Securities and Exchange Commission Suspends Trading in the Securities of Seven 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 Aug. 11, 2009, and terminating at 11:59 p.m. EDT on Aug. 24, 2009.
The Commission temporarily suspended trading in the securities of these seven 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. 34-60471)
Eric J. Spitler Named Counselor to the Chairman and Director of the Office of Legislative and Intergovernmental Affairs
Securities and Exchange Commission Chairman Mary L. Schapiro announced today that Eric J. Spitler has been named Counselor to the Chairman and Director of the Office of Legislative and Intergovernmental Affairs at the SEC.
Mr. Spitler most recently served as Director of the Office of Legislative Affairs at the Federal Deposit Insurance Corporation (FDIC). As Director, he advised the Chairman, Board of Directors and senior management on policy and legislative matters.
"Eric will be an extremely valuable addition to the agency as we continue down the path of financial regulatory reform," said Chairman Schapiro. "Eric has extensive experience working with Congress on federal regulatory matters and a true appreciation for how our laws impact Americans."
Mr. Spitler served with the FDIC during some of its most challenging periods, including the banking crisis in the early 1990s and the recent financial crisis. During his tenure, he advised the FDIC on landmark banking legislation, including legislation to establish and improve the risk-based deposit insurance assessment system, merge the bank and thrift insurance funds, and improve failed bank resolution authority.
Mr. Spitler served in numerous roles during his 18 years at the FDIC, including Special Assistant to the Chairman, Deputy Director of the Office of Legislative Affairs, and Legislative Attorney and Advisor. Previously, Mr. Spitler served as Legislative Director to U.S. Representative Elizabeth J. (Liz) Patterson of South Carolina. Earlier, he was an Associate at Neely & Player in Atlanta, GA, and Legislative Assistant to U.S. Representative Elliott H. Levitas of Georgia.
Mr. Spitler received his J.D. with honors from the University of North Carolina School of Law in 1985. He graduated summa cum laude with a B.A. in political science from Furman University in 1981 as a member of Phi Beta Kappa. (Press Rel. 2009-181)
RULES AND RELATED MATTERS
Order Providing NRSROs a Temporary Exemption from the Requirement in Rule 17g-2(d) (Incorporating the Provisions of Rule 17g-2(a)(8)) of the Securities Exchange Act of 1934 that CUSIP Numbers Be Displayed
On August 10, the Commission issued an Order temporarily exempting nationally recognized statistical rating organizations (NRSROs) from the requirement in Rule 17g-2(d) (incorporating the provisions of Rule 17g-2(a)(8)) that the CUSIP for each rated security be included with the ratings action information for thirty days, until Sept. 9, 2009. Publication is expected in the Federal Register during the week of August 10. (Rel. 34-60473)
Commission Orders Hearings on Registration Suspension or Revocation Against Seven 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 seven companies for failure to make required periodic filings with the Commission:
In this Order, the Division of Enforcement (Division) alleges that the seven 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. 34-60472; File No. 3-13575)
In the Matter of Atmospheric Glow Technologies, Inc.
On August 11, the Commission issued an Order Instituting Proceedings, Making Findings, and Revoking Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of 1934 against Atmospheric Glow Technologies, Inc.
The Order finds that Atmospheric Glow Technologies, a Delaware corporation based in Knoxville, Tennessee was a development stage company that conducted research and development activities to develop commercial applications for a patented process of non-thermal, atmospheric pressure processing. The common stock of Atmospheric Glow Technologies and its predecessors has been registered under Section 12 of the Securities Exchange Act of 1934 (Exchange Act) since 1997. Atmospheric Glow Technologies' stock is currently quoted by the Pink OTC Markets, Inc. Atmospheric Glow Technologies 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 it has not filed an annual report on Form 10-K since its Form 10-K for the fiscal year ended March 31, 2007 or quarterly reports on Form 10-Q for any period subsequent to its quarter ending Dec. 31, 2007.
Based on the above, the Order revoked the registration of each class of Atmospheric Glow Technologies' securities registered pursuant to Section 12 of the Exchange Act. (Rel. 34-60470; File No. 3-13574)
Securities and Exchange Commission Orders Hearing on Registration Revocation Against Seven Public Companies for Failure to Make Required Periodic Filings
Today the Commission instituted public administrative proceedings to determine whether to revoke or suspend for a period not exceeding twelve months the registrations of each class of the securities of seven companies for failure to make required periodic filings with the Commission:
In this Order, the Division of Enforcement (Division) alleges that the seven 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 Administrative Law 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 Administrative Law 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. 34-60474; File No. 3-13576)
SEC Charges Key Madoff Lieutenant for Operating and Concealing Fraud through Bogus Trades and Documents
The Securities and Exchange Commission today charged Bernard L. Madoff's chief financial officer, Frank DiPascali, with securities fraud for overseeing the mechanics of Madoff's entirely fictitious investment strategy and creating millions of phony documents and trading records to conceal the fraud from regulators and investors.
