SEC Charges Disney Employee and Boyfriend in Brazen Insider Trading Scheme
The Securities and Exchange Commission today charged a Walt Disney Company employee and her boyfriend in a scheme to sell confidential information about Disney's quarterly earnings to hedge funds.
The SEC alleges Bonnie Jean Hoxie -- an administrative assistant to a high-level Disney executive -- and her boyfriend Yonni Sebbag sent anonymous letters in March 2010 to more than 20 hedge funds in the U.S. and Europe, offering to provide pre-release results of Disney's second quarter 2010 earnings in exchange for a fee. Some hedge funds alerted the SEC, which immediately worked with the U.S. Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation (FBI) to investigate. The FBI set up an undercover operation and made several contacts with Sebbag who offered to sell the information, in one instance for $15,000 and in another for half the expected trading profits.
In early May, Hoxie obtained confidential information concerning Disney's quarterly earnings and provided it to Sebbag, who in turn sold it to an FBI agent posing as an investment manager.
"Hoxie and Sebbag stole Disney's confidential pre-release earnings information and put it up for sale," said Robert Khuzami, Director of the SEC's Division of Enforcement. "Fortunately, multiple hedge funds reported the illicit scheme, and the SEC and criminal law enforcement authorities acted quickly to stop this brazen attempt to establish an ongoing insider trading business."
According to the SEC's complaint, filed in U.S. District Court for the Southern District of New York, Hoxie had regular access to confidential information concerning Disney's financial performance and operating plans. Hoxie and Sebbag orchestrated a scheme to sell information to hedge funds to be used for purposes of insider trading.
The SEC alleges that Sebbag told FBI agents posing as investment managers that he wanted to establish a business relationship to share confidential information on a regular basis, and wanted to be compensated. Sebbag also expressed his understanding of the risks involved and his desire to avoid being caught. Among excerpts of Sebbag's e-mails to undercover agents (includes original spelling and punctuation):
"First of all, i am not a fed, I have no way to prove it at this point but i am not asking you to disclose your identity not i will disclose mine. It is up to you to determine if this is worth the risk as i did. I work for Disney, that is all i can tell you."
"I can deliver 3 to 4 days before release. I will email you the report as soon as i have it and you will wire transfer the money to my account after you get ahold of it. I am asking you to make me an offer based on the capital gains from the trade and the risk i am taking delivering this information to you? Also, i am looking to build a strong business relationship with you for future quarters and information."
"I dont think we will get caught if we stay discrete and careful. You can count on my discretion as i am counting on yours..."
"... $15k sounds great and $30k even better as i hope you will make a killing from Q2 earnings. I promise i will keep you informed of any unanticipated event, i keep my ears wide open here."
The SEC alleges that two days before Disney's earnings announcement, Sebbag e-mailed the undercover agents a 107-page confidential document that contained a series of talking points for Disney executives during an upcoming quarterly earnings conference call. It contained very detailed information about the quarterly performance and future prospects of Disney's various business segments. The SEC further alleges that Hoxie learned that Disney's Earnings Per Share (EPS) for the quarter and provided that information to Sebbag, who in turn provided it to an undercover agent approximately two hours before its public release.
According to the SEC's complaint, Sebbag made arrangements to meet the undercover agents in person so he could collect his payment. At a May 14 meeting in New York, Sebbag told the agents he wanted "to make a lot of money" through the arrangement and asked for their advice on how to open up an off-shore account to deposit his proceeds from the scheme, stating that he didn't "want to go to jail." Sebbag left the meeting with an envelope containing $15,000 in cash, and he subsequently made arrangements to meet with them again in California to continue building the illicit relationship. The FBI arrested Sebbag and Hoxie today.
By offering to sell and selling material non-public information to be used for the purposes of insider trading, Sebbag and Hoxie engaged in acts or practices that constitute violations of the anti-fraud provisions of the federal securities laws. The Commission seeks an order providing for permanent injunctive relief against Sebbag and Hoxie pursuant to Section 21(d)(1) of the Securities Exchange Act of 1934, and permanently enjoining each defendant from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
Ken C. Joseph, Jason E. Friedman, Howard Fischer, and Neil Hendelman of the New York Regional Office conducted the SEC's investigation. The Commission thanks the FBI and the U.S. Attorney's Office for the Southern District of New York for their assistance in this matter.
