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U.S. Securities and Exchange Commission

SEC News Digest

Issue 2009-203
October 22, 2009


SEC Launches Investor.gov

Agency's First-Ever Web Site Devoted Exclusively to Investor Education

The Securities and Exchange Commission today launched its first-ever Web site devoted exclusively to investor education, providing investors with in-depth information and "top tips" on how to invest wisely, plan for the future, and avoid being scammed.

By visiting www.investor.gov, investors can access information in a user-friendly format that is specifically tailored to their needs. The site includes sections specifically for those just getting started investing, for those saving for a child's education, and for those planning for retirement. It also has a detailed "Seniors Care Package" section for senior citizens and caretakers.

In a welcome video on the new site, SEC Chairman Mary Schapiro says, "Investing information is available from thousands of online resources - some good, some not so good. Through Investor.gov, we are adding our own online voice to provide investors with unbiased and factual investing information."

Chairman Schapiro adds, "You'll find resources that can help you analyze your current holdings or even check the background of a registered financial professional."

Investor.gov also offers a section exclusively in Spanish, targeting the millions of Spanish-speaking investors in the United States. The "En Espanol" portion presents information about what to do if an investor feels that he or she has been a fraud victim, as well as a Spanish-language podcast explaining the history and functions of the SEC.

The site will be further enhanced with additional investor education resources in the coming weeks and months.

"Investor.gov will help you if you are invested in the market, are considering investing, or care for a relative who has retirement savings," said Lori Schock, Director of the SEC's Office of Investor Education and Advocacy. "Investor.gov provides an extensive collection of investor education materials, tools, calculators, checklists, as well as valuable investor alerts."

Investor.gov is the latest in a series of social media initiatives undertaken by the SEC. On the home page at www.sec.gov, visitors can sign up to receive information and instant e-mail alerts on more than 80 topics of interest to investors as well as other market participants. The agency also reaches investors online through other social media channels such as Twitter and YouTube:

  • Investor Information: www.twitter.com/SEC_Investor_Ed
  • News Releases and Alerts: www.twitter.com/SEC_News
  • Enforcement Actions: www.twitter.com/SEC_Actions
  • Careers at the SEC: www.twitter.com/SEC_Jobs
  • You Tube channel: www.YouTube.com/SEC_Views

(Press Rel. 2009-224)

SEC to Hold Small Business Capital Formation Forum on November 19

Securities and Exchange Commission today announced that it will hold its annual forum on small business capital formation on November 19 at its Washington, D.C., headquarters.

The SEC forum will include both roundtable and breakout group sessions that are expected to focus on the economic recovery and the SEC's "accredited investor" definition for private and limited offerings. The roundtable participants and full agenda for the forum will be announced at a later date and posted on the SEC Web site.

"Since 1982, this annual event has served as an important way for the SEC and its staff to interact with the small business community and exchange ideas about how best to improve small business capital formation," said Gerry Laporte, Chief of the SEC's Office of Small Business Policy.

The all-day forum will begin at 9 a.m. ET, and roundtable sessions will be webcast on the SEC's Web site. During the breakout group sessions in the afternoon, participants will work together to formulate specific policy recommendations. The breakout group sessions will not be webcast, but those who cannot attend in person can still participate through a telephone conference call. Those wishing to participate in a forum breakout group, whether in person or by telephone conference call, need to register online by November 16, 2009.

The SEC is looking for suggestions on specific topics to be discussed at the forum and for recommendations to be considered by the forum breakout groups. Suggestions and recommendations can be e-mailed to the SEC's Office of Small Business Policy at SmallBusiness@sec.gov. Questions about the forum also may be sent to that e-mail address, or call (202) 551-3460 for more information. (Press Rel. 2009-227)


SEC Charges Promoter and Brokers With Antifraud and/or Section 5 Violations in Real Estate Investment Scheme Targeting Seniors at Free Lunch Seminars

On Oct. 22, 2009, the Securities and Exchange Commission filed a civil injunctive action in the United States District Court for the Eastern District of New York charging Charles C. Slowey, Jr.; Endeavor Partners, LLC; Endeavor Capital Management Group, LLC; Edward D. Puttick, Sr.; and Advanced Planning Securities, Inc. with violations of the antifraud provisions of the securities laws in connection with the sale of unregistered securities representing interests in four real estate funds to investors, many of whom were unsophisticated retirees and senior citizens. The SEC also charged the above defendants, along with two brokers, Gregory L. Oldham and Glenn R. Harris and their company Oldham Harris Inc., with violations of the registration provisions of the securities laws.

