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COMMISSION ANNOUNCEMENTSCommission MeetingsClosed Meeting - Thursday, September 10, 2009 - 2:00 p.m.The subject matter of the Closed Meeting scheduled for Thursday, September 10, will be: institution and settlement of injunctive actions; institution and settlement of administrative proceedings; 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. ENFORCEMENT PROCEEDINGSIn the Matter of Ronald E. Hardy, Jr.On September 2, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions (Order) against Ronald E. Hardy, Jr. The Order finds that Hardy was a registered representative associated with Aura Financial Services, Inc. (Aura), a broker-dealer registered with the Commission, from June 20, 2007, through Aug. 10, 2009. Additionally, the Order finds that on Aug. 10, 2009, a final judgment was entered by consent against Hardy, permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in the civil action entitled SEC v. Aura Financial Services, Inc., et al., Civil Action Number 09-CIV-21592, in the United States District Court for the Southern District of Florida. The complaint in that civil action alleged that from January 2008 through April 2009, Hardy made unauthorized trades in, and "churned" the accounts of, multiple Aura clients by engaging in excessive trading to generate commissions for himself rather than in the clients' interests. Hardy consented without admitting or denying the findings in the Order, except for the entry of the injunction, which he admitted. (Rel. 34-60615; File No. 3-13608) In the Matter of Universal Express, Inc.On September 3, the Commission issued an Order Instituting Proceedings Pursuant to Section 12(j) of the Securities Exchange Act of 1934, Making Findings, and Revoking Registration of Securities (Order) against Respondent Universal Express, Inc. The Order finds that Respondent has failed to comply with Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder in that it has not filed an Annual Report on Form 10-K or Form 10-KSB since June 2007 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, 2006. The Order further finds that on April 2, 2007, a final judgment was entered against Universal Express which enjoined the company from further violations of Sections 5(a) and 5(c) of the Securities Act of 1933 and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, ordered the company to disgorge $9,959,829 in ill-gotten gains plus prejudgment interest of $1,986,827, and imposed civil penalties of $9,959,829 against the company pursuant to Section 20(d) of the Exchange Act in connection with the issuance of unregistered Universal Express stock and the issuance of false and misleading statements concerning the company's business operations, access to financing, and other matters between 2001 and 2004. Based on the above, the Order revokes the registration of each class of Respondent's securities registered pursuant to Section 12 of the Exchange Act. Respondent consented to the issuance of the Order without admitting or denying any of the findings in the Order. (Rel. 34-60616; File No. 3-13609) Commission Declares Initial Decision as to Stanley Johnson FinalThe decision of an administrative law judge with respect to Stanley Johnson has become final. The initial decision found that on May 15, 2009, the federal district court for the Central District of California entered a revised final judgment, permanently enjoining Stanley Johnson from violating Sections 5 and 17(a) of the Securities Act and Sections 10(b) and 15(a) of the Exchange Act, and Rule 10b 5 thereunder. Johnson was adjudged jointly and severally liable for $521,259.23 of the disgorgement amount of $3,154,023.92 and $26,251.25 of the prejudgment interest of $58,840.51, based on funds diverted for his personal use. The district court assessed civil penalties in the amount of $130,000 against Johnson. The law judge found that Johnson, over a period of three years, received millions of dollars from investors and diverted a significant amount of the funds for his own personal benefit. The law judge ordered that, pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934, Stanley Johnson be barred from association with any broker or dealer. (Rel. 34-60617; File No. 3-13494) The Hain Celestial Group Inc. Settles Charges of Stock Options BackdatingThe Securities and Exchange Commission today charged The Hain Celestial Group, Inc. (Hain), a Melville, New York natural foods company, alleging that Hain backdated and re-priced stock option grants to its officers, directors, and employees and reported false information to shareholders. The SEC's complaint, filed in federal court in Brooklyn, New York, alleges that from at least 1998 to 