SEC Announces Creation of Investor Advisory Committee
Securities and Exchange Commission Chairman Mary Schapiro today announced the formation of an Investor Advisory Committee to give investors a greater voice in the Commission's work. SEC Commissioner Luis A. Aguilar will serve as the Commission's primary sponsor of the Committee.
"Through this well-respected and diverse group, we are reaching out to investors in a new and significant way," said Chairman Schapiro. "I look forward to hearing their views on new products, trading strategies, fee structures, and the effectiveness of disclosure, among other issues."
Commissioner Aguilar added, "Investors need a greater voice at the Commission. The Commission's traditional role as the investor's advocate, as well as our deliberations, will be enhanced by the range of views the Advisory Committee will provide."
The Investor Advisory Committee's charter provides for a broad scope of interest, including:
The Advisory Committee will be co-chaired by Richard (Mac) Hisey, President of AARP Financial Incorporated and AARP Funds, and Hye-Won Choi, Senior Vice President and Head of Corporate Governance for TIAA-CREF. Fred Josephs, President of the North American Securities Administrators Association and Securities Administrator for the State of Colorado, will be an ex officio participant.
The Advisory Committee's other members will include:
The Advisory Committee will begin its work in the next few weeks, after the SEC staff files the Committee's charter with Congress. (Press Rel. 2009-126)
Commission Revokes Registration of Securities of First Dynasty Mines, Ltd. (n/k/a Sterlite Gold Ltd.) for Failure to Make Required Periodic Filings
On June 3, 2009, the Commission revoked the registration of each class of registered securities of First Dynasty Mines, Ltd. (n/k/a Sterlite Gold Ltd.) (First Dynasty) for failure to make required periodic filings with the Commission.
Without admitting or denying the findings in the Order, except as to jurisdiction, which it admitted, First Dynasty consented to the entry of an Order Making Findings and Revoking Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of 1934 as to First Dynasty Mines, Ltd. (n/k/a Sterlite Gold Ltd.) finding that it had failed to comply with Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 13a-1 and 13a-16 thereunder and revoking the registration of each class of First Dynasty's securities pursuant to Section 12(j) of the Exchange Act. This order settled the charges brought against First Dynasty in In the Matter of FCF, Inc., et al., Administrative Proceeding File No. 3-13471.
Brokers and dealers should be alert to the fact that Exchange Act Section 12(j) provides, in pertinent part, as follows:
No member of a national securities exchange, broker, or dealer shall make use of the mails or any means or instrumentality of interstate commerce to effect any transaction in, or to induce the purchase or sale of, any security the registration of which has been and is suspended or revoked . . . .
For further information see Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934, In the Matter of FCF, Inc., et al., Administrative Proceeding File No. 3-13471, Exchange Act Release No. 59922 (May 14, 2009). (Rel. 34-60029; File No. 3-13471)
SEC Finalizes ARS Settlements With Bank of America, RBC and Deutsche Bank, Providing Over $6 Billion in Liquidity to Investors
The Securities and Exchange Commission announced that it has filed complaints in the United States District Court for the Southern District of New York against Banc of America Securities LLC and Banc of America Investment Services, Inc. (collectively, Bank of America), RBC Capital Markets Corporation (RBC), and Deutsche Bank Securities Inc. (Deutsche Bank) alleging that the firms misled investors regarding the liquidity risks associated with auction rate securities (ARS) that they underwrote, marketed or sold. Without admitting or denying the Commission's allegations, the firms consented to settle the actions. These settlements, combined, will provide or already have provided nearly $6.7 billion to approximately 9,600 customers who invested in auction rate securities before the market for those securities froze in February 2008.
According to the Commission's complaints, Bank of America, RBC and Deutsche Bank misrepresented to certain customers that ARS were safe, highly liquid investments that were comparable to money markets. According to the complaints, in late 2007 and early 2008, the firms knew that the ARS market was deteriorating, causing the firms to have to purchase additional inventory to prevent failed auctions. At the same time, however, the firms knew that their ability to support auctions by purchasing more ARS had been reduced, as the credit crisis stressed the firms' balance sheets. The complaints allege that Bank of America, RBC and Deutsche Bank failed to make their customers aware of these risks. In mid-February 2008, according to the complaints, Bank of America, RBC and Deutsche Bank decided to stop supporting the ARS market, leaving Bank of America, RBC and Deutsche Bank customers holding billions in illiquid ARS.
