Annual Forum on Small Business Capital Formation
The Securities and Exchange Commission will hold its annual forum on small business capital formation on Nov. 19, 2009, beginning at 9:00 a.m.
The forum will include roundtables focusing on the state of small business capital formation and the SEC's accredited investor definition for private and limited offerings. The roundtables will take place in the Auditorium of the Commission's headquarters at 100 F Street, NE, Washington, D.C. and will be open to the public with seating on a first-come, first-served basis. Doors will open at 8:30 a.m. Visitors will be subject to security checks.
For further information, please contact Anthony Barone at 202-551-3261.
In the Matter of Energy Source, Inc.
An Administrative Law Judge has issued an Order Making Findings and Revoking Registration by Default (Default Order) in Energy Source, Inc., Administrative Proceeding No. 3-13638. The Order Instituting Proceedings alleged that Energy Source, Inc., repeatedly failed to file required annual and quarterly reports while its securities were registered with the Securities and Exchange Commission. The Default Order finds these allegations to be true and revokes the registration of each class of registered securities of Energy Source, Inc., pursuant to Section 12(j) of the Securities Exchange Act of 1934. (Rel. 34-60920; File No. 3-13638)
In the Matter of Eric T. Seiden
On November 3, 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 Eric T. Seiden (Seiden). The Order finds that from 1993 through Oct. 28, 2008, Seiden was a registered representative associated with broker-dealers registered with the Commission. The Order further finds that on Sept. 24, 2009, Seiden pled guilty to one count of conspiracy to commit securities and wire fraud in violation of Title 18 United States Code, Sections 1349 and 3551, before the United States District Court for the Eastern District of New York, in United States v. Eric T. Seiden, Crim. Information No. 09-CR-582. The count of the criminal information to which Seiden pled guilty alleged, inter alia, that from October 2008 through July 2009, Seiden conspired to execute a scheme and artifice to defraud persons in connection with registered securities, and to obtain, by means of materially false and fraudulent pretenses, representations and promises, money and property in connection with the purchase and sale of the registered securities.
Based on the above, the Order bars Seiden from association with any broker or dealer. Seiden consented to the issuance of the Order without admitting or denying any of the findings in the Order, except with respect to jurisdiction. (Rel. 34-60924; File No. 3-13671)
Court Dismisses Claims Against Iain Brown Pursuant to Notice of Voluntary Dismissal Filed by the Securities and Exchange Commission
The Securities and Exchange Commission announced that on Oct. 20, 2009, the Honorable Nicholas G. Garaufis, United States District Judge for the Eastern District of New York entered an order of dismissal as to Iain Brown (Brown). The Court dismissed the claims against Brown pursuant to a Notice of Voluntary Dismissal filed by the Commission. Brown, now deceased, was a Canadian citizen and resident of the Republic of Malta.
For further information, see Litigation Release No. 18643 (March 29, 2004). [SEC v. Syndicated Food Services International, Inc., et al., Civil Action No. 04-CV-1303 (NGG) (E.D.N.Y.)] (LR-21273)
Madoff Auditors Consent to Partial Judgment Imposing Permanent Injunctions
The Securities and Exchange Commission today announced today that Bernard Madoff's auditors have agreed not to contest the SEC's charges that they enabled Madoff's fraud by falsely stating they audited the convicted fraudster's financial statements in accordance with the relevant accounting and auditing standards.
On Nov. 3, 2009, the SEC submitted to the Honorable Judge Louis L. Stanton, a federal judge in the Southern District of New York, the consents of David G. Friehling and Friehling & Horowitz, CPA'S, P.C. (F&H) to a proposed partial judgment imposing permanent injunctions against them. Friehling and F&H consented to the partial judgment without admitting or denying the allegations of the SEC's complaint, filed on March 19, 2009. If the partial judgment is entered by the Court, the permanent injunction will restrain Friehling and F&H from violating certain antifraud provisions of the federal securities laws.
The proposed partial judgment would leave the issues of the amount of disgorgement, prejudgment interest and civil penalty to be imposed against Friehling and F&H to be decided at a later time. For purposes of determining Friehling's and F&H's obligations to pay disgorgement, prejudgment interest and/or a civil penalty, the proposed partial judgment precludes Friehling and F&H from arguing that they did not violate the federal securities laws as alleged in the Complaint.
In its complaint, the SEC alleges that Friehling and F&H enabled Madoff's Ponzi scheme by falsely stating, in annual audit reports, that F&H audited Bernard L. Madoff Investment Securities LLC's (BMIS) financial statements pursuant to Generally Accepted Auditing Standards (GAAS). F&H also made representations that BMIS' financial statements were presented in conformity with Generally Accepted Accounting Principles (GAAP) and that Friehling reviewed internal controls at BMIS. The complaint alleges that all of these statements were materially false because Friehling and F&H did not perform a meaningful audit of BMIS and therefore had no basis to form an opinion about the firm's financial condition or internal controls.
The SEC's complaint specifically alleges that Friehling and F&H violated Section 17(a) of the Securities Act, violated and aided and abetted violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and aided and abetted violations of Sections 206(1) and 206(2) of the Advisers Act, Section 15(c) of the Exchange Act and Rule 10b-3 thereunder, and Section 17 of the Exchange Act and Rule 17a-5 thereunder.
