitution Ave., NW, Washington, D.C. Details concerning the hearing will be announced by the agencies in the next few weeks.
As target date funds and similar investment options become increasingly popular, it is important that all investors, including 401(k) plan sponsors and participants, can adequately evaluate these investment options and safeguard their interests. The hearing will focus generally on issues facing investors in these types of products, and will explore topics such as portfolio composition, risk, and disclosure.
The agencies anticipate that witnesses will include representatives of plan participants and beneficiaries, plan sponsors, investor organizations, academia and the financial services industry. (Press Rel. 2009-107)
Following is a schedule of Commission meetings, which will be conducted under provisions of the Government in the Sunshine Act. Meetings will be scheduled according to the requirements of agenda items under consideration.
Open meetings will be held in the Auditorium, Room L-002 at the Commission's headquarters building, 100 F Street, N.E., Washington, D.C. Visitors are welcome at all open meetings, insofar as space is available. Persons wishing to photograph or videotape Commission meetings must obtain permission in advance from the Secretary of the Commission. Persons wishing to tape record a Commission meeting should notify the Secretary's office 48 hours in advance of the meeting.
Any member of the public who requires auxiliary aids such as a sign language interpreter or material on tape to attend a public meeting should contact SECInterpreter@SEC.gov at least three business days in advance. For any other reasonable accommodation related disability contact DisabilityProgramOfficer or call 202-551-4158.
Open Meeting - Wednesday, May 20, 2009 - 10:00 a.m.
The subject matter of the Open Meeting will be:
The Commission will consider whether to propose changes to the federal proxy rules to facilitate director nominations by shareholders.
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.
Commission Orders Hearing on Registration Suspension or Revocation Against Respondent for Failure to Make Required Periodic Filings
In conjunction with today's trading suspension, the Commission announced the issuance of an Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934 (Order) against Fortel, Inc., now known as Envit Capital Group, Inc. (Respondent). The Order alleges that the Respondent is delinquent in its periodic filings with the Commission, having not filed any periodic reports since 2002. A delinquency letter sent to Respondent and its registered agent by the Division of Corporation Finance to the address on file with the Commission requesting compliance with its periodic filing obligations was returned undelivered. The Respondent also did not file any periodic report after the delinquency letter was sent.
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. 34-59901; File No. 3-13465)
In the Matter of Poseidis, Inc.
An Administrative Law Judge has issued an Order Making Findings and Revoking Registration by Default (Default Order) in Poseidis, Inc., Administrative Proceeding No. 3-13442. The Order Instituting Proceedings alleged that Poseidis, Inc., failed repeatedly to file required reports while its securities were registered with the Securities and Exchange Commission.
The Default Order finds the allegations to be true as to the Respondent. It revokes the registration of each class of registered securities of Poseidis, Inc., pursuant to Section 12(j) of the Securities Exchange Act of 1934. (Rel. 34-59897; File No. 3-13442)
Ingram Micro to Disgorge $15 Million for Recordkeeping and Internal Controls Violations
The Commission today instituted settled cease-and-desist proceedings against Ingram Micro Inc. (Ingram Micro), a computer technology distribution company based in Santa Ana, California, finding that the company violated the books and records and internal controls provisions of the securities laws in the course of its business dealings with McAfee, Inc., formerly known as Network Associates, Inc. (McAfee) during a period when McAfee was engaged in a financial fraud. As part of the settlement with the Commission, Ingram Micro will pay disgorgement of $15 million.
In January 2006, the Commission charged McAfee with carrying out a channel-stuffing scheme from 1998 through 2000, in which it employed various manipulative accounting artifices and secretly provided its distributors with substantial cash payments, price discounts, rebates and other concessions to continue buying and to not return excess inventory. This is the final enforcement action arising out of the Commission's investigation into the McAfee financial fraud. See SEC v. McAfee, Inc. (Lit. Rel. No. 19520, Jan. 4, 2006); SEC v. Eric Borrmann (Lit. Rel. No. 19895, Oct. 31, 2006); SEC v. Evan Collins (Lit. Rel. 18986, Nov. 30, 2004); SEC v. Prabhat Goyal (Lit. Rel. No. 18748, June 16, 2004); and SEC v. Terry Davis (Lit. Rel. No. 18189, June 12, 2003).
