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COMMISSION ANNOUNCEMENTSCommission MeetingsClosed Meeting - Thursday, August 13, 2009 - 1:00 p.m.The subject matter of the Closed Meeting scheduled for Thursday, Aug.13, 2009, will be: institution and settlement of injunctive actions; institution and settlement of administrative proceedings; adjudicatory matters; and other matters relating to enforcement proceedings. 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. RULES AND RELATED MATTERSRegulation S-AM: Limitations on Affiliate MarketingThe Commission has adopted Regulation S AM to implement Section 624 of the Fair Credit Reporting Act (FCRA) as amended by Section 214 of the Fair and Accurate Credit Transactions Act of 2003 (FACT Act). Section 214 of the FACT Act required the Commission and other federal agencies to adopt rules implementing limitations on a person's use of certain information received from an affiliate to solicit a consumer for marketing purposes, unless the consumer has been given notice and a reasonable opportunity and a reasonable and simple method to opt out of such solicitations. The final rules contained in Regulation S AM implement the requirements of Section 624 of the FCRA with respect to investment advisers and transfer agents registered with the Commission, as well as brokers, dealers and investment companies. Regulation S AM will become effective 30 days after publication in the Federal Register, and compliance will be mandatory as of Jan. 1, 2010. (Rel. 34-60423 - August 4) Delegation of Authority to Director of the Division of EnforcementThe Commission is amending its rules to delegate to the Director of the Division of Enforcement the authority to issue formal orders of investigation. These orders designate the enforcement staff authorized to issue subpoenas in connection with investigations under the federal securities laws. This action is intended to expedite the investigative process by removing the need for enforcement staff to seek Commission approval prior to performing routine functions. The Commission is adopting this delegation for a one-year period, and at the end of the period will evaluate whether to extend the delegation. (Rel. 34-60448) ENFORCEMENT PROCEEDINGSIn the Matter of Alain LustigOn August 5, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Section 203(f) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions (Order) against Alain Lustig (Lustig). The Order finds that in or about and between May 2005 and January 2006, Lustig was associated with Jesup & Lamont Securities Corp. (Jesup), a broker-dealer registered with the Commission that also held state investment adviser registration. The Order further finds that, on May 22, 2009, Lustig pled guilty to conspiracy to commit securities fraud in violation of Title 18 United States Code, Section 371, and securities fraud in violation of Title 15, United States Code, Sections 78j(b), 78ff, and 17 C.F.R. 240.10b-5 before the United States District Court for the Southern District of New York, in United States v. Dennis Michael Nouri, et al., Crim. Information No. 07-CR-1029. The counts of the criminal indictment to which Lustig pled guilty alleged, inter alia, that Lustig, while associated with Jesup, knowingly and willfully employed devices, schemes, and artifices to defraud and engaged in acts, practices, and courses of business which would and did operate as a fraud and deceit upon members of the investing public, in connection with the purchases and sales of securities, and by use of the means and instrumentalities of interstate commerce and the mails. Based on the above, the Order bars Lustig from association with any broker, dealer, or investment adviser. Lustig consented to the issuance of the Order without admitting or denying any of the findings in the Order, except with respect to the findings that on May 22, 2009, Lustig pled guilty to conspiracy to commit securities fraud in violation of Title 18 United States Code, Section 371, and securities fraud in violation of Title 15, United States Code, Sections 78j(b), 78ff, and 17 C.F.R. 240.10b-5 before the United States District Court for the Southern District of New York, in United States v. Dennis Michael Nouri, et al., Crim. Information No. 07-CR-1029. (Rels. 34-60449; IA-2912; File No. 3-13571) In the Matter of Vladimir ChekholkoOn August 5, the Commission issued an Order Making Findings and Imposing Remedial Sanctions and a Cease-and-Desist Order Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 as to Vladimir Chekholko (Order). The Order finds that from May 2004 until March 2008, Chekholko, who holds Series 7 and 55 licenses, was employed by CentreInvest, Inc. (CI-New York), a registered broker-dealer located in New York, New York, and that from July 24, 2004 through at least November 2007, Chekholko served as the firm's head of sales. The Order further finds that OOO CentreInvest Securities (CI-Moscow), a Moscow-based broker-dealer and limited liability company specializing in the sale of second-tier Russian equities, was, during the relevant period, an affiliate of CI-New York. The Order further finds that from about 2003 through November 2007, CI-Moscow, which has never been registered with the Commission as a broker or dealer, directly and through CI-New York, Chekholko, and others, solicited institutional investors in the United States to purchase and sell thinly-traded stocks of Russian companies, without registering as a broker-dealer as required by Section 15(a) of the Exchange Act or meeting the requirements for the exemption from registration for foreign broker-dealers under Exchange Act Rule 15a-6(a). The Order further finds that at some or all relevant times, Chekholko knew that he was referring investors to representatives of CI-Moscow who were neither licensed and registered with the Commission or an appropriate U.S. self-regulatory organization, nor exempt from such licensing and registration requirements, and that Chekholko received compensation from CI-New York in the form of salary and bonus as a result of his role in CI-Moscow's unlawful