SEC Suspends Trading in the Securities of Super Nova Resources, Inc.
The Securities and Exchange Commission announced the temporary suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934 (Exchange Act), of trading in the securities of Super Nova Resources, Inc. (Super Nova), of Corona, California, at 9:30 a.m. EDT on Sept. 8, 2009, and terminating at 11:59 p.m. EDT on Sept. 21, 2009.
The Commission temporarily suspended trading in the securities of Super Nova due to a lack of current and accurate information concerning the securities of the company because questions have arisen regarding the trading in the company's stock, and the accuracy and adequacy of publicly available information concerning, among other things, the company's business operations.
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, pursuant to Rule 15c2-11 under the Exchange Act, at the termination of the trading suspension, no quotation may be entered unless and until they have strictly complied with all of the provisions of the rule. If any broker or dealer has any questions as to whether or not it has complied with the rule, it should not enter any quotation but immediately contact the staff in the Division of Trading and Markets, Office of Interpretation and Guidance, at (202) 551-5777. If any broker or dealer is uncertain as to what is required by Rule 15c2-11, it should refrain from entering quotations relating to Super Nova's securities until such time as it has familiarized itself with the rule and is certain that all of its provisions have been met. If any broker or dealer enters any quotation that is in violation of the rule, the Commission will consider the need for prompt enforcement action. (Rel. 34-60630)
Delinquent Filers' Stock Registrations Revoked
The registrations of the registered securities of Action Auto Rental, Inc., Addisson Industries, Inc., Advanced Promotion Technologies, Inc., Advantexcel Com Communications Corp., Aeire Corp., All American Food Group, Inc., and Allerion, Inc., have been revoked. Each had repeatedly failed to file required annual and quarterly reports with the Securities and Exchange Commission. Thus, each violated a crucial provision of the federal securities laws that requires public corporations to publicly disclose current, accurate financial information so that investors may make informed decisions. The revocations were ordered in an administrative proceeding before an administrative law judge. (Rel. 34-60631; File No. 3-13580)
In the Matter of Jamie P. Lake
On September 8, 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 Jamie P. Lake. The Order finds that, from December 2006 through March 2009, Lake was the president and sole owner of JPL Financial, a financial services business located in Kingston, Pennsylvania, and was a registered representative associated with Questar Capital Corporation, a broker-dealer registered with the Commission. The Order further finds that on June 1, 2009, Lake pled guilty before the United States District Court for the Middle District of Pennsylvania to one count of mail fraud in violation of Title 18 United States Code, Section 1341 in United States v. Jamie P. Lake, Crim. Information No. 3:09-CR-168-01. The counts of the criminal information to which Lake pled guilty alleged that Lake defrauded investors by soliciting customers of Questar and JPL Financial to invest money under false pretenses, by failing to invest their money as promised, and by misappropriating and converting investor funds for his own use.
Based on the above, the Order bars Lake from association with any broker or dealer. Lake consented to the issuance of the Order without admitting or denying any of the Commission's findings, except he admits to the Commission's jurisdiction over him and the subject matter of the proceedings and his guilty plea on June 1, 2009. (Rel. 34-60632; File No. 3-13613)
SEC Freezes Funds of Multistate Investment Fraud Syndicate; Couple and Their Companies Reaped $32.5 Million in Three-Year Loan Scam
The Securities and Exchange Commission announced today that on Sept. 3, 2009, the United States District Court for the Western District of North Carolina entered an order freezing the proceeds of an allegedly fraudulent high-yield investment scheme run by defendants Sidney S. Hanson, Charlotte M. Hanson, of Charlotte, North Carolina, and the twelve entities they controlled. The defendants, who consented to the order as well as civil injunctions and other equitable relief, are charged with operating a scheme that sold approximately 500 investors in North Carolina and elsewhere throughout the United States $32.5 million in 'private loan agreements' from at least August 2006 to June 2009.
Without admitting or denying the allegations of the Commission's complaint, the defendants consented to the entry of judgments permanently enjoining them from violating Sections 17(a) and 5 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, with monetary relief to be determined by the court at a later date upon motion of the Commission. The defendants have also consented to an asset freeze and order expediting discovery and preventing the destruction or concealment of documents.
In a related criminal action, on July 28, 2009 the U.S. Attorney's Office for the Western District of North Carolina filed an information and plea agreement in which Sidney S. Hanson pleaded guilty to one count each of securities fraud, mail fraud, and promotion of money laundering. Pursuant to the plea agreement, Sidney S. Hanson faces a minimum 144-month prison sentence.