The Commission found that, from the second quarter of 1998 through the third quarter of 2000, Ingram Micro engaged in a variety of highly irregular transactions with McAfee, many lacking economic substance, that enabled McAfee to oversell its products to Ingram Micro and report materially inflated revenues from those sales in its public statements and Commission filings. Ingram Micro, which was McAfee's single largest source of sales, was compensated by McAfee for engaging in these irregular transactions through the payment of millions of dollars of unearned profits, cash payments, and excess inventory fees.
In particular, the Commission found that:
The Commission found that Ingram Micro's books, records, and accounts failed to accurately and fairly reflect its transactions with McAfee, and that Ingram Micro failed to devise and maintain a system of internal controls sufficient to provide reasonable assurance that its transactions were executed in accordance with management's general or specific authorization. Ingram Micro was ordered to cease and desist from committing or causing any violations and any future violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934, and ordered to pay disgorgement of $15 million.
Ingram Micro, in agreeing to the settlement, neither admitted nor denied the Commission's findings. (Rel. 34-59903; AAE Rel. 2968; File No. 3-13466).
SEC Halts on-Going Multi-Million Dollar Fraud Involving Former Dallas Cowboy Michael J. Kiselak and Jeffrey J. Sykes, and the Companies they Control
On May 11, 2009, the Commission filed an emergency action in the United States District Court for the Northern District of Texas (Fort Worth Division) to halt an on-going multi-million dollar fraud involving investments in Kiselak Capital Group, LLC (KCG), a Westlake, Texas-based investment company and Gemstar Capital Group, Inc. (Gemstar), a Redlands, California-based venture capital company. The Commission's complaint alleges that from approximately June 2007 to the present, Defendant Michael J. Kiselak (a former Dallas Cowboys football player), solicited approximately $24 million from 14 investors on behalf of KCG by promising inflated returns and misrepresenting how investor funds would be invested. The complaint also alleges that Kiselak failed to disclose to investors that KCG took a 35% performance fee on all trading profits. The complaint further alleges that Kiselak told investors that KCG made a 2.25% per month profit trading treasury bills; instead, Kiselak invested over 95% of the investor funds in Gemstar.
According to the complaint, KCG and Gemstar could not account for all of the investor funds. Specifically, the Commissions alleges that KCG provided to the SEC a brokerage statement purportedly showing that Gemstar, as of March 31, 2009, had over $23 million in segregated accounts for the benefit of KCG. But the complaint alleges that Gemstar, through its president, Defendant Jeffrey J. Sykes, produced this fabricated document to KCG. According to the complaint, as of March 31, 2009, Gemstar had only $20 million in its brokerage accounts - exactly $3 million less than the amount represented in the letter Sykes provided to Kiselak - and the funds were not segregated for the benefit of KCG investors. According to the SEC's complaint, as of May 7, 2009, the account had approximately $19 million.
U.S. District Judge John McBryde granted a temporary restraining order and asset freeze against the Defendants, and other emergency relief.
The complaint alleges that Defendants Kiselak Capital Group, LLC, Gemstar Capital Group, Inc., Michael J. Kiselak, and Jeffrey J. Sykes violated the anti-fraud provisions 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. In addition to the emergency relief granted by the Court, the Commission seeks the appointment of a receiver to take control of assets held by KCG and Gemstar, permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, and civil money penalties against the Defendants. [SEC v. Kiselak Capital Group, LLC et al, Civ. Action No. 4:09-cv-256-A (United States District Court for the Northern District of Texas)] (LR-21035)
SEC Charges Los Angeles-Based "Finder" in Kickback Scheme Involving New York Pension Fund
On May 12, 2009, the Securities and Exchange Commission announced charges against Julio Ramirez, Jr., who was formerly affiliated with broker-dealers DAV/Wetherly Financial, L.P. and Park Hill Group LLC, in connection with a multi-million dollar kickback scheme involving New York's largest pension fund.