For more information about this enforcement action, contact:
David Rosenfeld Associate Director, SEC's New York Regional Office (212) 336-1053
Ken C. Joseph Assistant Director, SEC's New York Regional Office (212) 336-0097
(Press Rel. 2010-84)
SEC Approves Rule Changes To Enhance Municipal Securities Disclosure
The Securities and Exchange Commission today voted unanimously to approve rule changes improving the quality and timeliness of municipal securities disclosure.
Municipal securities, such as municipal bonds, are exempt from the disclosure requirements of the federal securities laws. As such, the SEC's statutory authority is limited. The SEC's rule amendments approved today are designed to provide enhanced information to municipal securities investors by further regulating those who underwrite or sell such municipal securities.
The measures will strengthen existing requirements for the scope of securities covered, the nature of the events that issuers must disclose, and the time period in which disclosure must be made.
"These rule changes will enable investors to make more knowledgeable decisions about municipal securities by requiring more timely and relevant information on an ongoing basis," said SEC Chairman Mary L. Schapiro. "Although I believe that the SEC's regulatory authority over the municipal securities market should be expanded in order to better protect investors and issuers alike, these measures represent an important improvement within our present statutory authority."
The compliance date of the new rules is Dec. 1, 2010.
Every year, states and local governments raise funds for schools, roads, hospitals and other needs by issuing municipal bonds. In turn, investors receive principal and interest payments, which are often exempt from federal and state income taxes. Maintaining the health of this key component of the capital markets is important to every resident of the United States in addition to the millions of investors in municipal bonds.
Municipal securities, such as municipal bonds, are exempt from the disclosure requirements of the federal securities laws. The SEC adopted Rule 15c2-12 in 1989, which was designed to foster greater transparency in the municipal securities market, by regulating those who underwrite, or sell, municipal securities.
Rule 15c2-12 prohibits brokers, dealers, and municipal securities dealers from purchasing or selling municipal securities unless they reasonably believe that the state or local government issuing the securities has agreed to disclose such things as annual financial statements and notices of certain events, such as payment defaults, rating changes and prepayments.
The Amended Rule will ...
The existing rule presently provides that notice of all of the listed events need be made only "if material." The amended rule will eliminate the need for a materiality determination for the following events: (1) failure to pay principal and interest; (2) unscheduled payments out of debt service reserves reflecting financial difficulties; (3) unscheduled payments by parties backing the bonds, reflecting financial difficulties, or a change in the identity of parties backing the bonds or their failure to perform; (4) defeasances, including situations where the issuer has provided for future payment of all obligations under a bond; and (5) rating changes. A materiality determination would be retained for some events, including, for example, bond calls.
The amendments also increase the number of events to include: (1) tender offers; (2) bankruptcy, insolvency, receivership or similar proceeding; (3) mergers, consolidations, acquisitions, the sale of all or substantially all of the assets of the obligated person or their termination, if material; and (4) appointment of a successor or additional trustee or the change of the name of a trustee, if material.
Currently, the rule simply provides for disclosure "in a timely manner."
SEC Proposes Consolidated Audit Trail System To Better Track Market Trades
The Securities and Exchange Commission today proposed a new rule that would require the self-regulatory organizations (SROs) to establish a consolidated audit trail system that would enable regulators to track information related to trading orders received and executed across the securities markets.
A consolidated audit trail system would help regulators keep pace with new technology and trading patterns in the markets. Currently, there is no single database of comprehensive and readily accessible data regarding orders and executions. Stock market regulators tracking suspicious market activity or reconstructing an unusual event must obtain and merge an immense volume of disparate data from a number of different markets and market participants. Regulators are seeking more efficient access to a far more robust and effective cross-market order and execution tracking system.
"If adopted, this consolidated audit trail would, for the first time ever, allow the SEC and other market regulators to track trade data across multiple markets, products and participants in real time," said SEC Chairman Mary L. Schapiro. "It would allow us to rapidly reconstruct trading activity and quickly analyze both suspicious trading behavior and unusual market events."