The SEC appreciates the assistance of the U.S. Attorney for the Western District of North Carolina, the Commodities Futures Trading Commission and the North Carolina Secretary of State's Securities Division in this matter. [SEC v. Sidney S. Hanson, Charlotte M. Hanson, Queen Shoals, LLC, Queen Shoals II, LLC, Queen Shoals Capital, LLC, Queen Shoals Fund, LLC, Queen Shoals Group, LLC, Queen Shoals Holdings, LLC, Dominion Growth Fund, LLC, Dynasty Growth Fund, LLC, Heritage Growth Fund, LLC, Secure Wealth Fund, LLC, Select Fund, LLC, Two Oaks Fund, LLC, Civil Action No. 3:09-CV-00336 (RJC) (W.D.N.C.)] (LR-21198)
SEC Charges New York-Based Money Manager in $40 Million Ponzi Scheme
The Securities and Exchange Commission today charged a Brooklyn money manager for running a $40 million Ponzi scheme in which he promised approximately 800 investors guaranteed high returns from safe, liquid investments, but instead spent their money on real estate, his pornography mail order business, and other interests.
The SEC alleges that Philip G. Barry and his firms Leverage Group, Leverage Option Management Co., Inc, and North American Financial Services defrauded investors, including senior citizens and retirees, by selling securities in Leverage investment funds. According to the Commission's complaint, Barry provided fake account statements to investors that recorded growing account balances and concealed that Barry had not been trading securities at all for several years. Neither Barry nor any of his related firms is registered with the SEC in any capacity.
The SEC alleges that Barry and his firms made numerous and varied misrepresentations to induce investors to invest in or to maintain their investments with the Leverage investment funds. For example, Barry falsely represented that he would use the investors' funds to trade in options or other securities. In addition, Barry falsely told investors that he would use a proven trading strategy to protect investors' principal and generate guaranteed returns of as much as 21 percent per year. As alleged in the complaint, these purportedly guaranteed rates of return were simply numbers arbitrarily selected by Barry. Barry also misrepresented to some investors that their investments in Leverage would be protected from loss by privately obtained insurance and/or by the Securities Investors Protection Corporation (SIPC). Barry told investors that they could liquidate their investment at any time and withdraw their funds, after providing Leverage with a few weeks notice.
The SEC's complaint, filed in the U.S. District Court for the Eastern District of New York, alleges that, by approximately 1999, Barry had ceased investing any of his investors' funds in options or other securities. Instead, the Commission alleges that Barry ran a Ponzi scheme in which he used incoming investor money to repay other existing investors and diverted the remaining investor funds for his own personal use. According to the Commission's complaint, Barry spent the money by purchasing real estate in his own name and those of other entities he controlled, paying expenses of a separate mail order business that sold pornographic materials, and supporting his lifestyle.
The SEC's complaint charges Barry, Leverage Group, Leverage Option Management Co., Inc, and North American Financial Services with violating Section 17(a) of the Securities Act of 1933, Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934, and Sections 206(1), 206(2), 206(4) and Rule 206(4)-8 of the Investment Advisers Act of 1940. The complaint seeks permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, and financial penalties against all defendants.
Barry, Leverage Group, Leverage Option Management Co., Inc, and North American Financial Services, without admitting or denying the allegations, consented to the entry of a judgment that will grant the SEC the full relief that it seeks, but will defer the determination of the financial amounts of the settlement until a later date. The agreement to resolve the SEC's action is subject to approval by the court. Barry also has consented to the issuance of a Commission order barring him from association with an investment adviser. [SEC v. Philip G. Barry, Leverage Group, Leverage Option Management Co., Inc., and North American Financial Services, Civil Action No. 09-CV-3860 (E.D.N.Y.)] (LR-21199)
SEC Charges Seattle-Area Biotech With Fraudulently Hyping Stem Cell Breakthrough
The Securities and Exchange Commission today charged CellCyte Genetics Corporation, a biotechnology company based in Bothell, Wash., and its former CEO and Chief Scientific Officer, for falsely telling investors that the company's cutting-edge stem cell technology had been proven successful and was headed for human trials. In reality, the SEC alleges, the company merely had a license for a very early stage technology and no reasonable basis for its claims. According to the SEC, stock promoters hired by the company then spread the false information to investors, briefly driving the stock price to $7.50 before it plummeted back down to under a dime.
The SEC's complaints, filed in federal district court in Seattle, allege that in multiple public filings with the SEC and in other investor materials, CellCyte falsely claimed it had received U.S. Food and Drug Administration (FDA) approval to begin human clinical trials with a special stem cell compound to repair the heart. In fact, the SEC alleges, CellCyte did not know how to properly formulate the stem cell compound, had never attempted experiments with the compound to repair organs, and had not satisfied any of the FDA requirements to begin human clinical trials. According to the SEC, CellCyte's Chief Scientific Officer, Ronald Berninger of Mukilteo, Wash., originally approved or participated in the drafting of many of the false and misleading statements, while CEO Gary Reys of Freeland, Wash., approved the company's fraudulent SEC filings.
The SEC's action further alleges that CellCyte engaged in an illegal stock distribution by partnering with a Canadian stock promoter, who sent millions of spam emails, faxes and newsletters containing false information about CellCyte. During the August-December 2007 promotional campaign, CellCyte's stock price rose from $4.00 to $7.50, briefly giving the fledgling company a market capitalization of nearly half a billion dollars. The price later crashed to under ten cents per share.