In an amended complaint attached to a motion filed today in federal district court in Manhattan, the SEC alleges that Ramirez participated in the fraudulent scheme by helping his friend and associate Henry "Hank" Morris extract kickback payments from Aldus Equity Partners, an investment management firm that was seeking to win investment business from the New York State Common Retirement Fund (Retirement Fund). The SEC has previously charged Morris and David Loglisci with orchestrating this wide-ranging scheme to enrich Morris and others and has alleged that Aldus and one of its founding principals, Saul Meyer, also participated in the scheme by agreeing to pay kickbacks to Morris.
According to the SEC's amended complaint, Ramirez facilitated Morris's scheme by contacting Meyer and making clear to him that Aldus must pay a kickback to Morris to secure an investment from the Retirement Fund. Although Aldus was already negotiating with the Retirement Fund's investment staff about the proposed investment at the time, Aldus agreed to kick back 35 percent of its management fees to a shell entity run by Morris. Morris in turn paid Ramirez a portion of those fees. As a result of the quid pro quo arrangement, Aldus secured the Retirement Fund's emerging fund portfolio business, and Ramirez shared in the profits even though he performed no legitimate services.
The SEC's amended complaint alleges that Ramirez aided and abetted violations of Section Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The complaint seeks permanent injunctions against future violations of the federal securities laws, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties.
The SEC's investigation is continuing. In a parallel criminal action, the Office of the Attorney General of the State of New York today announced the unsealing of criminal charges against Ramirez. [SEC v. Henry Morris et al., 09-CV-2518 (SDNY) (CM)] (LR-21036)
INVESTMENT COMPANY ACT RELEASES
Pacific Investment Management Company LLC and PIMCO ETF Trust
A notice has been issued giving interested persons until May 29, 2009, to request a hearing on an application filed by Pacific Investment Management LLC and PIMCO ETF Trust for an order to permit (a) series of registered open-end management investment companies whose portfolios will consist of the component securities of certain domestic, global or international fixed income securities indices to issue shares that can be redeemed in large aggregations only, (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 aggregations of shares, 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 the series. (Rel. IC-28723 - May 11)
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed by the NASDAQ Stock Market to modify DOT, SCAN and STGY routing strategies to incorporate an optional pre-routing display period (SR-NASDAQ-2009-043) 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 May 11. (Rel. 34-59875)
A proposed rule change filed by the BATS Exchange (SR-BATS-2009-010) related to fees for use of BATS Exchange, Inc. 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 May 11. (Rel. 34-59890)
The Commission issued notice of filing and immediate effectiveness of proposed rule change (SR-NYSEArca-2009-38) 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 May 11. (Rel. 34-59893)
A proposed rule change filed by NASDAQ OMX BX (SR-BX-2009-023) to temporarily implement a cap on certain fees for members has become immediately 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 May 11. (Rel. 34-59894)
Proposed Rule Changes
The Commission has published notice of a proposed rule change (FINRA-2009-015) filed by the Financial Industry Regulatory Authority to establish procedures to expedite the administration of promissory note cases. Publication is expected in the Federal Register during the week of May 11. (Rel. 34-59885)
The Chicago Board Options Exchange filed a proposed rule change (SR-CBOE-2009-030) pursuant to Rule 19b-4 under the Securities and Exchange Act of 1934 regarding appointments and obligations of CBSX DPMs. Publication is expected in the Federal Register during the week of May 11. (Rel. 34-59896)
The Commission approved a proposed rule change, as modified by Amendment No. 1 thereto, (SR-Phlx-2009-24) submitted under Rule 19b-4 of the Securities Exchange Act of 1934 by NASDAQ OMX PHLX increasing transaction fees for Linkage inbound Principal Orders and Principal Acting as Agent Orders. Publication is expected in the Federal Register during the week of May 11. (Rel. 34-59891)
The Commission approved a proposed rule change (SR-NYSE-2009-37) submitted under Rule 19b-4 of the Securities Exchange Act of 1934 by the New York Stock Exchange implementing a cap on vendors' administrative charges for NYSE OpenBook. Publication is expected in the Federal Register during the week of May 11. (Rel. 34-59898)
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