SEC Suspends Trading in the Securities of Sun Sports and Entertainment Corporation
The Securities and Exchange Commission announced the temporary suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934 (the Exchange Act), of trading of the securities of Sun Sports and Entertainment, Inc. (Sun Sports), of Addison, Texas at 9:30 a.m. EDT on Oct. 21, 2009, and terminating at 11:59 p.m. EST on Nov. 3, 2009.
The Commission temporarily suspended trading in the securities of Sun Sports because of questions regarding the accuracy of statements by Sun Sports in press releases and statements to investors concerning, among other things, the company's business prospects and financial viability.
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 Sun Sport'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.
If any broker, dealer or other person has any information that may relate to this matter, they should contact Stephen Korotash (firstname.lastname@example.org) or Eric R. Werner (email@example.com), at the Fort Worth Regional Office of the Securities and Exchange Commission at 817-978-3821. (Rel. 34-60849)
Senior Supervisors Group Issues Report on Risk Management Practices
The Senior Supervisors Group (SSG) that comprises senior financial supervisors from seven countries (United States, Canada, France, Germany, Japan, Switzerland, United Kingdom) today issued a report that evaluates how weaknesses in risk management and internal controls contributed to industry distress during the financial crisis.
The report - Risk Management Lessons from the Global Banking Crisis of 2008 - reviews in detail the funding and liquidity issues central to the recent crisis and explores critical areas of risk management practice in need of improvement across the financial services industry.
The report concludes that despite firms' recent progress in improving risk management practices, underlying weaknesses in governance, incentive structures, information technology infrastructure and internal controls require substantial work to address.
The observations and conclusions in the report reflect the results of two initiatives undertaken by the SSG. These initiatives involved a series of interviews with firms about funding and liquidity challenges and a self-assessment exercise in which firms were asked to benchmark their risk management practices against a series of recommendations and observations taken from industry and supervisory studies published in 2008.
This report represents a joint effort of nine supervisory agencies, including the Securities and Exchange Commission, the Office of the Comptroller of the Currency, and the Federal Reserve in the United States. The other agencies are the Canadian Office of the Superintendent of Financial Institutions, the French Banking Commission, the German Federal Financial Supervisory Authority, the Japanese Financial Services Agency, the Swiss Financial Market Supervisory Authority, and the U.K. Financial Services Authority.
These initiatives were conducted to support the priorities of the Financial Stability Board whose mission is to address vulnerabilities affecting the financial system and to promote global financial stability. (Press Rel. 2009-222)
SEC Issues Proposals to Shed Greater Light on Dark Pools
The Securities and Exchange Commission today voted unanimously to propose measures intended to increase transparency of dark pools so investors get a clearer view of stock prices and liquidity.
Dark pools are essentially private trading systems in which participants can transact their trades without displaying quotations to the public. The largest dark pools are sponsored by securities firms primarily to execute the orders of their customers and proprietary orders of the firms.
"We should never underestimate or take for granted the wide spectrum of benefits that come from transparency, which plays a vital role in promoting public confidence in the honesty and integrity of financial markets," said SEC Chairman Mary Schapiro. "Today's focus on dark pools is just one part of our broader ongoing review of how the equity markets are structured."
The number of active dark pools transacting in stocks that trade on major U.S. stock markets has tripled since 2002. Given this growth of dark pools, a lack of transparency could create a two-tiered market that deprives the public of information about stock prices and liquidity.
To make trading through dark pools more transparent, the SEC's proposals generally would require that information about an investor's interest in buying or selling a stock be made available to the public instead of just a select group operating with a dark pool. The proposals also would require that dark pools publicly identify that it was their pool that executed the trade.
"Today's proposals are intended to prevent the development of a two-tiered market in access to pricing information, further promote displayed liquidity, and enhance transparency of trade information," said James Brigagliano, Co-Acting Director of the Division of Trading and Markets.
The SEC's proposals address three specific concerns related to dark pools:
In its proposals, the Commission is seeking public comment and data on certain issues relating to dark pools. Dark pools of liquidity are one of several issues that the Commission is currently considering as part of its broad review of equity market structure.
Public comments on today's proposal must be received by the Commission within 90 days after its publication in the Federal Register. (Press Rel. 2009-223)
In the Matter of William A. Huber
On Oct. 20, 2009, 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 against William A. Huber. The Order finds that on Sept. 29, 2009, a judgment was entered by consent against Huber, permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, Rule 10b-5 thereunder, Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder, in the civil action entitled SEC v. William A. Huber, et al., Civil Action Number 09-cv-6068, in the United States District Court for the Northern District of Illinois. In the Order, the Commission finds that the Commission's complaint alleged that Huber and Hubadex defrauded investors in the Funds by making false and misleading statements to them about the total assets under management, the returns generated by the Funds and the individual investors' account balances and gains. For example, Huber told investors that the three Funds had approximately $40.27 million in assets under management when, in reality, they only had approximately $3 million. In addition, the Commission's complaint alleged that Huber significantly inflated the fees Hubadex was entitled to receive from all three Funds based on the inflated returns he reported to investors and made Ponzi-like payments to investors who requested redemptions using funds that belonged to other investors to pay inflated returns. Huber also diverted investor funds to pay his personal expenses.
