Securities and Exchange Commission Suspends Trading in the Securities of Seven Issuers for Failure to Make Required Periodic Filings
The U.S. Securities and Exchange Commission announced the temporary suspension of trading in the securities of the following issuers, commencing at 9:30 a.m. EDT on March 19, 2010, and terminating at 11:59 p.m. EDT on April 1, 2010.
The Commission temporarily suspended trading in the securities of these seven issuers due to a lack of current and accurate information about the companies because they have not filed periodic reports with the Commission in over two years. This order was entered pursuant to Section 12(k) of the Securities Exchange Act of 1934 (Exchange Act).
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 these companies.
Brokers and dealers should be alert to the fact that, pursuant to Exchange Act Rule 15c2-11, at the termination of the trading suspensions, no quotation may be entered relating to the securities of the subject companies unless and until the broker or dealer has strictly complied with all of the provisions of the rule. If any broker or dealer is uncertain as to what is required by the rule, it should refrain from entering quotations relating to the securities of these companies that have been subject to a trading suspension until such time as it has familiarized itself with the rule and is certain that all of its provisions have been met. Any broker or dealer with questions regarding the rule should contact the staff of the Securities and Exchange Commission in Washington, DC at (202) 551-5720. If any broker or dealer enters any quotation which 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 which may relate to this matter, they should immediately communicate it to the Delinquent Filings Branch of the Division of Enforcement at (202) 551-5466, or by e-mail at DelinquentFilings@sec.gov. (Rel. 34-61739)
Notice of Proposed Distribution Plan and Opportunity for Comment in the Matter of Evergreen Investment Management Company, LLC, Evergreen Investment Services, Inc., Evergreen Service Company, LLC and Wachovia Securities, LLC
On March 19, 2010, the Commission gave notice that, pursuant to Rule 1103 of the Commission's Rules on Fair Fund and Disgorgement Plans, the Division of Enforcement has filed a proposed Distribution Plan for the distribution of the approximately $32.6 million Fair Fund established in In the Matter of Evergreen Investment Management Company, LLC, Evergreen Investment Services, Inc., Evergreen Service Company, LLC and Wachovia Securities, LLC, Administrative Proceeding File No. 3-12805, to compensate investors for the injury they may have suffered as a result of market timing in certain Evergreen mutual funds. The Fair Fund includes approximately $32.5 million in disgorgement and penalties paid by Evergreen Investment Management Company, LLC, Evergreen Investment Services, Inc., Evergreen Service Company, LLC and Wachovia Securities, LLC pursuant to an Order issued by the Securities and Exchange Commission on September 19, 2007, as well as approximately $150,000 in disgorgement and penalties paid by William M. Ennis, the former president of the parent company of the Evergreen entities listed above, pursuant to the Order issued by the Securities and Exchange Commission on that same date in In the Matter of William M. Ennis, Administrative Proceeding File No. 3-12806. The Distribution Plan provides for distribution to all eligible investors of their proportionate share of the approximately $32.6 million Fair Fund. Any interested persons may print a copy of the proposed Distribution Plan from the Commission's public website, http://www.sec.gov, or by submitting a written request to Kevin M. Kelcourse, Assistant Regional Director, United States Securities and Exchange Commission, 33 Arch Street, 23rd Floor, Boston, MA 02110. All persons desiring to comment on the Distribution Plan may submit their views, in writing, by no later than 30 days from the date of the Notice, to the Office of the Secretary, U.S. Securities and Exchange Commission, 100 F Street, N.E., Washington, DC 20549-1090, or by using the Commission's Internet comment form (http://www.sec.gov/litigation/admin.shtml), or by sending an e-mail to email@example.com. Please include "Administrative Proceeding File Number 3-12805" on the subject line. Comments received will be publicly available. Persons should submit only information that they wish to make publicly available. For more information see Rel. 34-56462; Press Rel. 2007-186; File No. 3-12805. (Rels. 34-61745; 34-61746; File No. 3-12805)
Commission Revokes Registration of Securities of U.S. Environmental Solutions, Inc. (n/k/a Enviroresolutions, Inc.) for Failure to Make Required Periodic Filings
On March 19, 2010, the Commission revoked the registration of each class of registered securities of U.S. Environmental Solutions, Inc. (n/k/a EnviroResolutions, Inc.) (U.S. Environmental) for failure to make required periodic filings with the Commission.
Without admitting or denying the findings in the Order, except as to jurisdiction, which it admitted, U.S. Environmental consented to the entry of an Order Making Findings and Revoking Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of 1934 as to U.S. Environmental Solutions, Inc. (n/k/a EnviroResolutions, Inc.) finding that it had failed to comply with Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 13a-1 and 13a-13 thereunder and revoking the registration of each class of U.S. Environmental's securities pursuant to Section 12(j) of the Exchange Act. This order settled the charges brought against U.S. Environmental in In the Matter of U.S. Biomedical Corp. (f/k/a United Textiles & Toys, Inc.), et al., Administrative Proceeding File No. 3-13793.