The SEC's action against CellCyte and Berninger alleges that CellCyte violated Sections 5(a) and 5(c) of the Securities Act of 1933 (Securities Act), Sections 10(b) and 13(a) of the Securities Exchange Act of 1934 (Exchange Act), and Exchange Act Rules 10b-5, 12b-20, 13a-11 and 13a-13. The SEC alleges that Berninger violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and that Berninger aided and abetted CellCyte's violations of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-11 and 13a-13 thereunder. CellCyte and Berninger agreed to a settlement, without admitting or denying the SEC's allegations, in which they each consented to a permanent injunction; Berninger also agreed to pay a $50,000 civil penalty and be barred from serving as an officer or director of a public company for five years.
In a separate litigated action, the SEC charges Reys with violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and with aiding and abetting CellCyte's violations of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-11 and 13a-13 thereunder. The SEC's action against Reys further alleges that he made false statements about his past employment and that he concealed CellCyte's role in the spam campaign. The SEC seeks injunctive relief, a monetary penalty, and an order barring Reys from serving as an officer or director of a public company. [SEC v. Gary A. Reys, Case No. CV-09-1262 (RSM) W.D. Wash.; SEC v. CellCyte Genetics Corporation and Ronald W. Berninger, Case No. CV-09-1263 BAT, W.D. Wash.] (LR-21200)
INVESTMENT COMPANY ACT RELEASES
American Capital, Ltd.
A notice has been issued giving interested persons until Sept. 29, 2009, to request a hearing on an application filed by American Capital, Ltd. (f/k/a American Capital Strategies, Ltd.) for an order under Section 61(a)(3)(B) of the Investment Company Act approving applicant's proposal to grant certain stock options to non-employee directors under applicant's 2008 stock option plan. (Rel. IC-28895 - September 3)
Columbia Funds Series Trust, et al.
A notice has been issued giving interested persons until Sept. 29, 2009, to request a hearing on an application filed by Columbia Funds Series Trust, et al., for an order under Section 6(c) of the Investment Company Act for an exemption from Rule 12d1-2(a) under the Act. The order would permit registered open-end investment companies relying on Rule 12d1-2 under the Act to invest in certain financial instruments. (Rel. IC-28896 - September 4)
Alpine Global Dynamic Dividend Fund, et al.
A notice has been issued giving interested persons until Sept. 29, 2009, to request a hearing on an application filed by Alpine Global Dynamic Dividend Fund, et al., for an order under Section 6(c) of the Investment Company Act for an exemption from Section 19(b) of the Act and Rule 19b-1 under the Act. The order would permit certain registered closed-end investment companies to make periodic distributions of long-term capital gains with respect to their outstanding common shares as frequently as twelve times each year, and as frequently as distributions are specified by or in accordance with the terms of any preferred shares that such investment companies may issue. (Rel. IC-28897 - September 4)
Proposed Rule Changes
The Commission issued notice of a proposed rule change submitted by the Financial Industry Regulatory Authority (SR-FINRA-2009-055) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 to adopt FINRA Rules 5210 (Publication of Transactions and Quotations) and 5220 (Offers at Stated Prices) into the Consolidated Rulebook. Publication is expected in the Federal Register during the week of September 7. (Rel. 34-60613)
NYSE Arca, through its wholly owned subsidiary, NYSE Arca Equities filed a proposed rule change (SR-NYSEArca-2009-79) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 relating to listing of five fixed income funds of the PIMCO ETF Trust. Publication is expected in the Federal Register during the week of September 7. (Rel. 34-60619)
The Commission issued notice of filing of a proposed rule change (SR-NYSEArca-2009-77) submitted by NYSE Arca pursuant to Rule 19b-4 under the Securities Exchange Act of 1934, amending NYSE Arca Options Rule 5.3(j). Publication is expected in the Federal Register during the week of September 7. (Rel. 34-60621)
The Commission issued notice of filing of a proposed rule change (SR-NYSEAmex-2009-59) submitted by NYSE Amex pursuant to Rule 19b-4 under the Securities Exchange Act of 1934, amending NYSE Amex Options Rule 915. Publication is expected in the Federal Register during the week of September 7. (Rel. 34-60622)
The Financial Industry Regulatory Authority filed a proposed rule change (SR-FINRA-2009-057), relating to Section 1(c) of Schedule A to the FINRA By-Laws to amend the personnel assessment and gross income assessment. Publication is expected in the Federal Register during the week of September 7. (Rel. 34-60624)
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed by New York Stock Exchange (SR-NYSE-2009-90) to modify rebates payable to Designated Market Makers 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. 34-60614)
A proposed rule change filed by the Chicago Board Options Exchange (SR-CBOE-2009-066) to permit CBOE to list series that are restricted to closing transactions if such series are listed and restricted to closing transactions on another exchange 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. 34-60625)
Approval of Proposed Rule Change
The Commission approved a proposed rule change (SR-CHX-2009-10) submitted by Chicago Stock Exchange to add the Quote@CHX and Reprice@CHX order types to the Brokerplex system. Publication is expected in the Federal Register during the week of September 7. (Rel. 34-60620)
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