According to the SEC's complaint, the securities fraud was orchestrated by Charles C. Slowey, Jr., 65, of Oak Beach, NY, and two companies controlled by Slowey, Endeavor Partners, LLC and Endeavor Capital Management Group, LLC. The SEC alleges that the four real estate funds were managed by Endeavor Partners or Endeavor Capital Management Group. The SEC alleges that these three defendants made misrepresentations to investors who invested approximately $12 million in the funds, and, further, that these defendants misappropriated investor proceeds. The SEC also alleges that Advanced Planning Securities, Inc. (APS) a formerly registered broker-dealer firm in Smithtown, N.Y., and its former president Edward D. Puttick, Sr., 70, of Setauket, New York, failed to conduct sufficient due diligence prior to authorizing brokers to sell interests in the funds to investors, including unsophisticated senior citizens. Finally, the SEC alleges that these defendants; the brokers, Gregory L. Oldham, 59, of Kenosha, Wisconsin, and Glenn R. Harris, 34, of Santa Rosa, California; and Oldham Harris Inc. (OHI) violated the registration provisions of the securities laws.

According to the SEC's complaint, Oldham, Harris, and OHI solicited investors by means of invitations to free lunch or dinner "seminars" at restaurants. On several occasions, Slowey joined Oldham and Harris at the gatherings to help them make sales of Endeavor Securities to potential investors at the seminars or in meetings at the OHI office scheduled shortly afterwards. Many of the investors to whom Oldham, Harris, and OHI sold these investments were elderly and of limited means and few had previously invested in private placement securities or securities based on distressed or subprime mortgages.

The SEC alleges that when the funds began to have increasing financial difficulties, Slowey continued to make false statements to investors. For example, told one senior investor in Florida in mid-2006 that his investment was safe, when in fact the funds had little money left by that time. Slowey told another senior investor in January 2007 that the funds would recover by the following year, and he had no basis for making that statement. In June, July, and November 2006, Slowey asked investors to reinvest their maturing interest in the Endeavor Funds even though he knew that the funds had lost substantial sums of money, and owned only a handful of properties worth far less than the $10 million initially deposited by investors.

The SEC's complaint alleges that Puttick and APS failed to conduct sufficient due diligence into the private placement securities they were selling and failed to resolve numerous red flags concerning Slowey and the funds, and, as a result, violated the implicit representation that all brokers make to their customers that there is an adequate basis for recommending an investment. Puttick and APS also failed to disclose to investors their lack of due diligence.

The SEC further alleges that the defendants violated the registration provisions of the securities laws by selling fund securities for which there was no registration statement in effect. Many of the customers were elderly, unsophisticated investors who could not have been expected to understand the risks associated with the funds' investments in distressed mortgages and other real-estate plays.

The SEC's complaint charges each of the defendants with violations of Sections 5(a) and 5(c) of the Securities Act of 1933. Further, the SEC's complaint charges Slowey, the Management Companies, Puttick, and APS with violations of Section 17(a) of the Securities Act, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC's complaint seeks a final judgment permanently enjoining the defendants (except APS) from future violations of the above provisions of the federal securities laws, ordering them to disgorge their ill-gotten gains plus prejudgment interest on a joint and several basis, and ordering them to pay financial penalties. [SEC v. Charles C. Slowey, Jr.; Endeavor Partners, LLC; Endeavor Capital Management Group, LLC; Edward D. Puttick, Sr.; Advanced Planning Securities, Inc.; Gregory L. Oldham; Glenn R. Harris; and Oldham Harris Inc., Civil Action No. 09-CV-4547 (EDNY) (LDW)] (LR-21258)

SEC Charges Broker for Repeatedly Disseminating Fake Press Releases and Making Fraudulent Internet Postings

