In the Matter of Apogee Technology, Inc.
The Securities and Exchange Commission announced the temporary suspension of trading in the securities of Apogee Technology, Inc. (Apogee), commencing at 9:30 a.m. EDT on April 16, 2010, and terminating at 11:59 p.m. EDT on April 29, 2010. The Commission temporarily suspended trading in the securities of Apogee due to a lack of current and accurate information about the company because it has filed a materially deficient Form 10-K for the 2008 fiscal year and materially deficient Forms 10-Q for the three quarters of 2009 with the Commission, and has failed to file a Form 10-K for the 2009 fiscal year. The 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 this company.
Brokers and dealers should be alerted 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 Apogee 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 Apogee 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, John T. Dugan of the Boston Regional Office of the Securities and Exchange Commission should be telephoned at (617) 573-8936. (Rel. 34-61924)
SEC Issues Notice of Proposed Plan of Distribution and Opportunity for Comment in Zurich Capital Markets Inc. Market Timing Case
The Commission announced today that it has given notice, pursuant to Rule 1103 of the Securities and Exchange Commission's Rules on Fair Fund and Disgorgement Plans, 17 C.F.R. S 201.1103, that the Division of Enforcement has filed a proposed plan (Distribution Plan) for the distribution of the Fair Fund pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002 in the matter of Zurich Capital Markets Inc., Admin. Proc. File No. 3-12628. The Fair Fund is comprised of the $16,809,354.42 paid by Zurich Capital Markets, plus accumulated interest, less any federal, state, or local taxes on the interest. The Distribution Plan provides for distribution of the Fair Fund to affected mutual funds identified in an exhibit to the plan that were harmed by the actions of certain hedge funds that engaged in deceptive market timing from 1999 through 2003. Respondent aided and abetted the hedge funds' deceptive market timing by providing leverage financing to the hedge funds. Interested parties may print a copy of the Distribution Plan from the Commission's public website, http://www.sec.gov. Interested parties may also obtain a written copy of the Distribution Plan by submitting a written request to George S. Canellos, Regional Director, United States Securities and Exchange Commission, 3 World Financial Center, Room 400, New York, NY 10281. All persons who desire to comment on the Distribution Plan may submit their comments, in writing, within 30 days of the date of the notice: by sending a letter to the Office of the Secretary, United States Securities and Exchange Commission, 100 F Street, N.E., Washington, DC 20549-1090; 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. Comments submitted by email or via the Commission's website should include "Administrative Proceeding File Number 3-12628" in the subject line. Comments received will be available to the public. Persons should only submit information that they wish to make publicly available.
For more information, see Securities Exchange Act of 1934 Release No. 55711, Investment Company Act of 1940 Release No. 27819, and Press Release No. 2007-88 (May 7, 2007). (Rel. 34-61918; File No. 3-12628)
Commission Orders Hearing on Registration Suspension or Revocation Against Apogee for Failure to Make Required Periodic Filings
In conjunction with today's trading suspension, the Commission announced the issuance of an Order Instituting Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934 (Order) against Apogee Technology, Inc. (Respondent). The Order alleges that Apogee Technology, Inc. has filed a materially deficient Form 10-K for the 2008 fiscal year and materially deficient Forms 10-Q for the three quarters of 2009, and has failed to file a Form 10-K for the 2009 fiscal year in violation of Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder.
A hearing will be held by an Administrative Law Judge to determine whether the allegations contained in the Order are true, to afford the Respondent an opportunity to establish any defenses to such allegations, and to determine whether it is necessary or appropriate for the protection of investors to suspend for a period not exceeding twelve months, or revoke the registration of each class of securities of the Respondent registered pursuant to Section 12 of the Securities Exchange Act of 1934. The Order requires the Administrative Law Judge to issue an initial decision no later than 120 days from the date of service of this Order, pursuant to Rule 360(a)(2) of the Commission's Rules of Practice. (Rel. 34-61925; File No. 3-13862)
The Commission Charges Goldman Sachs With Fraud in Connection With the Structuring and Marketing of a Synthetic CDO
The Commission today filed securities fraud charges against Goldman, Sachs & Co. (GS&Co) and a GS&Co employee, Fabrice Tourre (Tourre), for making material misstatements and omissions in connection with a synthetic collateralized debt obligation (CDO) GS&Co structured and marketed to investors. This synthetic CDO, ABACUS 2007-AC1, was tied to the performance of subprime residential mortgage-backed securities (RMBS) and was structured and marketed in early 2007 when the United States housing market and the securities referencing it were beginning to show signs of distress. Synthetic CDOs like ABACUS 2007-AC1 contributed to the recent financial crisis by magnifying losses associated with the downturn in the United States housing market.
According to the Commission's complaint, the marketing materials for ABACUS 2007-AC1 — including the term sheet, flip book and offering memorandum for the CDO — all represented that the reference portfolio of RMBS underlying the CDO was selected by ACA Management LLC (ACA), a third party with expertise in analyzing credit risk in RMBS. Undisclosed in the marketing materials and unbeknownst to investors, a large hedge fund, Paulson & Co. Inc. ("Paulson"), with economic interests directly adverse to investors in the ABACUS 2007-AC1 CDO, played a significant role in the portfolio selection process. After participating in the selection of the reference portfolio, Paulson effectively shorted the RMBS portfolio it helped select by entering into credit default swaps (CDS) with GS&Co to buy protection on specific layers of the ABACUS 2007-AC1 capital structure. Given its financial short interest, Paulson had an economic incentive to choose RMBS that it expected to experience credit events in the near future. GS&Co did not disclose Paulson's adverse economic interest or its role in the portfolio selection process in the term sheet, flip book, offering memorandum or other marketing materials.
The Commission alleges that Tourre was principally responsible for ABACUS 2007-AC1. According to the Commission's complaint, Tourre devised the transaction, prepared the marketing materials and communicated directly with investors. Tourre is alleged to have known of Paulson's undisclosed short interest and its role in the collateral selection process. He is also alleged to have misled ACA into believing that Paulson invested approximately $200 million in the equity of ABACUS 2007-AC1 (a long position) and, accordingly, that Paulson's interests in the collateral section process were aligned with ACA's when in reality Paulson's interests were sharply conflicting. The deal closed on April 26, 2007. Paulson paid GS&Co approximately $15 million for structuring and marketing ABACUS 2007-AC1. By Oct. 24, 2007, 83% of the RMBS in the ABACUS 2007-AC1 portfolio had been downgraded and 17% was on negative watch. By Jan. 29, 2008, 99% of the portfolio had allegedly been downgraded. Investors in the liabilities of ABACUS 2007-AC1 are alleged to have lost over $1 billion. Paulson's opposite CDS positions yielded a profit of approximately $1 billion.
The Commission's complaint, which was filed in the United States District Court for the Southern District of New York, charges GS&Co and Tourre with violations of Section 17(a) of the Securities Act of 1933, 15 U.S.C. S77q(a), Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. S78j(b) and Exchange Act Rule 10b-5, 17 C.F.R. S240.10b-5. The Commission seeks injunctive relief, disgorgement of profits, prejudgment interest and civil penalties from both defendants. For additional information see Litigation Release No. LR 21489/ April 16, 2010 [SEC v. Goldman, Sachs & Co. and Fabrice Tourre, 10 Civ. 3229 (BJ) (S.D.N.Y.)] (LR-21489)
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed by The NASDAQ OMX PHLX relating to a new category of fees for "Professionals" (SR-Phlx-2010-55) 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 April 19. (Rel. 34-61905)
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