According to the SEC's complaint, filed in U.S. District Court for the Southern District of New York, DiPascali helped generate bogus annual returns of 10 to 17 percent by fabricating backdated and fictitious trades that never occurred. The SEC further alleges that DiPascali helped Madoff cover up the fraud by preparing fake trade blotters, stock records, customer confirmations, Depository Trust Corporation (DTC) reports and other phantom books and records to substantiate the non-existent trading.
Without admitting or denying the allegations of the SEC's complaint, DiPascali has consented to a proposed partial judgment, which if entered by the court would impose a permanent injunction against DiPascali and leave the issues of disgorgement and a financial penalty to be decided at a later time.
The SEC alleges that DiPascali, who resides in Bridgewater, N.J., sustained Madoff's unprecedented fraud from at least the 1980s until the scheme's collapse, causing billions of dollars in investor losses. A specific computer was used to simulate phantom trading in advisory accounts, and to generate phony books and records reflecting that trading. This fake set of books and records was kept separate and distinct from the books and records for the market-making and proprietary trading operation at Bernard L. Madoff Investment Securities LLC (BMIS). When investors sent in funds to BMIS for investment, the funds were deposited or wired into a bank account at JPMorgan Chase that was not in any way reflected on the books and records (including the ledger) of the BMIS broker-dealer operation.
The SEC's complaint alleges that great effort was made to hide the fact that there were several thousand advisory accounts at BMIS, which would have required SEC registration. DiPascali helped Madoff devise a shifting subset of 10 to 25 accounts - known as the "special" accounts - which they deceptively presented as the universe of BMIS advisory accounts. DiPascali and others prepared fake books and records to provide regulators with information about only these special accounts in order to conceal the true size of the advisory business.
According to the SEC's complaint, DiPascali joined BMIS as a research clerk at age 19 after dropping out of college. Eventually, Madoff put DiPascali in charge of the bulk of day-to-day operations on the now-infamous 17th floor of BMIS. As Madoff consistently communicated his fear of detection to DiPascali, a significant portion of DiPascali's time and effort was dedicated to anticipating and preparing for regulatory inquiries - particularly SEC examinations in 2004 and 2005 and an SEC investigation in 2006.
The SEC's complaint alleges that DiPascali helped carry out Madoff's fictitious "split-strike conversion" strategy that BMIS claimed to be pursuing on behalf of its clients. DiPascali helped Madoff structure and record non-existent trades that were reflected on millions of pages of customer confirmations and account statements distributed each year. None of the trades purportedly executed as part of this strategy ever occurred. In fact, the strategy was nothing more than fictitious trading by hindsight, supported by documents created after the fact based on actual historical data.
According to the SEC's complaint, DiPascali helped Madoff cover his tracks in numerous nefarious ways. For instance, when Madoff grew concerned that showing positive returns every month would be suspicious, he occasionally instructed DiPascali to enter phony trades designed to lose money in order to make their investment strategy and returns more credible. In order to avoid scrutiny by sophisticated financial institutions, they made a practice of closing down accounts of investors who worked at such institutions. Madoff and DiPascali even went so far as to develop a phantom computer trading platform that would appear to reflect real trading. In the event of a surprise visit from outsiders requesting to observe real-time trading activity, one BMIS employee was to enter trades on a computer screen and another employee was to go into an office nearby and play the role of a counterparty trader in Europe.
The SEC further alleges that DiPascali misappropriated investor funds for personal gain, setting up an account at BMIS for himself in 2002 that he named after his fishing yacht, Dorothy Jo. DiPascali withdrew more than $5 million from the account between 2002 and 2008 to fund personal expenses, including the purchase of a new boat. DiPascali's withdrawals were funded directly from money deposited by investors with BMIS. Investor money being used to fund the overall operations of BMIS also contributed to the more than $2 million in salary and bonus that DiPascali received each year.
Today's charges mark the fifth enforcement action taken by the SEC related to the Madoff fraud. Previously, the Commission charged Madoff and BMIS, their auditors, certain solicitors, and feeder funds.
The Commission's complaint specifically alleges that DiPascali violated Section 17(a) of the Securities Act; violated, and aided and abetted violations of, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; and aided and abetted violations of Sections 204, 206(1) and 206(2) of the Advisers Act and Rule 204-2 thereunder and Sections 15(c) and 17(a) of the Exchange Act and Rules 10b-3 and 17a-3 thereunder. Among other things, the SEC's complaint seeks financial penalties and a court order requiring DiPascali to disgorge his ill-gotten gains.
The Commission acknowledges the assistance of the U.S. Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation. The Commission's investigation is continuing. [SEC v. Frank DiPascali, Jr., (S.D.N.Y. Civ. 09 CV 7085 (LLS) (S.D.N.Y.)] (LR-21174)
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