2002, Hain fraudulently backdated stock options granted to Company officers, directors, and employees, concealing millions of dollars in expenses from the Company's shareholders. Hain, and its former Chief Financial Officer (CFO) and Secretary, used hindsight to choose dates corresponding to low stock prices for stock option grants, backdated stock option agreements to make it appear as if options had been granted on the earlier dates, and prepared or approved financial statements and SEC filings that omitted necessary expenses for backdated options and falsely described Hain's option granting practices. During this period, Hain and its former CFO also re-priced grants that had previously been approved, but for which stock option paperwork had not yet been issued, to give recipients the advantage of subsequent lower exercise prices. The SEC's complaint also alleges that by virtue of the undisclosed backdating and re-pricing scheme, Hain materially understated the Company's expenses and overstated its income in disclosures to the Commission and the investing public, and falsely represented in filings that Hain had incurred no expenses for option grants. Additionally, throughout the period of 1993-2005, Hain did not have adequate internal controls relating to the granting of stock options and did not maintain accurate books and records concerning its stock option grants. After media inquiries and analyst reports regarding its stock option practices in mid-2006, Hain's current CFO conducted a limited internal review of selected grants. At the time, Hain did not retain outside counsel to review its historical option practices and did not conduct a forensic review of e-mails or accounting records. Subsequently, Hain's current CFO and the company made statements during September and November 2006 that the company had carefully reviewed its historical stock option grants and found nothing improper. After being contacted by the SEC staff in mid-2007, Hain formed a group of independent directors and retained outside counsel and other experts to conduct a detailed review of its stock options practices. In January 2008, Hain restated its historical financial statements as a result of this review. Hain re-measured 48 grants and recorded $20.5 million of compensation expense. Twenty-one of the 48 re-measured grants, representing approximately 3.7 million options and $13.2 million of compensation expense, were issued between 1998 and 2002. Without admitting or denying the SEC's allegations, Hain consented to a permanent injunction against violations of Section 17(a) of the Securities Act of 1933, Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), and 14(a) of the Securities Exchange Act of 1934, and Rules 10b-5, 12b-20, 13a-1, 13a-11, 13a-13, and 14a-9 thereunder. The settlement is subject to court approval. The Commission took into account the cooperation that Hain provided the Commission staff during its investigation. (SEC v. The Hain Celestial Group, Inc, CV 09-3826 (DRH) (E.D.N.Y.)] (LR-21195; AAE Rel. 3045) SEC Charges Eight Individuals with Participating in $41 Million Offering Fraud Based in Utah and ColoradoThe Securities and Exchange Commission announced yesterday that it filed charges against eight individuals who participated in the operation of a multi-million dollar offering fraud based in Utah and Colorado. The Commission's civil injunctive complaint, filed in the U.S. District Court for the District of Utah on Sept. 2, 2009, alleges that between January 2007 and July 2008, Thomas R. Fry and Fry's promoters, Bevan J. Wilde, Gary W. Hansen, Michael G. Butcher, James B. Mooring, David G. Bartholomew, and Michael W. Averett (collectively, the Promoters), raised approximately $41 million from the unregistered offer and sale of high-yield promissory notes to over 150 investors in several states, over half of which was lost to investors. According to the complaint, around $18 million of the funds raised by Fry and the Promoters was funneled by Fry into a Ponzi scheme run by Jeffrey L. Mowen, a convicted felon and securities law recidivist, who misappropriated over $8 million of these funds. The complaint also alleges that Fry and the Promoters knowingly or recklessly distributed private placement memoranda to investors that misrepresented the level of their due diligence and falsely stated that all the funds were being used to make collateralized domestic real estate loans and domestic small business loans. The complaint further alleges that, Fry, who dealt directly with Mowen, committed fraud by failing to disclose Mowen's involvement and criminal history to the Promoters and investors. According to the complaint, Fry and the Promoters also committed registration