SEC News Digest

COMMISSION ANNOUNCEMENTS

SEC, DOL Announce Panelists, Agenda for Joint Hearing on Target Date Funds

The Securities and Exchange Commission and the Department of Labor (DOL) today announced the agenda and expected panelists for their June 18 joint hearing about target date funds and other similar investment options.

The joint hearing will be held at the DOL's Washington, D.C., headquarters and will begin at 9 a.m. ET with opening remarks from SEC Chairman Mary Schapiro and DOL Deputy Secretary Seth Harris.

The joint hearing will consist of nine panels. Hearing witnesses will include representatives of plan participants and beneficiaries, plan sponsors, investor organizations, academia and the financial services industry.

9 a.m. - Opening Remarks

9:30 a.m. - Panel One: Introduction to Target Date Funds

• Karrie McMillan, Investment Company Institute
• Rich Whitney, T. Rowe Price Group, Inc.
• John Ameriks, Vanguard Group
• Derek L. Young, Fidelity Management & Research Company
• Jeffrey Knight, Putnam Investments

10:20 a.m. - Panel Two: Target Date Fund Investor Considerations

• Rod Bare, Morningstar, Inc.
• David Certner, AARP
• Joseph C. Nagengast, Target Date Analytics, LLC
• Marilyn Capelli Dimitroff, Certified Financial Planner Board of Standards, Inc.

11:05 a.m. - Break

11:20 a.m. - Panel Three: Exploration of Glide Paths and Underlying Investments

• Edward Moslander, TIAA-CREF
• Seth J. Masters, AllianceBernstein L.P.
• Anne Lester, J.P. Morgan Asset Management
• Michael Case Smith, Avatar Associates
• Jeffrey S. Coons, Manning & Napier Advisors, Inc.

Noon - Panel Four: Plan Sponsor Considerations

• Ian Kopelman, representing The Profit Sharing/401(k) Council of America
• Mark Wayne, representing National Association of Independent Retirement Plan Advisors
• Allison Klausner, representing American Benefits Council
• Jessica R. Flores, Fiduciary Compliance Center

12:45 p.m. - Break

1:30 p.m. - Panel Five: Utilization of Target Date Funds in Defined Contribution Plans

• Jack VanDerhei, Employee Benefits Research Institute
• Mark J. Warshawsky, Watson Wyatt Worldwide
• Jodi DiCenzo, Behavioral Research Associates

2:05 p.m. - Panel Six: Understanding, Selecting, and Monitoring Target Date Funds

• Josh Cohen, Russell Investments
• Richard O. Michaud, New Frontier Advisors, LLC
• Chip Castille, Barclays Global Investors
• Lori Lucas, Callan Associates Inc.

2:50 p.m. - Break

3:05 p.m. - Panel Seven: Understanding, Selecting, and Monitoring Target Date Funds

• James P. Lauder, Global Index Advisors, Inc.
• Claiborne B. Morton III, Raymond James Financial Services
• Richard C. Dunne, QDIA.com
• Louis S. Harvey, DALBAR, Inc.

3:50 p.m. - Panel Eight: Disclosures related to Target Date Funds

• Anne Tuttle, Financial Engines
• David A. Krasnow, Pension Advisors
• Randal McGathey, RM Consulting
• Edward P. Moore, Edelman Financial Services, LLC

4:35 p.m. - Panel Nine: Target Date Funds and Other Investment Options

• Michael Drew, Griffith Business School
• Chris Tobe, Breidenbach Capital Consulting, LLC
• Ross Bremen, NEPC, LLC
• Mark Foley, Prudential Investment Management Services, LLC

5:20 p.m. - Closing Remarks

DOL's headquarters is located at 200 Constitution Avenue, NW, in Washington, D.C. The joint hearing will be open to the public with seating on a first-come, first-served basis. Visitors will be subject to security checks. Any individuals with disabilities who may need special accommodations should notify Fred Wong, Employee Benefits Security Administration, U.S. Department of Labor, at (202) 693-8500. The joint hearing will be transcribed, and a live webcast will be available at the SEC and DOL Web sites. Captioning of the webcasts will be available. For additional information about the joint hearing, contact Tara Buckley in the SEC's Division of Investment Management at (202) 551-6825. (Press Rel. 2009-138)