Based on the above, the Order bars Huber from associating with an investment adviser. Huber consented to the issuance of the Order without admitting or denying any of the Findings in the Order, except as to the entry of the permanent injunction against him, which he admitted. (Rel. IA-2940; File No. 3-13661)
In the Matter of ECO2 Plastics, Inc.
On Oct. 20, 2009, the Commission issued an Order Instituting Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order (Order) as to ECO2 Plastics, Inc. (ECO2).
In the Order, the Commission finds that ECO2 failed to make required disclosures in its (1) Form 10-KSB for the fiscal year ended Dec. 31, 2007 concerning the effectiveness of its disclosure controls and procedures (DCP) and regarding its compliance with internal control over financial reporting requirements and (2) in its Form 10-K for the fiscal year ended Dec. 31, 2008 concerning the effectiveness of its DCP. As a result, the Commission finds that ECO2 violated Section 15(d) of the Securities Exchange Act of 1934 and Rules 15d-1 and 15d-15 thereunder.
Based on the above, the Order orders ECO2 to cease and desist from committing or causing any violations and any future violations of Section 15(d) of the Exchange Act and Rules 15d-1 and 15d-15 thereunder. ECO2 consented to the issuance of the Order without admitting or denying any of the findings in the Order, except as to the Commission's jurisdiction over the company and the subject matter of the proceedings, which are admitted. (Rel. 34-60846; AAE Rel. 3059; File No. 3-13659)
Securities and Exchange Commission Orders Hearing on Registration Revocation or Suspension Against Eight Public Companies for Failure to Make Required Periodic Filings
The Commission today 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 eight companies for failure to make required periodic filings with the Commission:
In this Order, the Division of Enforcement (Division) alleges that the eight 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. 34-60847; File No. 3-13660)
Federal Judge Permanently Enjoins Dr. Gautam Gupta from Future Insider Trading Violations, Orders Him to Pay Disgorgement of $689,401 in Illegal Profits, and Orders Him to Pay a Civil Penalty Equal to His Illegal Profits
The Securities and Exchange Commission announced that the Honorable William J. Hibbler, United States District Judge for the Northern District of Illinois, entered Final Judgment as to defendant Dr. Gautam Gupta (Gupta) of Rockford, Illinois on Oct. 16, 2009. Gupta was enjoined from future violations of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder.
The Court ordered disgorgement and prejudgment interest against Gupta in the respective amounts of $689,401 and $188,096.17. The Court also imposed a civil penalty against Gupta in the amount of $689,401, the full amount of his insider trading profits. The Court ordered Gupta to satisfy payment of these amounts in accordance with a monthly payment schedule over a period of one year. Gupta consented to the entry of the judgment without admitting or denying the allegations of the Commission's Complaint.
The Commission's complaint alleged fraud in connection with insider trading in the securities of Georgia-Pacific Corporation by three individuals who received tips directly or indirectly from defendant James D. Zeglis (Zeglis), now deceased. The Complaint alleged that Zeglis misappropriated material nonpublic information from his brother, a member of Georgia-Pacific's board of directors, and further alleged that on Nov. 10, 2005, three days before a public announcement that Georgia-Pacific had agreed to be acquired by Koch Industries, Inc., Zeglis tipped Gupta and Jim W. Dixon (Dixon), both of whom purchased Georgia-Pacific securities. Gupta, in turn, tipped Lance D. McKee (McKee), who also purchased Georgia-Pacific securities.
Further, the Complaint alleged that after Zeglis tipped Dixon, Dixon purchased Georgia-Pacific options on Zeglis's recommendation, and paid Zeglis a kickback from his ill-gotten gains. Within moments after meeting with Zeglis, Gupta transferred $400,000 from a commodities brokerage account to his bank account and placed a 40 second phone call to McKee. After the phone call from Gupta, McKee almost immediately purchased 500 shares of Georgia-Pacific stock, a stock he had never previously purchased. Within a few hours, Gupta had opened a brokerage account, transferred the $400,000 into his new brokerage account, and made his first stock purchase in ten years by purchasing 20,000 shares of Georgia-Pacific. The following day, Gupta purchased an additional 10,000 shares and then purchased 241short term call options in Georgia-Pacific, increasing his investment in Georgia-Pacific securities to more than $1 million. Further, the Complaint alleged that on Sunday, Nov. 13, 2005, Koch Industries, Inc. (Koch) publicly announced a definitive agreement for a Koch subsidiary to make a cash tender offer for all shares of Georgia-Pacific. The following day, Georgia-Pacific's stock price increased 36% in response to the announcement. Gupta then sold his Georgia-Pacific securities, realizing profits of $689,401.
