SEC Suspends Trading in 17 Companies to Combat Corporate Hijackings
The Securities and Exchange Commission announced the temporary suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934, of trading of the securities of the following 17 companies at 9:30 a.m. EDT on Sept. 23, 2009, and terminating at 11:59 p.m. EDT on Oct. 6, 2009: AEI Transportation Holdings, Inc. (DTGP) of Seattle, Washington; The Alcar Chemicals Group, Inc. (ALCX) of Vercheres, Quebec; China Adnet Enterprises, Inc. (CAEJ) of New York, New York; Innolife Pharma, Inc. (INNP) of Toronto, Ontario; KSW Industries, Inc. (KSWJ) of Etobicoke, Ontario; Level Vision Electronics, Inc. (LVLV) of Montreal, Quebec; Life Exchange, Inc. (LFXG) of Miami, Florida; Lotta Coal, Inc. (LCOL) of Calgary, Alberta; Magellan Energy Ltd. (MGLG) of Mississauga, Ontario; Marinas International, Inc. (MNSI) of Cincinnati, Ohio; Microlink Solutions, Inc. (PKTO) of Calgary, Alberta; UDS Group, Inc. (UDSG) of Boca Raton, Florida; United Environmental Energy Corp. (UTEM) of Fort Lauderdale, Florida; Uptrend Corp. (UPCP) of Shinjingshan District, Beijing; VShield Software Corp. (VSHE) of Henderson, Nevada, World Hockey Association Corp. (WHKA) of Oldsmar, Florida; and WW Energy, Inc. (WWNG) of Farmington, New Mexico.
The Commission temporarily suspended trading in the securities of the 17 companies because of questions that have been raised about the accuracy and adequacy of publicly disseminated information concerning their status as publicly-traded companies. Specifically, certain persons appear to have either: 1) usurped the identity of defunct or inactive publicly traded corporations, initially by incorporating new entities using the same names as each of the defunct entities, or 2) reinstated defunct publicly traded corporations without authorization. (Rel. 34-60707)
SEC Suspends Trading in the Securities of Genova Biotherapeutics 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 Genova Biotherapeutics Inc. (Genova), of New York, New York, at 9:30 a.m. EDT on Sept. 23, 2009, and terminating at 11:59 p.m. EDT on Oct. 6, 2009.
The Commission temporarily suspended trading in the securities of Genova due to a lack of current and accurate information concerning the securities of the company because questions have arisen regarding stock promotional activity for Genova, 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 Genova'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. 34-60708)
Closed Meeting - Thursday, October 1, 2009 - 2:00 p.m.
The subject matter of the Closed Meeting scheduled for Thursday, Oct. 1, 2009 will be: institution and settlement of injunctive actions; institution and settlement of administrative proceedings; a litigation matter; 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.
In the Matter of Pacific Lease Group, Inc.
On September 23, the Commission issued an Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934 (Order) as to Pacific Lease Group, Inc. (PLG).
In the Order, the Division of Enforcement alleges that PLG failed to make required disclosures in its Form 10-KSB for the fiscal year ended Dec. 31, 2007 concerning the effectiveness of its disclosure controls and procedures and regarding its compliance with internal control over financial reporting requirements. The Division of Enforcement also alleges that PLG is delinquent in its periodic filings, having not filed any annual or quarterly reports for periods subsequent to the fiscal quarter ended Sept. 30, 2007. As a result, the Division of Enforcement alleges that PLG failed to comply with Section 13(a) of the Securities Exchange Act of 1934 and Rules 13a-1, 13a-13 and 13a-15 thereunder.
A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide PLG an opportunity to respond to these allegations, and to determine whether it is appropriate to suspend for a period not exceeding 12 months or to revoke the registration of the securities of PLG. The Order directs the administrative law judge to issue an initial decision within 120 days from the date of service of the Order. (Rel. 34-60709; File No. 3-13621)
In the Matter of Scott M. Ross
On September 23, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 203(f) of the Investment Advisers Act of 1940, Making Findings and Imposing Remedial Sanctions (Order) against Scott M. Ross.
