SEC News Digest

COMMISSION ANNOUNCEMENTS

Securities and Exchange Commission Suspends Trading in the Securities of Twelve Issuers for Failure to Make Required Periodic Filings

The U.S. Securities and Exchange Commission announced the temporary suspension of trading in the securities of the following issuers, commencing at 9:30 a.m. EDT on July 20, 2009, and terminating at 11:59 p.m. EDT on July 31, 2009.

• RDM Sports Group, Inc. (RDMG)
• Real Del Monte Mining Corp. (RDMMF)
• Recoton Corp. (RCOTQ)
• Red Hot Concepts, Inc. (RHCS)
• RedHand International, Inc. (n/k/a African Diamond Co., Inc. or Coal Corp.) (AFDM)
• Redlaw Industries, Inc. (RDLI)
• Republic Resources, Inc. (RPRS)
• Reward Enterprises, Inc. (RWRD)
• Rhino Enterprises, Inc (n/k/a Physicians Adult Daycare, Inc.) (PHYA)
• Ridgeview, Inc. (RIDG)
• Riverside Group, Inc. (RSGI)
• Rocky Mount Undergarmet Co., Inc. (RMUC)

The Commission temporarily suspended trading in the securities of these twelve issuers due to a lack of current and accurate information about the companies because they have not filed periodic reports with the Commission in over two years. This 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 these companies.

Brokers and dealers should be alert to the fact that, pursuant to Exchange Act Rule 15c2-11, at the termination of the trading suspensions, no quotation may be entered relating to the securities of the subject companies 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 these companies that have been subject to a trading suspension 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, they should immediately communicate it to the Delinquent Filings Branch of the Division of Enforcement at (202) 551-5466, or by e-mail at DelinquentFilings@sec.gov. (Rel. 34-60339)

Commission Meetings

Closed Meeting - Thursday, July 23, 2009 - 2:00 p.m.

The subject matter of the Closed Meeting scheduled for Thursday, July 23, 2009, will be: institution and settlement of injunctive actions; institution and settlement of administrative proceedings; and other matters relating to enforcement proceedings.

Closed Meeting - Friday, July 24, 2009 - 8:00 a.m.

The subject matter of the Closed Meeting scheduled for Friday, July 24, 2009 will be: consideration of amici consideration; and litigation matters.

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.

ENFORCEMENT PROCEEDINGS

In the Matter of Mary Beth Stevens

On July 17, the Commission issued an Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Sections 203(f) and 203(k) of the Investment Advisers Act of 1940 (Order) against Mary Beth Stevens (Stevens). The Order alleges that Stevens, the former chief financial officer and chief compliance officer of investment adviser AA Capital Partners Inc. (AA Capital), aided and abetted the misappropriation of more than $23 million by AA Capital and its former president, John Orecchio (Orecchio).

In the Order, the Division of Enforcement (Division) alleges that, between May 2004 and September 2006, Stevens facilitated Orecchio's and AA Capital's misappropriation of more than $23 million belonging to AA Capital's clients by improperly withdrawing funds from AA Capital's client trust accounts and transferring those funds for Orecchio's personal benefit and to pay the firm's operating expenses. The Division also alleges that Stevens falsely characterized the withdrawals in the monthly account statements she prepared and sent to AA Capital's clients as "capital calls" for legitimate investments.

The Division further alleges that Stevens also did not fulfill her responsibility as AA Capital's chief financial officer to properly maintain the firm's books and records and that Stevens' failure to keep up-to-date books and records helped conceal Orecchio's and AA Capital's misappropriations from clients.

The Division alleges that Stevens willfully aided and abetted and caused AA Capital's violations of Sections 204, 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rules 204-2(a)(1), 204-2(a)(2), 204-2(a)(6) and 206(4)-4 thereunder. A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide Stevens an opportunity to dispute the allegations, and to determine what, if any, remedial action is appropriate and in the public interest.

The Commission directed that an administrative law judge shall issue an initial decision in the matter no later than 300 days from the date of service of the Order pursuant to Rule 360(a)(2) of the Commission's Rules of Practice. (Rel. IA-2902; File No. 3-13553)

In the Matter of Paul W. Oliver, Jr.

On July 17, the Commission issued an Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Sections 203(f) and 203(k) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (Order) against Paul W. Oliver, Jr. (Oliver). The Order finds that Oliver, the former chairman of investment adviser AA Capital Partners, Inc. (AA Capital), aided and abetted the misappropriation of more than $23 million by AA Capital and its former president, John Orecchio (Orecchio) by failing to disclose the misappropriations to AA Capital's clients and by failing to take appropriate action to halt the misappropriations after he learned of them.