For more information see prior litigation release no. 20959 and accounting and auditing enforcement release No. 2992. [SEC v. David G. Friehling, C.P.A and Friehling & Horowitz, CPA'S, P.C. (S.D.N.Y. Civ. 09 CV 2467)] (LR-21274)
SEC Obtains Permanent Injunctive Relief Against Randy M. Cho in Lawsuit Alleging Misappropriation of Investors Funds and Ponzi Scheme
The Securities and Exchange Commission announced that on Oct. 27, 2009, the Honorable James F. Holderman in the U.S. District Court of the Northern District of Illinois entered a permanent injunction order enjoining Randy M. Cho from violating the antifraud provisions of the Securities Act of 1933 [Section 17(a)], the Securities Exchange Act of 1934 [Section 10(b) and Rule 10b-5 thereunder], and the Investment Advisers Act of 1940 [Sections 206(1) and 206(2)] (Permanent Injunction Order). Cho consented to the entry of the Permanent Injunction Order without admitting or denying the allegations in the complaint. The asset freeze order entered by the Court on Oct. 7, 2009, freezing Cho's assets continues and the Court retains jurisdiction to set the appropriate amount of disgorgement and civil penalties.
Filed on Oct. 7, 2009, in an emergency TRO action, the Commission's complaint alleges that, since at least 2001, Cho engaged in a fraudulent scheme to misappropriate investors' funds for his personal use and to repay other investors, raising at least $3.7 million from at least 45 investors in four states. The complaint alleges that Cho falsely represented to investors that he would pool their funds to invest in shares of specific well-known companies in anticipation of expected initial public offerings of those companies, including Centerpoint, AOL/Time Warner, Inc., Google, Inc., Facebook, Inc. and Rosetta Stone, Inc. The complaint alleges that, instead of purchasing these shares for investors, Cho used investor funds for personal trading, the personal expenses of himself and his family, and also operated a Ponzi scheme, using new investor funds to repay existing investors. The complaint alleges that throughout the scheme, Cho falsely told investors that he had worked at Goldman Sachs, still had an account there and made his investments through the firm, and/or that Goldman Sachs still considered him a preferred client. The complaint further alleges that Cho told some investors that additional funds would be needed to satisfy a U.S. tax liability in connection with their supposed purchase of Google and Rosetta Stone shares, when there was no tax liability and when the shares had not even been purchased for the investors. [SEC v. Randy W. Cho, Case No. 09-CV-6261, USDC, N.D.Ill.] (LR-21275)
Information for Investors in Cameron International, Inc.
On April 23, 2009, Alan M. Grochal, Esq., was appointed as Distribution Agent by the Honorable Paul A. Crotty of the United States District Court for the Southern District of New York in connection with the civil action commenced by the Commission against Peter S. Jessop, Socius Holdings, Ltd., SIGF, S.A., Steven R. Wright, International Solutions, Inc., Shawn Casias and Logic's Consulting, Inc. (collectively, Defendants) stemming from Defendants' alleged market manipulation of the stock price of Cameron International, Inc. (CMRN).
Pursuant to Judge Crotty's Order, Mr. Grochal's role is to take control of all disgorgement funds paid by Socius Holdings, Ltd. (and any other Defendants) into the Court Registry and distribute a pro-rata share of those funds to any harmed investors. Persons eligible to receive a pro-rata distribution of the disgorgement funds are those individuals who traded CMRN stock between Aug. 29, 2005 and Nov. 7, 2005. A claim form must be completed, and any supporting documentation provided, before anyone will be entitled to receive a share of the distribution funds.
For more information, investors should contact the Distribution Agent at (410) 752-9700. Additional information is available at www.sociusfairfund.com
For more information, see Litigation Release No. 19481. [SEC v. Peter S. Jessop, et al., United States District Court for the Southern District of New York, Civil Action No. 05 Civ 10115 (PAC)] (LR-21276)
INVESTMENT COMPANY ACT RELEASES
Notices of Deregistration under the Investment Company Act
For the month of October 2009, a notice has been issued giving interested persons until Nov. 20, 2009, to request a hearing on any of the following applications for an order under Section 8(f) of the Investment Company Act declaring that the applicant has ceased to be an investment company:
DWS Equity Partners Fund, Inc. [File No. 811-8886]
(Rel. IC-28988 - October 30)
STANDARDS SETTING BOARDS
Notice to Solicit Comments on PCAOB Auditing Standard No. 7, Engagement Quality Review
The Commission is publishing for public comment the Public Company Accounting Oversight Board's proposed new Auditing Standard No. 7, Engagement Quality Review. Publication of the proposed rule is expected in the Federal Register during the week of Nov. 1, 2009. The comment period will end 21 days after the proposed rule is published in the Federal Register. (Rel. 34-60903)
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed by the NASDAQ Stock Market relating to the modification of the opening of trading on the NASDAQ Options Market (SR-NASDAQ-2009-093) 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 Nov. 2, 2009. (Rel. 34-60905)
A proposed rule change (SR-NYSEAmex-2009-73) filed by NYSE Amex to add Commentary .04 to Rule 904C 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 Nov. 2, 2009. (Rel. 34-60907)
A proposed rule change (SR-NYSEAmex-2009-77) filed by NYSE Amex to amend its Schedule of Fees and Charges for Exchange Services 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 Nov. 2, 2009. (Rel. 34-60908)
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