The Order finds that from some point in 2007 until February of 2009, Ross operated and served as investment adviser to three private investment funds. On Feb. 3, 2009, the Commission filed suit against Ross based on admissions Ross made directly to the Commission's staff. The Commission's complaint alleged that, after raising at least $10 million from approximately 300 investors, Ross misappropriated investors' money from at least two of his investment funds, took undisclosed commissions from another fund, and used investors' money from one fund to pay returns to investors in another fund. On the same day that the Commission sued Ross, a Partial Final Judgment and Order of Permanent Injunction, Asset Freeze and Other Relief was entered against Ross, permanently enjoining him from future violations of Sections 17(a)(1), 17(a)(2), and 17(a)(3) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
Based on the above, the Order bars Ross from association with any investment adviser. Ross consented to the issuance of the Order without admitting or denying any of the findings contained in the Order except as to the issuance of the Partial Final Judgment and Order of Permanent Injunction, Asset Freeze and Other Relief, which Ross admitted. (Rel. IA-2927; File No. 3-13622)
SEC v. David L. Hersh
The Securities and Exchange Commission announced today that on September 22, it filed a settled Complaint in the United States District Court for the Eastern District of North Carolina against David L. Hersh (Hersh). The Commission alleges that between January 2007 and January 2009, Hersh conducted a fraudulent offering of $2 million in unregistered securities from his home near Raleigh, North Carolina.
The Complaint alleges that Hersh raised more than $2 million from twelve investors to invest in an options trading program, and that he falsely and misleadingly told the investors that they could expect a 40% annual rate of return and that the program involved minimal risk. The Complaint further alleges that Hersh misappropriated approximately $575,000 in investor funds for his personal use and that he lost approximately $1,136,000 of the funds in risky options trading. According to the Complaint, as part of the scheme, Hersh deceived investors and prospective investors by showing them false trade confirmations and other documents which he created.
The Commission alleges that, by his conduct, Hersh violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder.
Hersh has entered into a consent in which he agrees to the entry of a final judgment providing for permanent injunctive relief, disgorgement of his ill-gotten gains of $574,936 plus prejudgment interest of $55,336, and a civil penalty of $130,000. [SEC v. David L. Hersh, Civil Action No. 5:09-CV-417 (E.D.NC)] (LR-21218)
Court Enters Final Judgment Setting Disgorgement, Prejudgment Interest and Imposing Civil Penalty Against Defendant John P. Utsick
The Securities and Exchange Commission announced that on May 22, 2009, the United States District Court for the Southern District of Florida entered a Final Judgment Setting Disgorgement and Prejudgment Interest and Imposing a Civil Penalty against Defendant John P. Utsick. After evidentiary hearings over three days, the Court issued a 28-page opinion finding that Utsick ran his two entertainment companies as a Ponzi scheme, and improperly spent more than $4 million of investor money raised by his companies on his own expenses. The Final Judgment orders Utsick to pay disgorgement of $4,035.479.31, prejudgment interest of $921,708.84 and a civil penalty of $120,000.
The Commission began this action by filing its Complaint on April 17, 2006, against Utsick, his two companies, Worldwide Entertainment, Inc. and Entertainment Group Fund, Inc., and others. The Complaint alleges violations of the antifraud and registration provisions of the federal securities laws in connection with the fraudulent offering of shares and other investments in Utsick's entertainment ventures that raised more than $300 million from over 3,300 investors nationwide. Utsick previously consented to the entry of a permanent injunction without admitting or denying the allegations of the Complaint. [SEC v. John P. Utsick, et al., Civil Action No. 07-20975-CIV-HUCK/O'SULLIVAN] (LR-21219)
INVESTMENT COMPANY ACT RELEASES
Rafferty Asset Management, LLC, et al.
An order has been issued on an application filed by Rafferty Asset Management, LLC, et al. The order amends an existing order that permits: (a) series of an open-end management investment company to issue shares (ETS) redeemable in large aggregations only (Creation Units); (b) secondary market transactions in ETS to occur at negotiated prices; (c) dealers to sell ETS to purchasers in the secondary market unaccompanied by a prospectus, when prospectus delivery is not required by the Securities Act of 1933; (d) certain series to pay redemption proceeds, under certain circumstances, more than seven days after the tender of ETS for redemption; and (e) certain affiliated persons of the series to deposit securities into, and receive securities from, the series in connection with the purchase and redemption of Creation Units (Prior Order). The amended order: (a) provides greater operational flexibility to the existing and future series of the Direxion Shares ETF Trust (Funds); (b) expands the category of Funds designed to correspond to the return of an underlying securities index (Underlying Index) to include Funds that seek to match the performance of an Underlying Index primarily focused on United States equity securities that apply a strategy referred to as 130/30; (c) supersedes the definition of Leveraged Funds and Inverse Funds in the application on which the Prior Order was issued (Prior Application); (d) deletes the relief granted in the Prior Order from Section 24(d) of the Act and revises the Prior Application accordingly; and (e) amends the terms and conditions of the Prior Application with respect to certain disclosure requirements. (Rel. IC-28905 - September 22)
DNP Select Income Fund Inc., et al.