Last year, the SEC set up an agency-wide task force to carry out the audit trail initiative and begin the process of developing the rulemaking proposal recommended to the Commission today.
The SEC's proposal seeks public comment and data on a broad range of issues relating to a consolidated audit trail. Public comments on the proposal should be received by the Commission within 60 days of its publication in the Federal Register.
As the events of May 6 made clear, today's securities markets are highly automated, and trading activity is widely dispersed across many trading centers. Due to rapid technological advances, trades are now transacted in a matter of milliseconds.
Such dispersed, automated trading activity makes it more challenging for SROs and the SEC to conduct cross-market supervision of trading activities and oversight of the securities markets and market participants.
Currently, there is no single database of comprehensive and readily accessible data regarding orders and executions. Instead, each SRO uses its own separate audit trail systems to track information relating to orders in its respective markets. And, the existing audit trail requirements vary significantly among markets. That means that regulators, when conducting a cross-market analysis, must obtain and merge together a large volume of disparate data from different entities.
As SEC Chairman Mary Schapiro said when first announcing the audit trail initiative earlier this year: "It is like trying to put together a jigsaw puzzle, but only being able to see a small part of the final picture. To see the complete picture, regulators must have access to a robust and effective consolidated order and transaction tracking system."
As such, there is a heightened need for a uniform, consolidated cross-market order and execution tracking system.
Goals of the Proposal
The proposed consolidated audit trail is intended to:
Requirements of the Proposed Rule
Under the proposed rule (Rule 613), SROs would file jointly with the Commission an NMS plan to create, implement, and maintain a consolidated audit trail. Then, the SROs would file proposed rule changes requiring their members to comply with the plan.
The proposed rule, which would initially apply to all NMS stocks and listed options, would:
The central repository would be jointly owned and operated by the exchanges and FINRA. The central repository would receive, consolidate, and retain all data submitted by the SROs and their members.
The exchanges, FINRA and the SEC would have access to the data collected by the central repository for purposes of performing their respective regulatory and oversight functions.
If adopted, it is expected that the proposed rule will ultimately be expanded to cover other securities.
Timeline of the Proposed Rule
The proposed rule would provide for a phased approach to implementation, requiring:
Recent Commission Actions on Market Structure
Today's proposal is part of a larger effort by the SEC to help ensure that the markets are fair, transparent and efficient. Among other things, the Commission already has proposed rules that would:
The Commission also has sought public comment on a concept release covering a wide range of topics concerning the equity markets to help facilitate the SEC's ongoing review of market structure issues. (Press Rel. 2010-86)
SEC Charges Money Manager and Two Associates in New York City-Based Affinity Fraud
The Securities and Exchange Commission today charged a purported money manager, his New York City-based investment company, and two of his associates with conducting an affinity fraud and Ponzi scheme that specifically targeted investors living in the Caribbean and African-American communities of Brooklyn.
The SEC alleges that Gedrey Thompson, through his firm GTF Enterprises Inc., convinced investors to entrust him with money that he claimed to trade on their behalf. Thompson assured investors that the investments were risk-free and employed "stop-loss" trading techniques, and he guaranteed quarterly returns ranging from 4 to 20 percent.
However, Thompson allegedly invested only a fraction of investor funds and sustained thousands of dollars in trading losses from those investments. He sent investors fake quarterly account statements that hid those losses and instead showed lofty returns. Thompson also made Ponzi-like payments to earlier investors, and he stole thousands of dollars in investor funds to pay for exotic trips and other personal expenses. GTF's account manager Dean Lewis and assistant treasurer Sezzie Goodluck also are charged in the fraud that caused many investors in GTF to lose their life savings.
"GTF and its associates abused a bond of trust with promises of extraordinary returns and risk-free investment opportunities," said George S. Canellos, Director of the SEC's New York Regional Office.
David Rosenfeld, Associate Director of the SEC's New York Regional Office, added, "Thompson and his cohorts exploited members of their own community by using phony trading credentials and bogus account statements to legitimize their fraud."