ENFORCEMENT PROCEEDINGS

Securities and Exchange Commission Orders Hearings on Registration Revocation or Suspension Against Six Public Companies for Failure to Make Required Periodic Filings

On June 15, the Commission instituted public administrative proceedings to determine whether to revoke or suspend for a period not exceeding twelve months the registration of each class of the securities of six companies for failure to make required periodic filings with the Commission:

• Falcon Entertainment Corp. (INDE)
• Fanatics Only, Inc. (FONL)
• Fidelity Leasing Income Fund
• Finger Lakes Financial Corp.
• First Cincinnati, Inc. (FCNN)
• First Mutual, Inc. (n/k/a First Community, Inc.)

In this Order, the Division of Enforcement (Division) alleges that the six issuers are delinquent in their required periodic filings with the Commission.

In this proceeding, instituted pursuant to Exchange Act Section 12(j), a hearing will be scheduled before an Administrative Law Judge. At the hearing, the judge will hear evidence from the Division and the respondents to determine whether the allegations of the Division contained in the Order, which the Division alleges constitute failures to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 thereunder, are true. The judge in the proceeding will then determine whether the registrations pursuant to Exchange Act Section 12 of each class of the securities of these respondents should be revoked or suspended for a period not exceeding twelve months. The Commission ordered that the Administrative Law Judge in this proceeding issue an initial decision not later than 120 days from the date of service of the order instituting proceedings. (Rel. 34-60115; File No. 3-13518)

Securities and Exchange Commission Orders Hearings on Registration Revocation or Suspension Against Five Public Companies for Failure to Make Required Periodic Filings

The Commission today instituted public administrative proceedings to determine whether to revoke or suspend for a period not exceeding twelve months the registration of each class of the securities of five companies for failure to make required periodic filings with the Commission:

In the Matter of Warehouse Club, Inc., et al., Administrative Proceeding

• Warehouse Club, Inc. (WCLB)
• Wavemat, Inc. (WVMT)
• Wilson Lee Engineering Co., Inc. (n/k/a Lee Wilson Engineering Co., Inc.)
• Winthrop Resources Corp.
• WorldCall Corp.

In this Order, the Division of Enforcement (Division) alleges that the five issuers are delinquent in their required periodic filings with the Commission.

In this proceeding, instituted pursuant to Exchange Act Section 12(j), a hearing will be scheduled before an Administrative Law Judge. At the hearing, the judge will hear evidence from the Division and the respondents to determine whether the allegations of the Division contained in the Order, which the Division alleges constitute failures to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 thereunder, are true. The judge in the proceeding will then determine whether the registrations pursuant to Exchange Act Section 12 of each class of the securities of these respondents should be revoked or suspended for a period not exceeding twelve months. The Commission ordered that the Administrative Law Judge in this proceeding issue an initial decision not later than 120 days from the date of service of the order instituting proceedings. (Rel. 34-60116; File No. 3-13519)

SEC Files Emergency Action Against Alleged Perpetrator of $11 Million Offering Fraud

On June 15, the Securities and Exchange Commission filed an emergency civil injunctive action in the United States District Court for the Northern District of Illinois charging David J. Hernandez, also doing business as "NextStep Financial Services, Inc.," with conducting a Ponzi scheme which raised more than $11 million from investors in at least 12 states with false promises that their investments would earn guaranteed returns of 10% to 16% per month with no risks. Instead of investing the investors' money as promised, the Commission alleges that Hernandez used the majority of the investors' funds to pay the promised investment returns to existing investors and diverted the remaining funds into his other business ventures and for his and his wife's personal benefit. The Honorable Samuel Der-Yeghiayan, United States District Court Judge for the Northern District of Illinois, granted the Commission's motion for emergency relief and, among other things, froze Hernandez's assets and the assets of several relief defendants.

According to the Commission's complaint, between February 2008 and the present, Hernandez, a convicted felon, solicited more than 100 investors to purchase "guaranteed investment contracts" by making false and misleading statements about his background, the existence of the company that issued the investments, the uses of investor proceeds and the safety of the investments. The complaint alleges that Hernandez claimed that he had an extensive background in banking and business, including having business and law degrees, and that NextStep Financial was a successful company that invested in payday advance stores. The complaint further alleges that Hernandez told investors that their investments were safe because they were covered by insurance. However, according to the complaint, Hernandez never received the claimed degrees, his "banking experience" included a prior federal conviction for wire fraud and NextStep Financial was a defunct corporation with no financial services operations. In addition, the complaint alleges that Hernandez never invested in the payday advance business or purchased the insurance policies that covered investors' funds.