An order (Order) has been issued on an application filed by DNP Select Income Fund Inc., et al. (Funds) under Section 6(c) of the Investment Company Act for an exemption from Sections 18(a)(1)(A) and (B) of the Act for a period from the date of the Order until October 31, 2010. The Order permits each Fund to issue or incur debt subject to asset coverage of 200% that would be used to refinance the Fund's auction preferred shares and/or remarketed preferred shares issued prior to Feb. 1, 2008 that are outstanding at the time such post-Order debt is issued or incurred. The Order also permits each Fund to declare dividends or any other distributions on, or purchase, capital stock during the term of the Order, provided that such debt has asset coverage of at least 200% after deducting the amount of such transaction. (Rel. IC-28906 - September 22)
Jackson National Life Insurance Company, et al.
An order has been issued pursuant to Section 6(c) of the Investment Company Act to Jackson National Life Insurance Company (Jackson National), Jackson National Separate Account - I, and Jackson National Life Distributors LLC (collectively, Applicants), granting exemptions from the provisions of Sections 2(a)(32), 22(c), and 27(i)(2)(A) of the Act and Rule 22c-1 thereunder, to the extent necessary to permit recapture, under specified circumstances, of certain contract enhancements applied to purchase payments made under deferred variable annuity contracts issued by Jackson National. (Rel. IC-28907 - September 22)
Highland Capital Management, L.P., et al.
An order has been issued on an application filed by Highland Capital Management, L.P., et al. under Section 6(c) of the Investment Company Act granting an exemption from Sections 18(c) and 18(i) of the Act, under Sections 6(c) and 23(c)(3) of the Act granting an exemption from Rule 23c-3 under the Act, and pursuant to Section 17(d) of the Act and Rule 17d-1 under the Act. The order permits certain registered closed-end management investment companies to issue multiple classes of shares and to impose asset-based distribution fees and early withdrawal charges. (Rel. IC-28908 - September 22)
Annuity Investors Life Insurance Company, et al.
A notice has been issued giving interested persons until Oct. 19, 2009, to request a hearing on an application filed by Annuity Investors Life Insurance Company, Annuity Investors Variable Account C and Great American Advisors, Inc. (Applicants). Applicants seek an order pursuant to Section 6(c) of the Investment Company Act to permit, under specified circumstances, the recapture of certain bonuses applied to certain deferred variable annuity contracts and certificates issued or to be issued by Annuity Investors Life Insurance Company. Applicants also request that the order being sought extend to any other Financial Industry Regulatory Authority (FINRA) member broker-dealer controlling or controlled by, or under common control with Annuity Investors Life Insurance Company that serves as a distributor or principal underwriter of the Contracts. (Rel. IC-28909 - September 22)
Proposed Rule Changes
The Commission issued notice of a proposed rule change, as modified by Amendment No. 1, by the New York Stock Exchange (SR-NYSE-2009-84) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 to Amend NYSE Rule 36 to Permit the Use of Personal Portable or Wireless Communication Devices Off the Exchange Trading Floor and Outside Other Restricted Access Areas. Publication is expected in the Federal Register during the week of September 21. (Rel. 34-60691)
The Commission issued notice of a proposed rule change, as modified by Amendment No. 1, by the NYSE Amex (SR-NYSEAmex-2009-57) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 to Amend Rule 36 - NYSE Amex Equities NYSE Rule 36 to Permit the Use of Personal Portable or Wireless Communication Devices Off the Exchange Trading Floor and Outside Other Restricted Access Areas. Publication is expected in the Federal Register during the week of September 21. (Rel. 34-60692)
Immediate Effectiveness of Proposed Rule Change
A proposed rule change (SR-NYSEAmex-2009-61), as modified by Amendment No. 1, filed by NYSE Amex to establish fees for electronically executed complex 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 September 21. (Rel. 34-60698)
Approval of Proposed Rule Change
The Commission granted approval to a proposed rule change (SR-FINRA-2009-014) submitted by the Financial Industry Regulatory Authority to adopt FINRA Rule 2150 (Improper Use of Customers' Securities or Funds; Prohibition Against Guarantees and Sharing in Accounts) in the Consolidated FINRA Rulebook Publication is expected in the Federal Register during the week of September 21. (Rel. 34-60701)
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