According to the SEC's complaint, filed in U.S. District Court for the Southern District of New York, Thompson with assistance from Lewis and Goodluck raised a total of more than $800,000 from at least 20 investors from at least 2004 to 2009. Thompson primarily sought investors who were similarly from the Caribbean and now living in the New York area, convincing them to entrust him with their money that he claimed to trade on their behalf in options, futures, commodities, or other securities.
The SEC alleges that Thompson and Lewis made a number of false or misleading representations to con investors. For example, they claimed that GTF practiced sound and careful investing and assumed all trading risk. They also falsely represented that key GTF personnel had extensive experience with Wall Street's top financial firms. Thompson himself boasted false trading qualifications and misstated GTF's success as an investment company.
According to the SEC's complaint, Lewis solicited and obtained approximately $170,000 in investments from at least five investors and obtained $29,000 in commissions from the fraud. Goodluck, a J.P. Morgan Chase Bank employee in Brooklyn at the time, recruited at least two Chase customers to invest in GTF without disclosing those outside activities to Chase. Goodluck personally obtained approximately $78,000 of the investors' funds from GTF's Chase account and provided Thompson with cash from the same account to pay some of his personal expenses, including exotic trips for him and his girlfriend, private school tuition for his son, and meals at restaurants. By 2009, Thompson had dissipated all of the funds that investors had invested in GTF.
The SEC charged Thompson and GTF with violating the securities registration provisions of the Securities Act of 1933 and the antifraud provisions of the Securities Act and the Securities Exchange Act of 1934. Thompson also is alleged to have violated the antifraud provisions of the Investment Advisers Act of 1940. GTF is alleged to have violated the registration requirements of the Investment Company Act of 1940. Lewis is alleged to have violated the antifraud provisions of the Securities Act and the Exchange Act, and to have aided and abetted violations of the Advisers Act. Goodluck is alleged to have aided and abetted violations of the antifraud provisions of the Exchange Act and the Advisers Act. The Commission seeks to enjoin each defendant from future violations of these provisions along with monetary relief and certain other sanctions.
Ken C. Joseph, Lee Bickley, and Cynthia Matthews in the New York Regional Office conducted the investigation and will prosecute the SEC's case. The Commission thanks the For more information about this enforcement action, contact:
David Rosenfeld Associate Director, SEC's New York Regional Office (212) 336-1053
Ken C. Joseph Assistant Director, SEC's New York Regional Office (212) 336-0097
(Press Rel. 2010-87)
Delinquent Filers' Stock Registrations Revoked
The registrations of the registered securities of Tal Wireless Networks, Inc., TCT Financial Group A, Inc., Telechips Corp., Tellus Industries, Inc., TELnet go 2000, Inc., TMCI Electronics, Inc., TMP Inland Empire, Ltd., TMP Inland Empire V, Ltd., and TMP Inland Empire VI, Ltd., have been revoked. Each had repeatedly failed to file required annual and quarterly reports with the Securities and Exchange Commission. Thus, each violated a crucial provision of the federal securities laws that requires public corporations to publicly disclose current, accurate financial information so that investors may make informed decisions. The revocations were ordered in an administrative proceeding before an administrative law judge. (Rel. 34-62171; File No. 3-13876)
Commission Revokes Registration of Securities of U.S. Harvest Medical Technologies Corp. for Failure to Make Required Periodic Filings
On May 26, 2010, the Commission revoked the registration of each class of registered securities of U.S. Harvest Medical Technologies Corp. (U.S. Harvest Medical) 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. Harvest Medical 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. Harvest Medical Technologies Corp. 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. Harvest Medical Technologies Corp.'s securities pursuant to Section 12(j) of the Exchange Act. This order settled the charges brought against U.S. Harvest Medical in In the Matter of United Vanguard Homes, Inc., et al., Administrative Proceeding File No. 3-13875.
Brokers and dealers should be alert to the fact that Exchange Act Section 12(j) provides, in pertinent part, as follows:
No member of a national securities exchange, broker, or dealer shall make use of the mails or any means or instrumentality of interstate commerce to effect any transaction in, or to induce the purchase or sale of, any security the registration of which has been and is suspended or revoked . . . .