The Order finds that, in the summer of 2004, Oliver first learned that Orecchio purportedly had borrowed approximately $1 million to pay taxes due to an accountant's miscalculation of Orecchio's personal liability for a gain in one of AA Capital's private equity funds. The Order further finds that, in March 2006, Oliver learned that Orecchio's "tax loan" had grown to more than $5 million and that AA Capital had "borrowed" an additional $5 million in client funds to pay its operating expenses in 2005. According to the Order, these purported "loans" were in fact misappropriations of client funds, as AA Capital was not permitted to use client funds for such purposes. The Order finds that, despite his knowledge, Oliver did not inform AA Capital's clients of the misappropriations until September 2006.

Based on the above, the Order directs Oliver to cease and desist from committing or causing any violations and any future violations of Sections 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-4 thereunder, suspends Oliver from associating with any investment adviser for a period of 12 months, and requires Oliver to pay disgorgement of $49,786.44, prejudgment interest of $7,979.71 and a civil penalty of $75,000. Oliver consented to the issuance of the Order without admitting or denying any of the findings. (Rel. IA-2903; File No. 3-13554)

In the Matter of LSB Industries, Inc.

On July 17, the Commission issued an Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Sections 4C and 21C of the Securities Exchange Act of 1934 and Rule 102(e) of the Commission's Rules of Practice, Making Findings and Imposing Remedial Sanctions and a Cease-and-Desist Order (Order) against LSB Industries, Inc. and Jimmie Dean Jones, CPA.

The Commission finds that LSB Industries, Inc. violated Exchange Act Sections 13(a) and 13(b)(2)(A) and Rules 13a-1 and 13a-13 by failing to comply with the restatement and disclosure requirements of Accounting Principles Board Opinion No. 20 (APB 20) when it changed inventory pricing methodologies in 2004 from LIFO to FIFO, by materially misstating its quarterly and annual financial results for 2004 as a result of bleeding down its LIFO reserve by $125,000 per quarter, and by falsely stating in its Forms 10-Q for the first and second quarters of 2004 that it maintained LIFO inventory.

The Commission also finds that Jimmie Dean Jones willfully violated Exchange Act Section 13(b)(5) and Rule 13b2-1 and aided and abetted LSB's violations by failing to ensure that LSB complied with APB 20, by directing his subordinates to make improper journal entries to bleed down LSB's LIFO reserve, by circumventing LSB's internal controls which required him to alert LSB's chief financial officer to items with a financial impact exceeding $100,000, by failing to ensure that LSB's financial statements were accurate and not misleading, and by allowing LSB to issue two quarterly reports that he knew or should have known contained false disclosures that LSB maintained inventory using the LIFO pricing methodology.

Based on the above, the Order requires LSB Industries to cease and desist from committing or causing any violations and any future violations of Exchange Act Sections 13(a) and 13(b)(2)(A) and Rules 13a-1 and 13a-13 thereunder. The Order requires Jimmie Dean Jones to cease and desist from committing or causing any violations and any future violations of Exchange Act Section 13(b)(5) and Rule 13b2-1 thereunder and from causing any violations and any future violations of Exchange Act Sections 13(a) and 13(b)(2)(A) and Rules 13a-1 and 13a-13 thereunder. The Order also denies Jimmie Dean Jones the privilege of appearing or practicing before the Commission as an accountant, with the right to apply for reinstatement after two years. LSB Industries and Jimmie Dean Jones have consented to the issuance of the Order without admitting or denying any of the Order's findings. (Rel. 34-60336; AAE Rel. 3015; File No. 3-13555)

In the Matter of Matthew La Madrid

An Administrative Law Judge has issued an Initial Decision in Matthew La Madrid, Administrative Proceeding No. 3-13415. The Initial Decision finds that the U.S. District Court for the Southern District of California permanently enjoined Respondent La Madrid from future violations of Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 (Advisers Act). The Initial Decision concludes that, pursuant to Section 203(f) of the Advisers Act, it is in the public interest to bar Respondent La Mardrid from association with any investment adviser. (Initial Decision No. 383; File No. 3-13415)

Commission Orders Hearings on Registration Suspension or Revocation Against Twelve Companies for Failure to Make Required Periodic Filings

In conjunction with today's trading suspension, the Commission today also 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 twelve companies for failure to make required periodic filings with the Commission:

• RDM Sports Group, Inc. (RDMG)
• Real Del Monte Mining Corp. (RDMMF)
• Recoton Corp. (RCOTQ)
• Red Hot Concepts, Inc. (RHCS)
• RedHand International, Inc. (n/k/a African Diamond Co., Inc. or Coal Corp.) (AFDM)
• Redlaw Industries, Inc. (RDLI)
• Republic Resources, Inc. (RPRS)
• Reward Enterprises, Inc. (RWRD)
• Rhino Enterprises, Inc (n/k/a Physicians Adult Daycare, Inc.) (PHYA)
• Ridgeview, Inc. (RIDG)
• Riverside Group, Inc. (RSGI)
• Rocky Mount Undergarmet Co., Inc. (RMUC)

In this Order, the Division of Enforcement (Division) alleges that the twelve 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 or 13a-16 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. 34-60340; File No. 3-13556)

In the Matter of TD Ameritrade, Inc.

On July 20, the Commission issued an Order Instituting Administrative and Cease-and-Desist Proceedings, Pursuant to Section 8A of the Securities Act of 1933 and Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (Order) against TD Ameritrade, Inc. (TD Ameritrade), a broker-dealer registered with the Commission and based in Omaha, Nebraska. The Order finds that, prior to mid-February 2008, TD Ameritrade's registered representatives sold Auction Rate Securities (ARS) to customers. The Order further finds that the firm's representatives made inaccurate comparisons between ARS and other investments, such as certificates of deposit or money market accounts, telling customers that ARS were similar investments but with a slightly higher yield. The firm's representatives did not accurately characterize the investment nature of ARS since ARS are highly complex securities that are very different from money market funds or certificates of deposit, as evidenced by, among other things, the dependence of ARS on successful auctions for liquidity. The firm's registered representatives also did not provide customers with adequate and complete disclosures regarding the complexity of the auction process and the risks associated with ARS, including the circumstances under which an auction could fail. As a result of this conduct, the Order finds that TD Ameritrade willfully violated Section 17(a)(2) of the Securities Act of 1933 (Securities Act).

Based on the above, the Order censures TD Ameritrade and orders the firm to cease and desist from committing or causing any violations of Section 17(a)(2) of the Securities Act. The Order further sets forth voluntary undertakings by TD Ameritrade to, among other things, purchase ARS from certain of its current and former customers. TD Ameritrade consented to the issuance of the Order without admitting or denying any of the findings in the Order. (Rels. 33-9053; 34-60341; File No. 3-13557)

In the Matter of Morgan Stanley & Co. Incorporated
In the Matter of William Keith Phillips

On July 20, the Commission issued an Order Instituting Administrative and Cease-and-Desist Proceedings, Making Findings, and Imposing Remedial Sanctions, a Censure, and a Cease-and-Desist Order Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 (Advisers Act) (Order) against Morgan Stanley & Co. Incorporated. The Order finds that from 2000 through at least April 2006, Morgan Stanley breached its fiduciary duty to certain of the firm's advisory clients by making material misstatements and failing to disclose conflicts of interest. As a result, Morgan Stanley willfully violated Section 206(2) of the Advisers Act. In addition, Morgan Stanley failed reasonably to supervise one of its financial advisers with a view to preventing these violations within the meaning of Section 203(e)(6) of the Advisers Act. Further, Morgan Stanley willfully violated Section 204 of the Advisers Act and Rules 204-2(a)(7) and 204-2(a)(10) thereunder by failing to maintain (1) all account paperwork reflecting Morgan Stanley's written agreements with its advisory clients; and (2) all written communications relating to recommendations of money managers.

Based on the above, the Order requires that Morgan Stanley be censured; cease and desist from committing or causing any violations and any future violations of Sections 204 and 206(2) of the Advisers Act and Rules 204-2(a)(7) and 204-2(a)(10) thereunder; and, within 90 days of the entry of the Order, pay a civil money penalty in the amount of $500,000 to the United States Treasury. Morgan Stanley consented to the issuance of the Order without admitting or denying any of the findings in the Order.