The settlements, which are subject to court approval, will restore approximately $4.5 billion in liquidity to Bank of America customers, $800 million in liquidity to RBC customers and $1.3 billion in liquidity to Deutsche Bank customers. Previously, on October 8, 2008, the Commission's Division of Enforcement announced preliminary settlements with Bank of America and RBC.
Bank of America, RBC and Deutsche Bank agreed to be permanently enjoined from violations of the broker-dealer fraud provisions and to comply with a number of undertakings, some of which are set forth below.
The Bank of America, RBC and Deutsche Bank settlements provide, among other things, that:
The Commission wishes to alert investors that, in most instances, they have received or will receive correspondence from Bank of America, RBC and Deutsche Bank, and that they must advise the respective firm that they elect to participate in these settlements, or they could lose their rights to sell their ARS. Further, if eligible customers incurred consequential damages because of the illiquidity of their ARS, they may participate in special FINRA arbitrations.
Bank of America, RBC and Deutsche Bank will also be permanently enjoined from violating the provisions of Section 15(c) of the Exchange Act of 1934, which prohibit the use of manipulative or deceptive devices by broker-dealers. The Commission reserves the right to seek a financial penalty against the firms.
The Commission notes the assistance and cooperation from the New York Attorney General, the Financial Industry Regulatory Authority (FINRA), the Massachusetts Securities Division, the Texas State Securities Board, the North American Securities Administrators Association (NASAA) and the New Jersey Attorney General.
The Commission's investigation of the auction rate securities market is continuing.
SEC Complaints in this matter: Bank of America, RBC, Deutsche Bank. [SEC v. Banc of America Securities LLC and Banc of America Investment Services, Inc., Civil Action No. 09-CIV-5170 (S.D.N.Y. June 3, 2009); Securities and Exchange Commission v. RBC Capital Markets Corporation, Civil Action No. 09-CIV-5172 (S.D.N.Y); SEC v. Deutsche Bank Securities Inc., Civil Action No. 09-CIV-5174 (S.D.N.Y.)] (LR-21066; Press Rel. 2009-127)
INVESTMENT COMPANY ACT RELEASES
WisdomTree Investments, Inc., et al.
A notice has been issued giving interested persons until June 26, 2009, to request a hearing on an application filed by WisdomTree Investments, Inc., et al., for an order to amend two prior orders (Prior Orders) to modify a condition so that acquiring funds may rely on the Prior Orders to invest in the WisdomTree India Earnings Fund and additional series of the WisdomTree Trust that invest all of their respective assets in wholly-owned subsidiaries as described in the application. Applicants also seek to amend one of the orders by deleting the relief granted from the requirements of Section 24(d) of the Act and revising related terms and conditions of the applications for such order. (Rel. IC-28755 - June 1)
Accelerated Approval of Proposed Rule Change
The Commission is publishing notice of filing of Amendment No. 1 and granting accelerated approval of a proposed rule change, as modified by Amendment No. 1, (SR-FINRA-2008-062) submitted by the Financial Industry Regulatory Authority to adopt FINRA Rule 2267 (Investor Education and Protection) in the Consolidated FINRA Rulebook. Publication is expected in the Federal Register during the week of June 1. (Rel. 34-60012)
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed by the Financial Industry Regulatory Authority (SR-FINRA-2009-033) to amend rule cross-references in FINRA Rules 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 June 1. (Rel. 34-60008)
A proposed rule change (SR-BATS-2009-018) filed by the BATS Exchange to change criteria for becoming a member of the Nominating Committee 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 June 1. (Rel. 34-60019)
A proposed rule change (SR-CBOE-2009-034) filed by the Chicago Board Options Exchange related to trades for less than $1 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 June 1. (Rel. 34-60020)
Proposed Rule Changes
International Securities Exchange filed a proposed rule change (SR-ISE-2009-27) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 and Rule 19b-4 thereunder to adopt rules to implement the Options Order Protection and Locked/Crossed Market Plan. Publication is expected in the Federal Register during the week of June 1. (Rel. 34-60014)
Chicago Board Options Exchange filed a proposed rule change (SR-CBOE-2009-031) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 and Rule 19b-4 thereunder amending CBOE Rules relating to the Penny Pilot Program. Publication is expected in the Federal Register during the week of June 1. (Rel. 34-60018)
NASDAQ OMX PHLX filed a proposed rule change (SR-Phlx-2009-40), modified by Amendment No. 1, pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 and Rule 19b-4 thereunder relating to listing and trading new currencies. Publication is expected in the Federal Register during the week of June 1. (Rel. 34-60021)
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