The Securities and Exchange Commission today charged Lambros Ballas, a licensed securities broker at a New York stock brokerage firm, with using phony press releases to manipulate the stock prices of multiple publicly traded companies. Ballas created and then distributed fake press releases purporting to announce good news regarding the companies, including that Google was buying one company at a substantial premium. Ballas then posed as an investor on Internet message boards, touting the announcements he had fabricated. In one instance, Ballas' scheme caused the stock price to increase by over 75 percent within a few hours of the issuance of his phony press release. Among other relief, the SEC is seeking an emergency court order to enjoin Ballas from further fraudulent activity.

The Commission's complaint, filed in federal court in San Jose, Calif., and documents filed in support of the requested emergency relief, alleges Ballas issued his first phony press release on Sept. 29, 2009. The release falsely announced that Pennsylvania biotech company Discovery Laboratories had obtained approval from the U.S. Food and Drug Administration for a drug under development. Ballas then posted a message on a stock message board with a link to what he described as the company's official press release. In his post, Ballas claimed to have called his personal broker who confirmed the deal. Discovery Laboratories' stock price shot up nearly 50%.

The next day, September 30, Ballas issued a release falsely claiming that IMAX Corporation had been acquired by Disney. Once again he followed up by posting links to the phony release on a stock message board, telling other potential investors that he had bought 10,000 IMAX shares and that his broker had called him about the deal early that morning.

Ballas continued his scheme on October 1, issuing a phony press release stating that California search engine company Local.com was being acquired by Microsoft. Ballas followed this by again posting messages and links to the Local.com release on stock message boards. In one posting he said that Local.com had just been bought out by Microsoft for $12.50 per share including patent ownership." In aftermarket trading, Local.com's stock price rose over 75%. Later that night, Local.com issued a corrective release saying that the Microsoft release had been false - there was no Microsoft acquisition. Undeterred, the next day Ballas issued another phony release, this time stating that it was Google, and not Microsoft, that was acquiring the company.

The SEC further alleges that for at least one of the stocks he touted, Ballas purchased shares of the company immediately before disseminating the phony press release he had drafted.

In its federal court action against Ballas, the SEC alleges Ballas violated Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. The SEC seeks an ex parte temporary restraining order, a preliminary and permanent injunction, expedited discovery, disgorgement with prejudgment interest, and civil penalties against Ballas.

The Commission appreciates the significant assistance of FINRA, the Financial Industry Regulatory Authority. The Commission's investigation is continuing. [SEC v. Lambros D. Ballas, Case No. C-09-05036 (JW) (N.D. CA)] (LR-21259)


Servus Life Insurance Company Separate Account One

An order has been issued pursuant to Section 8(f) of the Investment Company Act declaring that Servus Life Insurance Company Separate Account One has ceased to be an investment company. (Rel. IC-28980 - October 21)

Servus Life Insurance Company Separate Account Two

An order has been issued pursuant to Section 8(f) of the Investment Company Act declaring that Servus Life Insurance Company Separate Account Two has ceased to be an investment company. (Rel. IC-28981 - October 21)


Immediate Effectiveness Proposed Rule Change

A proposed rule change filed by NASDAQ OMX BX, the NASDAQ Stock Market, and NASDAQ OMX PHLX, relating to the Restated Certificate of Incorporation of the NASDAQ OMX Group, Inc. (SR-BX-2009-061, SR-NASDAQ-2009-087, and SR-Phlx-2009-88, respectively) 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 October 26. (Rel. 34-60845)


Order Approving Joint Amendment

Pursuant to Section 11A of the Securities Exchange Act of 1934 and Rule 608 of Regulation NMS thereunder, the Commission has approved Joint Amendment No. 1 to the Options Order Protection and Locked/Crossed Market Plan, submitted by the Chicago Board Options Exchange, International Securities Exchange, The NASDAQ Stock Market, NASDAQ OMX BX, NASDAQ OMX PHLX, NYSE Amex, and NYSE Arca. Publication is expected in the Federal Register during the week of October 26. (Rel. 34-60841)





Modified: 10/22/2009