Final judgments have previously been entered against all other defendants. [SEC v. John Zeglis, As Executor, Successor/Representative To James D. Zeglis, Gautam Gupta, Jim W. Dixon and Lance D. McKee, Civil Action File No. 08CV5259 (N.D. Ill.)] (LR-21256)
Advisory Firm Employee Sentenced for Embezzling Over $1.3 Million in Client Funds
The Commission announced today that, on Oct. 9, 2009, Rita White, a former employee of former Boston-based investment advisory firm Veritas Advisors, Inc., was sentenced to two years imprisonment, followed by three years of supervised release, and was ordered to pay a fine of $25,000. White also was ordered to pay restitution in the amount of $1,333,340 and to forfeit certain property in the same amount. On May 22, 2007, White pled guilty to three counts of mail fraud in connection with her embezzlement of Veritas client funds.
According to the criminal Information against White, filed on Dec. 26, 2006, Veritas provided investment, bookkeeping, and bill payment services to its clients. White, as a Veritas employee, had access to blank checks for client accounts and was responsible, among other things, for writing and mailing checks drawn on client accounts to pay for clients' day-to-day expenses. Between at least 1999 and March 2005, the Information alleges, White wrote and mailed checks drawn on certain clients' accounts, totaling more than $1.4 million, to pay for her own personal expenses, without the clients' authorization.
White was one of several respondents in a Commission administrative proceeding instituted on July 5, 2006. In the administrative proceeding, the Division of Enforcement made substantially similar factual allegations against White as those contained in the Information. The Division alleged that White's conduct violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. White failed to respond to the Division's allegations, and, on Oct. 11, 2006, an Administrative Law Judge entered an order of default against her. The default order deemed the Division's factual allegations against White to be true, found that she had willfully violated the aforementioned provisions of the Exchange Act, ordered her to cease and desist from committing or causing future violations of these provisions, barred her from associating with any investment adviser, and ordered her to pay disgorgement in the amount of $1,300,000, plus prejudgment interest thereon, and a civil penalty in the amount of $100,000.
The remaining parties to the administrative proceeding - namely, Veritas, an affiliated entity of Veritas known as Veritas Financial Advisors, LLC, and Patrick Cox, the sole principal of both entities - consented to the entry of an order, on Dec. 29, 2006, making certain factual findings, finding that they violated the anti-fraud and various other provisions of the federal securities law, censuring both Veritas entities for their violations, ordering Cox to cease and desist from committing or causing future securities laws violations, revoking Veritas Financial's registration as an investment adviser, barring Cox from associating with any investment adviser, and ordering Cox to pay a civil penalty of $120,000.
For additional information, see Exchange Act Release No. 54098 (July 5, 2006), and associated order, Exchange Act Release No. 54587 (Oct. 11, 2006), and Exchange Act Release No. 55021 (Dec. 29, 2006).
The Commission acknowledges the assistance and cooperation of the Federal Bureau of Investigation and the United States Attorney's Office for the District of Massachusetts. [U.S. v. Rita White, Case No. 1:06-CR-10424-MLW (D. Mass.); In the Matter of Veritas Financial Advisors, LLC, et al., Admin. Proc. File No. 3-12355] (LR-21257)
INVESTMENT COMPANY ACT RELEASES
Annuity Investors Life Insurance Company, et al.
An order has been issued pursuant to Section 6(c) of the Investment Company Act to Annuity Investors Life Insurance Company (Annuity Investors), Annuity Investors Variable Account C, and Great American Advisors, Inc. (collectively, Applicants), granting exemptions from the provisions of Sections 2(a)(32) 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 bonus credits applied to purchase payments made under deferred variable annuity contracts issued by Annuity Investors. (Rel. IC-28948 - October 20)
Pacific Investment Management Company LLC and PIMCO ETF Trust
A notice has been issued giving interested persons until Nov. 9, 2009, to request a hearing on an application filed by Pacific Investment Management Company LLC and PIMCO ETF Trust for an order to permit (a) series of certain actively managed open-end management investment companies to issue shares (Shares) redeemable in large aggregations only (Creation Units); (b) secondary market transactions in Shares to occur at negotiated market prices; (c) certain series to pay redemption proceeds, under certain circumstances, more than seven days from the tender of Shares for redemption; (d) 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; and (e) certain registered management investment companies and unit investment trusts outside of the same group of investment companies as the series to acquire Shares. (Rel. IC-28949 - October 20)
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