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ENFORCEMENT PROCEEDINGSIn the Matter of Comverse Technology, Inc.On March 23, 2010, the Commission issued an Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934 against Comverse, to determine whether the registration of each class of its securities should be revoked or suspended for a period not exceeding twelve months based on its failure to file required periodic reports. The Division of Enforcement alleges that Comverse has failed to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 thereunder by failing to file an annual report on either Form 10-K or Form 10-KSB since April 20, 2005, or quarterly reports on either Form 10-Q or Form 10-QSB since Dec. 12, 2005. A hearing will be scheduled before an Administrative Law Judge to determine whether the allegations of the Division contained in the Order are true, and to provide Comverse an opportunity to respond to these allegations. As directed by the Commission, the administrative law judge shall issue an initial decision in this matter not later than 120 days from the date of service of the Order Instituting Proceedings. (Rel. 34-61763; File No. 3-13828) Securities and Exchange Commission Orders Hearing on Registration Revocation Against Seven Public Companies for Failure to Make Required Periodic FilingsOn March 23, 2010, the Commission instituted public administrative proceedings to determine whether to revoke or suspend for a period not exceeding twelve months the registrations of each class of the securities of seven companies for failure to make required periodic filings with the Commission:
In this Order, the Division of Enforcement (Division) alleges that the seven 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 Administrative Law 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 Administrative Law 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. 34-61765; File No. 3-13829) In the Matter of John F. KendrickOn March 24, 2010, the Commission issued an Order Instituting Administrative and Cease-and-Desist Proceedings, Pursuant to Sections 15(b), 15B(c)(4) and 21C of the Securities Exchange Act of 1934 and Notice of Hearing (Order) against John F. Kendrick (Kendrick) of Medfield, Massachusetts. The Division of Enforcement (Division) alleges that Kendrick was a registered representative associated with Southwest Securities, Inc. (Southwest), a registered broker-dealer and municipal securities dealer. According to the Order, between December 2000 and July 2009, Kendrick engaged in activities that constituted solicitation of municipal securities business from certain issuers on behalf of Southwest. As a result, according to the Order, Kendrick was a "municipal finance professional" associated with Southwest under MSRB Rule G-37. According to the Order, between 2003 through 2008, Kendrick contributed $1,625 to Timothy Cahill, the treasurer of the Commonwealth of Massachusetts (treasurer). The treasurer, according to the Order, was an incumbent who was also at the time of the contributions a candidate for elective office in the Commonwealth of Massachusetts. According to the Order, the contributions were made through seven different checks during two election cycles. Specifically, according to the Order, on February 8, 2003, March 25, 2004 and June 22, 2005, Kendrick contributed $250 to the treasurer through three different personal checks, for a total of $750. These contributions, according to the Order, were all made before the state primary election in 2006. According to the Order, the contributions on March 25, 2004 and June 22, 2005 placed Kendrick's total contributions for the primary election above the $250 de minimis exception. In addition, according to the Order, on December 15, 2006, May 29, 2007, December 10, 2007 and April 28, 2008, before the scheduled state primary election in 2010, in which the treasurer expected to be a candidate, Kendrick contributed $875 to the treasurer through four different personal checks. According to the Order, each of the contributions on May 29, 2007, December 10, 2007 and April 28, 2008 placed Kendrick's total contributions above the $250 de minimis exception. In addition, according to the Order, the treasurer is responsible for, or has the authority to appoint persons who are responsible for, the hiring of brokers, dealers, or municipal securities dealers for municipal securities business by the Commonwealth of Massachusetts and certain related state governmental units (Issuers). According to the Order, under Rule G-37, each of these contributions above the $250 de minimis exception triggered a two-year ban on municipal securities business with the Issuers, starting with the dates of the contributions. Accordingly, the Order alleges that during the first election cycle, Southwest was prohibited from engaging in municipal securities business with the Issuers for the period March 25, 2004 to June 22, 2007. In addition, according to the Order, during the second election cycle, Southwest was prohibited from engaging in municipal securities business with the Issuers for the period May 29, 2007 to April 28, 2010. According to the Order, within two years after the above non-de minimis contributions, Southwest, with Kendrick's knowledge, participated as co-manager for a total of 19 negotiated underwritings by the Issuers totaling approximately $14 billion. In addition, according to the Order, in June 2005, Kendrick co-hosted a fundraiser for the treasurer. According to the Order, Kendrick made approximately 82 solicitation requests for campaign contributions relating to the fundraiser. According to the Order, the fundraiser raised approximately $9,000 for the treasurer's campaign committee. At the same time of the solicitations, according to the Order, Southwest was engaged in or seeking to engage in municipal securities business through a response to a request for qualifications