In a separate related proceeding, the Commission instituted contested administrative proceedings against William Keith Phillips pursuant to Sections 203(f) and 203(k) of the Advisers Act and Section 15(b)(6) of the Securities Exchange Act of 1934 against Phillips. The Division of Enforcement alleged that Phillips willfully aided and abetted and caused Morgan Stanley's violations of Section 206(2) of the Advisers Act. (In the Matter of Morgan Stanley - Rels. 34-60342; IA-2904; File No. 3-13558; In the Matter of Keith Phillips - Rel. 34-60344; IA-2905; File No. 3-13559)

In the Matter of Lisa M. Roberts, CPA

On July 20, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Rule 102(e) of the Commission's Rules of Practice, Making Findings, and Imposing Remedial Sanctions (Order) against Lisa M. Roberts, CPA (Roberts).

On July 13, 2009, a Final Judgment signed by Judge Wexler was entered in the United States District Court for the Eastern District of New York, which permanently enjoins Roberts, by consent, from future violations of Section 17(a) of the Securities Act of 1933, Sections 10(b), 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5, 13b2-1, and 13b2-2 thereunder, and from aiding and abetting violations of Sections 13(a), 13(b)(2)(A), 13(b)(2)(B), and 14(a) of the Exchange Act and Rules 13a-1, 13a-11, 13a-13, and 14a-9 thereunder. The Court ordered the injunction based on allegations in the Commission's Complaint in the matter of Securities and Exchange Commission v. Lisa M. Roberts., (U.S. District Court for the Eastern District of New York, Civil Action No. 1:09-CV-02590-LDW-AKT , filed June 18, 2009). The Commission's Complaint alleged, among other things, that Roberts, at the direction of former Ulticom senior executives, participated in two separate fraudulent schemes to materially misstate the financial results of Ulticom in a departure from generally accepted accounting principles. The first scheme involved improper backdating of Ulticom stock options. The second scheme involved improper accounting practices, including (i) the improper establishment, maintenance, and release of excess reserves, and (ii) the improper recognition of revenue on certain inter-company shipments and service contracts. As a result of these schemes, Ulticom has announced that its historical financial statements and any related reports of its independent registered public accounting firm should no longer be relied upon, and that it will correct its historical financial statements in order to record additional material non-cash charges for option-related compensation expenses and to address the material misstatement of its revenues and earnings. In addition, the Complaint alleged that Roberts made material misrepresentations to Ulticom's outside auditors in furtherance of these schemes.

Based on the Court's entry of an injunction against Roberts, the Commission ordered that Roberts be suspended from appearing or practicing before the Commission as an accountant, with the right to reapply after five years from the date of the Order. Roberts consented to the issuance of the Order without admitting or denying any of the findings in the Order except as to the Commission's jurisdiction over her, the subject matter of the Proceedings, and the fact that the federal court entered the injunction against her. (Rel. 21091; AAE Rel. 2995). (Rel. 34-60345; AAE Rel. 3016; File No. 3-13560)

SEC Charges Qualcomm's Former Director of Strategic Marketing Analysis With Insider Trading

The Securities and Exchange Commission today filed an insider trading action in the United States District Court for the Southern District of California against Andres Leyva, a former Director of Strategic Marketing Analysis at San Diego-based Qualcomm Incorporated. The SEC's complaint alleges that Leyva realized more than $34,000 in illegal profits by trading on the basis of confidential information about Qualcomm's new licensing agreement with Nokia Corporation and the settlement of all litigation between the companies.

According to the SEC's complaint, Qualcomm and Nokia were set to begin trial on July 23, 2008 in a key Delaware case to determine whether Nokia owed Qualcomm substantial royalty revenues when the companies' licensing agreement expired in April 2007. The complaint alleges that on July 22, 2008, at approximately 7:30 a.m. (PT), the senior Qualcomm executive leading negotiations with Nokia representatives in Delaware informed Leyva that Nokia had surprised Qualcomm with a significant settlement offer and conveyed the key terms of that offer to Leyva, including Nokia's proposal to increase an upfront payment to Qualcomm from $500 million to $2.5 billion. Approximately two hours later, the complaint alleges, Leyva purchased 80 Qualcomm call option contracts priced at $.39 each with a strike price of $50.

After the market closed on July 23, 2008, Qualcomm and Nokia announced their new licensing agreement and a global settlement of all litigation between them. On July 24, 2008, Qualcomm's stock price increased 17 percent to $52.43, and its trading volume increased 394 percent. That same day, the complaint alleges, Leyva sold the 80 Qualcomm call option contracts for a profit of $34,739.98.

The SEC's complaint charges Leyva with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC seeks a permanent injunction, disgorgement of Leyva's illegal trading profits, and civil penalties. [SEC v. Andres Leyva, Civil Action No. 09 CV 1565 JLS NLS (S.D. Cal.)] (LR-21140)

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