solicitation of U.S. institutional investors. Based on the above, the Order orders Chekholko to cease and desist from committing or causing violations and any future violations of Section 15(a) of the Exchange Act, suspends Chekholko from association with any broker or dealer for a period of six months, and orders Chekholko to comply with his undertaking to provide the Commission, within thirty days after the end of the six month suspension, with an affidavit stating that he has complied with the suspension. Chekholko consented to the issuance of the Order without admitting or denying any of the findings in the Order. (Rel. 34-60450; File No. 3-13304) Revocation of Registration of Securities of Freehand Systems International, Inc.The Securities and Exchange Commission announced the revocation of the registration of the securities of FreeHand Systems International, Inc. (FreeHand), of Los Altos, California, registered with the Commission pursuant to Section 12 of the Securities Exchange Act of 1934 (Exchange Act), on Aug. 6, 2009, pursuant to Section 12(j) of the Exchange Act. In its Order Instituting Proceedings Pursuant to Section 12(j) of the Securities Exchange Act of 1934, Making Findings, and Revoking Registration of Securities (Order), the Commission found that FreeHand has failed to comply with Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder, while its common stock was registered with the Commission, in that FreeHand has not filed an Annual Report on Form 10-K or Form 10-KSB, or periodic or quarterly reports on Form 10-Q or Form 10-QSB, for any fiscal period subsequent to its fiscal quarter ending Dec. 31, 2007. 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 the company. Further, brokers and dealers should be alert to the fact that 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 pursuant to the preceding sentence. Without admitting or denying the findings in the Order, FreeHand consented to the entry of an order finding that it had failed to comply with Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder, and revoking the registration of each class of FreeHand's securities registered with the Commission pursuant to Section 12 of the Exchange Act. (Rel. 34-60453; File No. 3-13572) Final Judgments Entered Against Attorneys and Website Operator Charged with Issuing Fraudulent Legal Opinions in Pump-and-Dump SchemeThe Securities and Exchange Commission announced today that, on July 31, 2009, the United States District Court for the Northern District of Georgia entered final judgments by consent against Albert J. Rasch, Jr., Kathleen R. Novinger, Sandra B. Masino and 144 Opinions, Inc. (144 Opinions) in a civil injunctive action charging them for their roles in issuing legal opinions in a pump-and-dump scheme. The final judgments enjoined all defendants from future antifraud and registration violations of the federal securities laws, imposed civil monetary penalties, and barred all defendants from participating in a penny stock offering for a period of five years. The Commission filed its Complaint in this matter on May 5, 2009. The Complaint alleged that during 2007, the defendants collectively operated a legal "opinion mill" which issued fraudulent legal opinions used by promoters in a pump-and-dump scheme, and others, to sell securities in violation of the registration provisions of the federal securities laws. Masino and 144 Opinions drafted and Rasch or Novinger executed, at least 24 legal opinion letters concerning the removal of restrictive legends on certificates representing over 22 million shares of Mobile Ready Entertainment Corp. (Mobile Ready). The defendants cited to non-existent documents and misrepresented critical facts in executing the 24 legal opinions. The complaint alleges that the false and misleading statements drafted by Masino and 144 Opinions and thereafter executed by Rasch and Novinger fraudulently induced the transfer agent for Mobile Ready to remove the restrictive legends and permit the illegal sale of over 22 million shares of Mobile Ready in violation of the registration provision of the federal securities laws. Without admitting or denying the allegations in the Commission's Complaint, Rasch, Novinger, Masino and 144 Opinions consented to judgments entered by the Court that permanently enjoin them from future violations of Sections 5 and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and bar them from participating in the offering of a penny stock for a period of five years. The judgments ordered Rasch and Masino each to pay a $20,000 civil monetary penalty, while Novinger was ordered to pay a $10,000 civil monetary penalty. Additionally, the final judgments ordered Rasch and Masino to disgorge all professional and service fees related to the Mobile Ready legal opinions. For additional information, please see Litigation Release Numbers 21024 (May 5, 2009) and 20644 (July 14, 2008). [SEC v. Albert J. Rasch, Jr., Kathleen R. Novinger, Sandra B. Masino, and 144 Opinions, Inc., Civil Action No.1:09-CV-1190 (N.D. Ga)] (LR-21169) SEC Charges Hank Greenberg and Howard Smith for Roles in Alleged AIG Accounting ViolationsThe Securities and Exchange Commission today charged former American International Group Chairman and CEO Maurice "Hank" Greenberg and former Vice Chairman and CFO Howard Smith for their involvement in numerous improper accounting transactions that inflated AIG's reported financial results between 2000 and 2005. The complaint alleges that Greenberg and Smith are liable as control persons for AIG's violations of the antifraud and other provisions of the securities laws. Smith is also charged with direct violations of the antifraud and other provisions of the securities laws. The complaint alleges that Greenberg and Smith were responsible for material misstatements that enabled AIG to create the false impression that the company consistently met or exceeded key earnings and growth targets. According to the complaint, Greenberg publicly described AIG as the leader in the insurance and financial services industry with a history of delivering consistent double-digit growth. However, AIG faced numerous financial challenges under Greenberg's leadership that were disguised through improper accounting. The complaint, filed in U.S. District Court for the Southern District of New York, charges the defendants with responsibility for the following improper accounting transactions:
The complaint alleges that Greenberg knew about the effects that certain improper transactions would have on AIG's reported financial results, and along with Smith was responsible for false and misleading public statements and material omissions in quarterly reports that AIG filed in the second and third quarters of 2002, and in related press releases and investor conference calls. In 2005, AIG restated its prior accounting for many transactions, including those that are the subject of the charges in the SEC's complaint. Without admitting or denying the allegations in the complaint, Greenberg has consented to a judgment enjoining him from violating Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 and from controlling any person who violates Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13, and directing him to pay a penalty of $7.5 million and disgorgement of $7.5 million. Without admitting or denying the allegations in the complaint, Smith has consented to a judgment enjoining him from violating Section 17(a) of the Securities Act of 1933, and Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5, 13a-14, 13b2-1, and 13b2-2, and from controlling any person who violates Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13, directing him to pay a penalty of $750,000 and disgorgement of $750,000, and prohibiting him from acting as an officer or director of any public company for three years. Smith also consented to the entry of a Commission order that will suspend him from appearing or practicing before the Commission as an accountant, with the right to reapply after five years. The SEC previously charged AIG in 2006 with securities fraud and improper accounting, and the company settled the charges by paying disgorgement of $700 million and a penalty of $100 million, among other remedies. [SEC v. Maurice R. Greenberg and Howard I. Smith, Civil Action No. 09 Civ 6939 (S.D.N.Y.)] (LR-21170; AAE Rel. 3032) SELF-REGULATORY ORGANIZATIONSImmediate Effectiveness of Proposed Rule ChangesA proposed rule change (SR-NYSEAMEX-2009-49) filed by the NYSE Amex amending NYSE Amex Equities Rule 103B to modify the composition of the Exchange Selection Panel and prohibit any ex parte communications during and regarding the selection process between the DMM units and the individuals serving on the Exchange Selection Panel has become effective under Section 19(b)(3)(A) under the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of August 10. (Rel. 34-60425) A proposed rule change (SR-NYSE-2009-74) filed by the New York Stock Exchange amending NYSE Rule 103B to modify the composition of the Exchange Selection Panel and prohibit any ex parte communications during and regarding the selection process between the DMM units and the individuals serving on the Exchange Selection Panel has become effective under Section 19(b)(3)(A) under the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of August 10. (Rel. 34-60426) A proposed rule change filed by the NASDAQ Stock Market to clarify fee schedule for members using the NASDAQ Market Center (SR-NASDAQ-2009-072) has become 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 August 10. (Rel. 34-60430) A proposed rule change filed by the Financial Industry Regulatory Authority to amend Incorporated NYSE Rules 12 and 282 to conform to amendments made by NYSE (SR-FINRA-2009-053) has become 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 August 10. (Rel. 34-60432) A proposed rule change filed by the NYSE Arca (SR-NYSEArca-2009-69) amending NYSE Arca Equities Rule 7.31(oo) 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 August 10. (Rel. 34-60433) A proposed rule change filed by NYSE Amex (SR-NYSEAmex-2009-53) to change the transaction fee for Market At-the-Close and Limit At-the-Close orders 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 August 10. (Rel. 34-60438) A proposed rule change filed by the NASDAQ OMX BX to amend the fee schedule of the Boston Options Exchange Facility to implement the non-penny pilot class pricing structure (SR-BX-2009-044) has become 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 August 10. (Rel. 34-60444) A proposed rule change filed by the Chicago Board Options Exchange (SR-CBOE-2009-055) relating to temporary membership status and interim trading permit access 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 August 10. (Rel. 34-60445) Proposed Rule ChangesNYSE Amex filed a proposed rule change (SR-NYSEAmex-2009-46) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 to access CCS interest to partially fill an incoming limit order. Publication is expected in the Federal Register during the week of August 10. (Rel. 34-60428) The New York Stock Exchange filed a proposed rule change (SR-NYSE-2009-71) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 to allow Exchange systems to access CCS interest to partially fill an incoming limit order. Publication is expected in the Federal Register during the week of August 10. (Rel. 34-60429) The Commission issued notice of a proposed rule change, and Amendment No 1 thereto, submitted by NASDAQ OMX PHLX (SR-Phlx-2009-59) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 relating to the Exchange's By-Laws, Regulatory Oversight Committee and Referee Program. Publication is expected in the Federal Register during the week of August 10. (Rel. 34-60431) The Commission has published notice of a proposed rule change (FINRA-2009-052), filed by the Financial Industry Regulatory Authority to adopt FINRA Rule 2264 (Margin Disclosure Statement) in the Consolidated FINRA Rulebook. Publication is expected in the Federal Register during the week of August 10. (Rel. 34-60437) SECURITIES ACT REGISTRATIONSRECENT 8K FILINGS
http://www.sec.gov/news/digest/2009/dig080609.htm
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