sent to the Issuers. The Order alleges that as a result of the conduct described above, Kendrick willfully caused Southwest's violations of MSRB Rule G-37(b), which prohibits brokers, dealers or municipal securities dealers from engaging in municipal securities business with an issuer within two years after any contribution to an official of such issuer made by (i) the broker, dealer or municipal securities dealer; (ii) any municipal finance professional associated with such broker, dealer or municipal securities dealer; or (iii) any political action committee controlled by the broker, dealer or municipal securities dealer or by any municipal finance professional, unless the contribution is exempt. In addition, the Order alleges that as a result of the conduct described above, Kendrick willfully violated Rule G-37(c) of the MSRB, which prohibits, among other things, brokers, dealers, municipal securities dealers or any municipal finance professional of the broker, dealer or municipal securities dealer from soliciting any person to make any contributions or coordinating any contributions to an official of an issuer with which the broker, dealer or municipal securities dealer is engaging or is seeking to engage in municipal securities business. The Order further alleges that as a result of the conduct described above, Kendrick willfully caused Southwest's violations of Section 15B(c)(1) of the Exchange Act, which prohibits a broker, dealer or municipal securities dealer from using the mails or any means or instrumentality of interstate commerce to effect any transaction in, or to induce or attempt to induce the purchase or sale of, any municipal security in contravention of any rule of the MSRB. A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide Kendrick an opportunity to establish any defenses to such allegations, and to determine what, if any, remedial action is appropriate and in the public interest. The Order directs the Administrative Law Judge to issue an initial decision no later than 300 days from the date of service of the Order, pursuant to Rule 360(a)(2) of the Commission's Rules of Practice. (Rel. 34-61767; File No. 3-13830) In the Matter of Southwest Securities, Inc.On March 24, 2010, the Commission issued an Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Sections 15(b), 15B(c)(2) and 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (Order) against Southwest Securities, Inc. (Southwest). The Order finds that Southwest, a registered broker-dealer and municipal securities dealer, engaged in municipal securities business with the Commonwealth of Massachusetts and certain related state governmental units within two years of non-de minimis campaign contributions made by the senior vice president in Southwest's public finance office, a municipal finance professional, to a candidate for elective office in the Commonwealth of Massachusetts. The campaign contributions were not disclosed on Southwest's quarterly reports to the Municipal Securities Rulemaking Board (MSRB) on Form G-37. Based upon the above, the Order: (a) requires Southwest to cease and desist from committing or causing any violations and any future violations of Section 15B(c)(1) of the Exchange Act, MSRB Rule G-37(b) and MSRB Rule G-37(e); (b) orders Southwest to pay disgorgement of $348,154 and prejudgment interest of $71,993; and (c) requires Southwest to pay a $50,000 civil money penalty. Southwest consented to the issuance of the Order without admitting or denying any of the findings in the Order, except jurisdiction, which is admitted. (Rel. 34-61768; File No. 3-13831) In the Matter of Brian K. Rabinovitz, CPAOn March 24, 2010, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Rule 102(e) of the Commission's Rules of Practice, Making Findings and Imposing Remedial Sanctions (Order) against Brian K. Rabinovitz, CPA. The Order finds that, on March 15, 2010, a final judgment was entered against Rabinovitz, permanently enjoining him from future violations of Rule 2-02 of Regulation S-X in the civil action entitled Securities and Exchange Commission v. Exotics.com, Inc., et al., Civil Action Number 2:05-cv-00531-PMP-GWF, in the United States District Court for the District of Nevada. Rabinovitz also was ordered to pay a $30,000 civil money penalty. Based on the above, the Order suspends Rabinovitz from appearing or practicing before the Commission as an accountant, with the right to apply for reinstatement after three years. Rabinovitz consented to the issuance of the Order without admitting or denying any of the findings except as to the entry of the final judgment. (Rels. 34-61771; AAE Rel. 3122; File No. 3-13832) Securities and Exchange Commission Orders Hearing on Registration Revocation or Suspension Against P&P Research Co., Ltd. for Failure to Make Required Periodic FilingsOn March 24, 2010, the Commission 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 P&P Research Co., Ltd. for failure to make required periodic filings with the Commission:
In this Order, the Division of Enforcement (Division) alleges that P&P Research Co., Ltd. is delinquent in its 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 Respondent 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-16 thereunder, are true. The judge in the proceeding will then determine whether the registration pursuant to Exchange Act Section 12 of each class of the securities of the Respondent 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. 34-61772; File No. 3-13833) Commission Orders Hearings on Registration Suspension or Revocation Against Eleven Companies for Failure to Make Required Periodic FilingsOn March 24, 2010, the Commission 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 eleven companies for failure to make required periodic filings with the Commission:
In this Order, the Division of Enforcement (Division) alleges that the eleven 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. 34-61773; File No. 3-13834) SEC v. Douglas F. Vaughan, The Vaughan Company, Realtors, Inc., and Vaughan Capital, LLCThe Securities and Exchange Commission yesterday filed fraud charges against a prominent New Mexico realtor and obtained an emergency court order to halt his $80 million Ponzi scheme. The SEC's complaint, filed in federal court in Albuquerque, alleges that Douglas F. Vaughan through his company - The Vaughan Company Realtors - issued promissory notes that he claimed would generate high fixed returns for investors. Vaughan also used another entity - Vaughan Capital LLC - to solicit investors for different types of real estate-related investments, such as buying residential properties at distressed prices. Vaughan relied entirely on new money raised from investors through both companies to fund Vaughan Company's ever-increasing obligations to note holders. The SEC also charged both of Vaughan's companies in the enforcement action. Neither Vaughan nor his companies are registered with the SEC to offer securities under the federal securities laws. The Honorable M. Christina Armijo for the U.S. District Court for the District of New Mexico granted the SEC's request for a temporary restraining order and asset freeze against Vaughan and his companies. According to the SEC's complaint, Vaughan defrauded approximately 600 investors, promising them high, fixed interest payments ranging from 10 to 25 percent over one to three years. He misrepresented that the aggregate principal on the Vaughan Company notes would not exceed a certain limit. Vaughan falsely claimed that the notes were "secured" by certain real estate and his personal wealth, and that Vaughan Company used investor funds to generate profits well in excess of its obligations on the notes. The SEC's complaint alleges that Vaughan's failing business accumulated losses totaling more than $61 million, and the $80 million in principal owed to investors is 20 times the claimed equity in the properties that were to secure the notes. The SEC also alleges that Vaughan's net worth, which was supposed to provide protection to investors, is negative in value. In direct violation of promises made, Vaughan transferred almost all of the money he raised from Vaughan Capital investors to Vaughan Company's operating account. He then used those funds to cover Vaughan Company's obligations to promissory note holders and its ordinary business costs. The SEC's complaint charges the defendants with violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. Vaughan and Vaughan Company are also charged with violations of Section 15(a)(1) of the Exchange Act. The SEC's investigation is ongoing. [SEC v. Douglas F. Vaughan, The Vaughan Company, Realtors, Inc., and Vaughan Capital, LLC, United States District Court for the District of New Mexico, Civil Action No. 1:10-cv-00263-MCA-WPL] (LR-21459) INVESTMENT COMPANY ACT RELEASESRMR Real Estate Income Fund, et al.A notice has been issued giving interested persons until April 19, 2010, to request a hearing on an application filed by RMR Real Estate Income Fund, et al., under Section 6(c) of the Investment Company Act for an exemption from Section 19(b) of the Act and Rule 19b-1 under the Act. The order would permit certain registered closed-end management investment companies to make periodic distributions of long-term capital gains (i) with respect to their common stock as part of a managed distribution plan as frequently as twelve times each year, and (ii) with respect to their preferred stock as frequently as required by the terms of such preferred stock. (Rel. IC-29178 - March 23) Rydex Series Funds, et al.A notice has been issued giving interested persons until April 19, 2010, to request a hearing on an application filed by Rydex Series Funds, et al., for an order under Section 6(c) of the Investment Company Act for an exemption from Rule 12d1-2(a) under the Act. The order would permit funds of funds relying on Rule 12d1-2 under the Act to invest in certain financial instruments. (Rel. IC-29179 - March 23) SELF-REGULATORY ORGANIZATIONSImmediate Effectiveness of Proposed Rule ChangesA proposed rule change filed by the NYSE Amex (SR-NYSEAmex-2010-21) relating to cabinet trades 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 March 22. (Rel. 34-61726) A proposed rule change (SR-FINRA-2010-10) filed by Financial Industry Regulatory Authority amending FINRA Rule 0150 to update a cross-reference to reflect a change adopted in the consolidated FINRA rulebook has become immediately 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. 34-61747) A proposed rule change filed by NYSE Amex (SR-NYSEAmex-2010-27) amending NYSE Amex Equities Rule 127 to remove the restrictions on the execution of block cross transactions outside the prevailing NYSE Amex quotation 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. 34-61755) A proposed rule change filed by New York Stock Exchange (SR-NYSE-2010-24) amending NYSE Rule 127 to remove the restrictions on the execution of block cross transactions outside the prevailing NYSE quotation 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. 34-61756) A proposed rule change (SR-NASDAQ-2010-036) filed by The NASDAQ Stock Market to clarify and modify the applicability of Nasdaq Rule 5615 to Exchange Traded Funds 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. 34-61757) The National Securities Clearing Corporation filed a proposed rule change (SR-NSCC-2010-02) under Section 19(b)(1) of the Exchange Act, which became effective upon filing, to aggregate transactions in certain securities designated for settlement on a trade-for-trade basis. Publication is expected in the Federal Register during the week of March 22. (Rel. 34-61762) SECURITIES ACT REGISTRATIONSRECENT 8K FILINGS
http://www.sec.gov/news/digest/2010/dig032410.htm
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