Brokers and dealers should be alert to the fact that Exchange Act Section 12(j) provides, in pertinent part, as follows:
For further information see Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934, In the Matter of U.S. Biomedical Corp. (f/k/a United Textiles & Toys, Inc.), et al., Administrative Proceeding File No. 3-13793, Exchange Act Release No. 61597 (February 26, 2010). (Rel. 34-61738; File No. 3-13798)
Commission Orders Hearings on Registration Suspension or Revocation Against Eight Companies for Failure to Make Required Periodic Filings
In conjunction with today's trading suspension, the Commission today also 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 the Matter of Aspen Group Resources Corp., et al., Administrative Proceeding File No. 3-13824
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 or 13a-16 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. 34-61740; File No. 3-13824)
In the Matter of William H. Lofthus
On March 19, 2010, the United States Securities and Exchange Commission announced the issuance of an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Section 203(f) of the Investment Advisers Act of 1940 (Order) against William H. Lofthus (Lofthus).
The Division of Enforcement alleges that, on January 27, 2009, in State of Illinois v. William H. Lofthus, File No. 06-CF-2419, Lofthus pled guilty to one count of a criminal indictment for theft of assets having a total value exceeding $100,000 and not exceeding $500,000 from a broker-dealer customer. The Division also alleges that, on August 28, 2006, the Securities Department of the Illinois Secretary of State issued an Order of Prohibition against Lofthus in In the Matter of William H. Lofthus, Illinois Department of Securities, File No. 0600143. The Order of Prohibition bars Lofthus from offering or selling securities in or from the State of Illinois.
A hearing before an administrative law judge will be scheduled to determine whether the allegations in the order are true, to provide the Respondent an opportunity to dispute these allegations, and to determine what remedial action, if any, is appropriate in the public interest. The Order directed the Administrative Law Judge to issue an initial decision within 210 days from the date of service of the Order. (Rel. 34-61741; Rel. IA-3006; File No. 3-13825)
Final Judgments Entered Against Certified Public Accountants Stephen P. Corso and Brian K. Rabinovitz in Market Manipulation and Financial Fraud Case
The Securities and Exchange Commission announced that a federal district court in Nevada has entered final judgments, by consent, against Stephen P. Corso, of Las Vegas, Nevada, and Brian K. Rabinovitz of Oak Park, California, in connection with an enforcement action filed in 2005 concerning a stock manipulation and accounting fraud scheme. The judgment against Corso, entered on March 18, 2010, permanently enjoins him from violating the antifraud and auditor independence provisions of the federal securities laws. The judgment against Rabinovitz, entered on March 15, 2010, permanently enjoins him from violating the auditor independence provisions of the federal securities laws and orders him to pay a civil penalty of $30,000.
The Commission's civil injunctive action was filed on April 25, 2005, against Exotics.com, Inc., a Nevada corporation based in Vancouver, British Columbia, and 12 additional principal defendants and one relief defendant. The Commission's complaint alleged that, between at least 1999 and 2002, Exotics.com, which was then an Over-the-Counter Bulletin Board company in the business of operating adult Web sites, was the subject of a stock manipulation and accounting fraud perpetrated by, among others, its officers, attorneys and outside auditors. The complaint alleged, among other things, that Corso, Rabinovitz, and others engaged in conduct that resulted in Exotics.com filing materially false and misleading financial statements in its Commission filings. The complaint further alleged that audit staff under the supervision of Corso and Rabinovitz committed acts and/or omissions that caused them to become non-independent during audits of Exotics.com and that Corso and Rabinovitz approved the issuance of audit reports that were incorporated in Exotics.com's Commission filings. According to the complaint, the audit reports, among other things, falsely stated that the audits had been conducted by an independent auditor and in accordance with generally accepted auditing standards (GAAS). The Complaint also alleged that Rabinovitz and audit staff under his supervision engaged in a number of improper accounting practices that caused Exotics.com's financial statements to depart from generally accepted accounting principles (GAAP).
Without admitting or denying the allegations in the Commission's complaint, Corso and Rabinovitz consented to the entry of final judgments against them. The final judgment against Corso enjoins him from violating Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder and Rule 2-02 of Regulation S-X. The final judgment against Rabinovitz enjoins him from violating Rule 2-02 of Regulation S-X and orders him to pay a civil penalty of $30,000.
Rabinovitz also consented to the entry of an Administrative Order, pursuant to Rule 102(e) of the Commission's Rules of Practice, suspending him from appearing or practicing before the Commission as an accountant, with a right to apply for reinstatement after three years. Corso was previously forthwith suspended, on April 14, 2009, from appearing or practicing before the Commission as an accountant.
The Commission previously obtained judgments by default against two defendants and judgments by consent against two additional defendants. The action remains pending against the remaining seven defendants and a relief defendant.
For further information, see Litigation Release Nos. 19207 (April 28, 2005) [civil injunctive action filed], 19645 (April 7, 2006) [judgment by default against Exotics.com], 19699 (May 15, 2006) [judgment by consent against Barry Duggan], 19957 (January 4, 2007) [judgment by default against Gary Thomas], and 21028 (May 7, 2009) [judgment by consent against Edward James Wexler], and Exchange Act Release No. 59766 (April 14, 2009) [forthwith suspension of Stephen Corso]. [SEC v. Exotics.com, Inc., et al., Civil Action No. 2:05-cv-00531-PMP-GWF, (District of Nevada, Complaint filed April 25, 2005) (LR-21456)
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed by the New York Stock Exchange (SR-NYSE-2010-25) to extend the operation of its New Market Model pilot program 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 March 22. (Rel. 34-61724)
A proposed rule change filed by NYSE Amex (SR-NYSEAmex-2010-28) to extend the operation of its New Market Model pilot program 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 March 22. (Rel. 34-61725)
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