Commission Dismisses Appeal Filed by Gregory S. Profeta
The Commission has dismissed an application for review of FINRA disciplinary action filed by Gregory S. Profeta. FINRA barred Profeta from association with any FINRA member in any capacity in February 2010 for failure to provide FINRA with information regarding three criminal matters that Profeta did not disclose on his Form U4. The Commission dismissed the appeal because Profeta failed to exhaust his administrative remedies before FINRA. (Rel. 34-62055; File No. 3-13810)
BFA Liquidation Trust
An Administrative Law Judge has issued an Order Making Findings and Revoking Registrations by Default as to Eight Respondents (Default Order) in BFA Liquidation Trust, Administrative Proceeding No. 3-13834. The Order Instituting Proceedings (OIP) alleged that eleven Respondents repeatedly failed to file required annual and quarterly reports while their securities were registered with the Securities and Exchange Commission. The Default Order finds these allegations to be true as to eight of the Respondents and revokes the registrations of each class of registered securities of BFA Liquidation Trust, Big Dog Partners, Inc., Big Fun Toys, Inc., Billy Dead, Inc., BioSecure Corp., Brazos Sportswear, Inc. (n/k/a Marinas International, Inc.), Bridge Technology, Inc., and B.U.M. International, Inc., pursuant to Section 12(j) of the Securities Exchange Act of 1934.
The Commission previously accepted an Offer of Settlement from BioImmune, Inc., BFA Liquidation Trust, Exchange Act Release No. 62024 (May 4, 2010), and the proceeding is still pending as to Biltmore Vacation Resorts, Inc. (n/k/a AbsoluteSKY, Inc.), and BrightCube, Inc., the other Respondents named in the OIP. (Rel. 34-62059; File No. 3-13834)
SEC Charges California-Based Securities Professional for Defrauding Investors in Scrap Metal Investment
The Securities and Exchange Commission today filed civil fraud charges against Dennis Lee Keating II, a former registered representative and part owner of San Diego-based Torrey Pines Securities, Inc., for making misrepresentations to investors in a $17.6 million unregistered private securities offering.
The SEC alleges that Keating, who lives in Highland, Utah, and previously resided in Temecula, Calif., swindled more than 100 investors by encouraging them to invest in his company, Corona, Calif.-based Paseo Partners LLC. Keating falsely promised investors exorbitant returns ranging from four to twelve times their investment. The complaint alleges that Keating agreed to use investor funds to purchase investment contracts involving scrap metal extracted from properties in Texas. Instead, he used the money to fund the purchase of a Texas paper mill by another Keating-affiliated company. Unbeknownst to the investors, Keating also allegedly committed the investors' funds to pay a third-party debt on the same paper mill.
The complaint, filed in the United States District Court for the District of Utah, further alleges that Keating misrepresented that he personally invested millions of dollars in Paseo. Keating also allegedly gave investors the false impression that Torrey Pines, a registered broker-dealer, was involved in the Paseo offering when, in fact, it was not. The complaint further alleges that until at least November 2008, Keating continued to deceive investors with false assurances that they would receive a return on their Paseo investments.
Keating agreed to settle this matter without admitting or denying the allegations in the complaint. Keating consented to a permanent injunction from further violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The disgorgement and civil penalty amounts will be determined by the court at a later time. Keating also consented to the entry of a Commission order that will permanently bar him from association with any broker, dealer, or investment adviser. [SEC v. Dennis Lee Keating II, Civil Action No. 2:10-cv-00419-DAK, USDC (D. Utah)] (LR-21520)
INVESTMENT COMPANY ACT RELEASES
AdvisorShares Investments, LLC and AdvisorShares Trust
A notice has been issued giving interested persons until May 27, 2010, to request a hearing on an application filed by AdvisorShares, LLC and AdvisorShares Trust for an order to permit: (a) series of certain open-end management investment companies to issue shares (Shares) redeemable in large aggregations only (Creation Units); (b) secondary market transactions in Shares to occur at negotiated market prices; (c) certain series to pay redemption proceeds, under certain circumstances, more than seven days from the tender of Shares for redemption; (d) certain affiliated persons of the series to deposit securities into, and receive securities from, the series in connection with the purchase and redemption of Creation Units; and (e) certain registered management investment companies and unit investment trusts outside of the same group of investment companies as the series to acquire Shares. (Rel. IC-29264 - May 6)
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change (SR-CBOE-2010-040) filed by Chicago Board Options Exchange to add 75 classes to the penny pilot program 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 May 10. (Rel. 34-62040)
A proposed rule change filed by The NASDAQ Stock Market to amend Rules 9552, 9554 and 9559 to conform NASDAQ's rules to recent changes to the rules of FINRA (SR-NASDAQ-2010-057) 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 May 10. (Rel. 34-62044)
A proposed rule change filed by International Securities Exchange relating to fees and rebates for adding and removing liquidity (SR-ISE-2010-43) 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 May 10. (Rel. 34-62048)
A proposed rule change (SR-NYSEArca-2010-38) filed by NYSE Arca to clarify, eliminate, revise, or delete certain out-dated or obsolete rules has become immediately 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 May 10. (Rel. 34-62052)
Approval of Proposed Rule Changes
The Commission granted approval to a proposed rule change (File No. 4-594) submitted pursuant to Section 19(b)(2) of the Securities Exchange Act of 1934 by EDGX Exchange to establish a minor rule violation plan. Publication is expected in the Federal Register during the week of May 10. (Rel. 34-62036)
The Commission granted approval to a proposed rule change (File No. 4-595) submitted pursuant to Section 19(b)(2) of the Securities Exchange Act of 1934 by EDGA Exchange to establish a minor rule violation plan. Publication is expected in the Federal Register during the week of May 10. (Rel. 34-62037)
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