The Commission's complaint claims that Hernandez violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition to the expedited relief the Court granted, the Commission seeks injunctive relief, disgorgement plus prejudgment interest and civil penalties against Hernandez. The Commission also seeks to recover assets from several relief defendants - Hernandez's wife Gina Hernandez, and several other companies that Hernandez owns and controls, NextStep Medical Staffing IL, Inc., NextStep Holdings, Inc., Spectrum Entertainment Group, Inc. and The Ilumina Group, Inc. [SEC v. David J. Hernandez, also doing business as "NextStep Financial Services, Inc.," Civil Action No. 09-cv-3587, USDC, ND IL, Eastern Division] (LR-21085)

STANDARDS SETTING BOARDS

Notices to Solicit Comments on PCAOB Proposed Rules Regarding Annual and Special Reporting and Succession by Firms

The Commission is publishing two notices to solicit comments on proposed rules submitted by the Public Company Accounting Oversight Board. One relates to annual and special reporting by registered public accounting firms (PCAOB-2008-04). The other relates to succeeding to the registration status of a predecessor firm (PCAOB-2008-05). Publication is expected in the Federal Register during the week of June 15. (Rel. 34-60107 and Rel. 34-60108)

SELF-REGULATORY ORGANIZATIONS

Immediate Effectiveness of Proposed Rule Changes

The Commission issued notice of filing and immediate effectiveness of a proposed rule change (SR-NYSEArca-2009-51) filed by NYSE Arca under Rule 19b-4 of the Securities Exchange Act of 1934 amending Rule 7.36 governing order ranking and display. Publication is expected in the Federal Register during the week of June 15. (Rel. 34-60099)

A proposed rule change filed by NYSE Arca (SR-NYSEArca-2009-49), as modified by Amendment No. 1, implementing Schedule of Fees and Charges for Exchange services 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 15. (Rel. 34-60101)

A proposed rule change filed by NYSE Arca (SR-NYSEArca-2009-50), as modified by Amendment No. 1, implementing Schedule of Fees and Charges for Exchange services by adding a Ratio Threshold Fee 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 15. (Rel. 34-60102)

A proposed rule change filed by NASDAQ OMX PHLX. (SR-Phlx-2009-47) relating to order routing fees 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 15. (Rel. 34-60103)

Proposed Rule Changes

A proposed rule change (SR-CBOE-2009-033) has been filed by the Chicago Board Options Exchange, regarding a proposal to amend CBOE Rule 3.18 related CBOE's statutory disqualification procedures. Publication is expected in the Federal Register during the week of June 15. (Rel. 34-60106)

A proposed rule change (SR-FINRA-2009-039) has been filed by the Financial Industry Regulatory Authority pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 and Rule 19b-4 thereunder regarding a proposal to adopt NASD Rule 3011 (Anti-Money Laundering Compliance Program) as FINRA Rule 3310 (Anti-Money Laundering Compliance Program). The proposed rule change would also adopt NASD IM-3011-1 (Independent Testing Requirements) and NASD IM-3011-2 (Review of Anti-Money Laundering Compliance Person Information) as supplementary material to FINRA Rule 3310. The proposed rule change would delete Incorporated NYSE Rule 445 (Anti-Money Laundering Compliance Program) as duplicative. Publication is expected in the Federal Register during the week of June 15. (Rel. 34-60112)

Approval of Proposed Rule Change

The Commission approved a proposed rule change (SR-FINRA-2007-009), as modified by Amendment No. 1 thereto, filed by the Financial Industry Regulatory Authority modernize and simplify NASD Rule 2720 (Distributions of Securities of Members and Affiliates - Conflicts of Interest), which governs public offerings of securities in which a member with a conflict of interest participates, and make corresponding changes to FINRA Rule 5110 (Corporate Financing Rule). Publication is expected in the Federal Register during the week of June 15. (Rel. 34-60113)

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http://www.sec.gov/news/digest/2009/dig061609.htm