violations with respect to the securities offerings and their status as brokers. The Commission's complaint alleges that, as a result of their conduct, the defendants violated, and unless enjoined, will continue to violate, Section 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. The complaint also alleges that Fry and the Promoters violated, and unless enjoined, will continue to violate Sections 5(a) and 5(c) the Securities Act and Section 15(a) of the Exchange Act. As part of this action, the Commission seeks against each of the defendants an injunction against future violations of the provisions set forth above, disgorgement, pre-judgment interest, and third tier civil money penalties. The Commission has also provided assistance to the United States Attorney's Office for the District of Utah, which has filed criminal charges against Mowen relating to the Ponzi scheme. [SEC v. Jeffrey L. Mowen et al., Civil Action No. 2:09CV0786, USDC, DUtah] (LR-21196) Six Named for Unregistered Distribution of 21 Billion SharesOn Sept. 1, 2009, the Commission filed a civil complaint against three individuals and three entities alleging that between February 2004 and June 2007, they engaged in an unregistered distribution and sale of over 21 billion shares of Universal Express Inc. (USXP). The defendants raised approximately $34 million from their sales to public investors without filing registration statements. The defendants are Doyle Scott Elliott, Scott Elliott Inc., Robert Weidenbaum, CLX Associates, Inc., Michael Xirinachs and Emerald Asset Advisors LLC. Four of the defendants entered into private agreements to obtain shares of Universal Express at a substantial discount to the current market price. Weidenbaum and CLX agreed to receive shares purportedly for consulting services. However, each of the defendants immediately sold the shares they obtained directly from Universal Express without filing a registration statement and paid roughly half the proceeds back to the company. The defendants are charged with violating the securities registration provisions of Sections 5(a) and (c) of the Securities Act. The Commission seeks permanent injunctions, disgorgement, third-tier civil penalties, and penny stock bars. The Commission previously sued Universal Express, Inc. for violating the securities registration provisions. For further information see SEC v. Universal Express, Inc. et al., 04 Civ-02322 (GEL), (LR-18636 Mar. 24, 2004). [SEC v. Doyle Scott Elliott, Scott Elliott, Inc., Michael Xirinachs, Emerald Asset Advisors LLC, Robert Weidenbaum, and CLX & Associates, Inc., Civil Action No. 09-Civ-07594 (S.D.N.Y.)] (LR-21197) INVESTMENT COMPANY ACT RELEASESJNLNY Variable Fund I LLCAn order has been issued pursuant to Section 8(f) of the Investment Company Act declaring that JNLNY Variable Fund I LLC has ceased to be an investment company. (Rel. IC-28887 - August 26) SELF-REGULATORY ORGANIZATIONSImmediate Effectiveness of Proposed Rule ChangesA proposed rule change filed by the Chicago Board Options Exchange (SR-CBOE-2009-053) to permit FLEX Options on Securities Eligible for Non-FLEX Options Trading and on Corporate Debt Securities 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 September 7. (Rel. 34-60585) A proposed rule change filed by the NASDAQ Stock Market (SR-NASDAQ-2009-078) to make certain conforming and technical changes to the Nasdaq Listing Rules 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 September 7. (Rel. 34-60590) A proposed rule change (SR-BX-2009-050) filed by NASDAQ OMX BX to modify fees for members using the NASDAQ OMX BX Equities System 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 September 7. (Rel. 34-60592) A proposed rule change filed by New York Stock Exchange amending NYSE Rules 103B and 104 to increase the amount of time that a Designated Market Maker Unit must maintain a bid and an offer at the National Best Bid and National Best Offer for an aggregate average period of time monthly (SR-NYSE-2009-91) 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 September 7. (Rel. 34-60595) A proposed rule change filed by New York Stock Exchange extending until Sept. 8, 2009, the operation of Interim NYSE Rule 128 which permits the Exchange to cancel or adjust clearly erroneous executions if they arise out of the use or operation of any quotation, execution or communication system owned or operated by the Exchange, including those executions that occur in the event of a system disruption or system malfunction, (SR-NYSE-2009-92) 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 September 7. (Rel. 34-60597) A proposed rule change (SR-BX-2009-049) filed by NASDAQ OMX BX to correct an error in Rule 7018 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 September 7. (Rel. 34-60603) A proposed rule change filed by the Chicago Stock Exchange (SR-CHX-2009-13) adding additional trading sessions 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 September 7. (Rel. 34-60605) A proposed rule change filed by NASDAQ OMX PHLX relating to a retroactive waiver of the cancellation fee (SR-Phlx-2009-76) has become immediately 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 September 7. (Rel. 34-60606) A proposed rule change filed by the NYSE Arca (SR-NYSEArca-2009-80) to establish the Risk Management Gateway (RMG) service 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 September 7. (Rel. 34-60607) A proposed rule change filed by New York Stock Exchange (SR-NYSE-2009-85) adding language to several NYSE Rules to clarify that transactions that occur solely within NYSE MatchPointSM will be treated differently than executions that occur in the NYSE Display Book(R) for certain order processing purposes 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 September 7. (Rel. 34-60608) A proposed rule change filed by NASDAQ OMX BX to amend the Fee Schedule of the Boston Options Exchange Facility (SR-BX-2009-056) 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 September 7. (Rel. 34-60609) A proposed rule change filed by NASDAQ OMX BX to amend the Fee Schedule of the Boston Options Exchange Facility (SR-BX-2009-058) 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 September 7. (Rel. 34-60610) A proposed rule change filed by New York Stock Exchange to modify the cure provisions under its dollar stock price continued listing standard (SR-NYSE-2009-88) 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 September 7. (Rel. 34-60612) Approval of Proposed Rule ChangesThe Commission approved a proposed rule change submitted by the Chicago Board Options Exchange (SR-CBOE-2009-047) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 to permit all CBSX market-makers to operate from the CBSX Floor Post. Publication is expected in the Federal Register during the week of September 7. (Rel. 34-60589) The Commission has approved a proposed rule change (SR-DTC-2009-11) filed by the Depository Trust Company under Section 19(b)(1) of the Exchange Act to eliminate one of the indemnity surety programs in the Profile Modification System. Publication is expected in the Federal Register during the week of September 7. (Rel. 34-60594) The Commission approved a proposed rule change (SR-ISE-2009-45), as modified by Amendment No. 1, submitted by the International Securities Exchange pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 relating to changes to ISE Rule 312 in connection with the purchase by International Securities Exchange Holdings, Inc. of equity interests in Optifreeze, LLC. Publication is expected in the Federal Register during the week of September 7. (Rel. 34-60598) Proposed Rule ChangesThe NASDAQ OMX BX filed a proposed rule change (SR-BX-2009-048) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 to amend the Grandfathered Rules of the Exchange. Publication is expected in the Federal Register during the week of September 7. (Rel. 34-60591) The Options Clearing Corporation filed a proposed rule change (SR-OCC-2009-14) under Section 19(b)(1) of the Exchange Act that would permit OCC to clear options based on Index-linked securities. Publication is expected in the Federal Register during the week of September 7. (Rel. 34-60602) The NASDAQ Stock Market filed a proposed rule change (SR-NASDAQ-2009-077) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 to modify the procedures followed when a listed company falls below certain listing requirements. Publication is expected in the Federal Register during the week of September 7. (Rel. 34-60611) Accelerated Approval of Proposed Rule ChangesThe Commission published notice of, and granted accelerated approval to, a proposed rule change (SR-BX-2009-057) submitted by NASDAQ OMX BX pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 to amend the Fee Schedule of the Boston Options Exchange Group, LLC. Publication is expected in the Federal Register during the week of September 7. (Rel. 34-60596) NYSE Arca filed, and the Commission has approved on an accelerated basis, a proposed rule change (SR-NYSEArca-2009-78) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 eliminating NYSE Arca Equities Rule 7.26, adding new NYSE Arca Equities Rule 6.7 and amending NYSE Arca Equities Rule 6.18. Publication is expected in the Federal Register during the week of September 7. (Rel. 34-60604) SECURITIES ACT REGISTRATIONSRECENT 8K FILINGS
http://www.sec.gov/news/digest/2009/dig090309.htm
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