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 United Vanguard Homes, Inc., et al., Administrative Proceeding File No. 3-13875, Exchange Act Release No. 62018 (April 30, 2010). (Rel. 34-62172; File No. 3-13875)
In the Matter of JayCee James
An Administrative Law Judge has issued an Order Making Findings and Imposing Sanction by Default (Default Order) in Administrative Proceeding No. 3-13584, JayCee James. The Order Instituting Proceedings alleged that JayCee James (James) filed numerous false reports with the Securities and Exchange Commission on Forms 3 and 4 and Schedules 13D between March and May 2009. The Default Order finds that the Division of Enforcement (Division) demonstrated that James filed the Forms and Schedules, that certain of the filings were false, and that certain of the securities to which the false Forms and Schedules related were registered pursuant to Section 12 of the Securities Exchange Act of 1934 (Exchange Act) at the relevant times. The Default Order grants the Division's Second Motion for Summary Disposition, which James did not oppose. It orders James to cease and desist from committing or causing any violations or future violations of Sections 13(d) and 16(a) of the Exchange Act and Exchange Act Rules 13d-1, 13d-2, and 16a-3. (Rel. 34-62173; File No. 3-13584)
Commission Sustains Disciplinary Action Taken By FINRA Against John M.E. Saad
The Commission sustained FINRA disciplinary action against John M.E. Saad, formerly a registered representative associated with Homer, Townsend & Kent (HTK), a FINRA member firm. The Commission found that Saad misappropriated funds of HTK's parent company, member firm Penn Mutual Life Insurance Co., in violation of NASD Rule 2110 (which requires that members and their associated persons "observe high standards of commercial honor and just and equitable principles of trade") by accepting reimbursement based on Saad's submission of false expense reimbursement requests and receipts. The Commission also sustained FINRA's imposition of a bar against Saad in all capacities and the assessment of costs. (Rel. 34-62178; File No. 3-13678)
SEC v. Matthew Gagnon
On May 24, 2010, the Securities and Exchange Commission obtained an emergency court order freezing the assets of Matthew J. Gagnon (Gagnon) for promoting and operating a series of fraudulent, unregistered securities offerings through his website, www.mazu.com. In its complaint filed in the U.S. District Court for the Eastern District of Michigan, the SEC alleges that from January 2006 through approximately August 2007, Gagnon helped orchestrate a massive Ponzi scheme conducted by Gregory N. McKnight (McKnight) and his company, Legisi Holdings, LLC (Legisi), which raised a total of approximately $72.6 million from over 3,000 investors by promising returns of upwards of 15% a month. The complaint also alleges that Gagnon promoted Legisi but in doing so misled investors by claiming, among other things, that he had thoroughly researched McKnight and Legisi and had determined Legisi to be a legitimate and safe investment. The complaint alleges that Gagnon had no basis for the claims he made about McKnight and Legisi. Gagnon also failed to disclose to investors that he was to receive 50% of Legisi's purported "profits" under his agreement with McKnight. According to the complaint, Gagnon received a net of approximately $3.8 million in Legisi investor funds from McKnight for his participation in the scheme.
The SEC's complaint further alleges that beginning in August 2007, Gagnon fraudulently offered and sold securities representing interests in a new company that purportedly was to develop resort properties. The complaint alleges that Gagnon, among other things, falsely claimed that the investment was risk-free and "SEC compliant," and guaranteed a 200% return in 14 months. In reality, however, Gagnon sent the money to a twice-convicted felon, did not register the investment with the SEC, and knew such an outlandish return was impossible. Gagnon took in at least $361,865 from 21 investors. The SEC's complaint alleges that in April 2009, Gagnon began promoting a fraudulent offering of interests in a purported Forex trading venture. Gagnon guaranteed that the venture would generate returns of 2% a month or 30% a year for his investors. Gagnon's claims were false, and Gagnon had no basis for making the claims. Finally, the complaint alleges that from October 2009 to November 2009, Gagnon offered another purported Forex trading venture in which he claimed to have a trader in Europe who would trade foreign currencies for investors in exchange for 40% of any profits he generated. Gagnon removed this offer from his website in November 2009 when he received notice that the SEC had subpoenaed his bank records.
The SEC's complaint charges Gagnon with violating Sections 5(a), 5(c), 17(a) and 17(b) of the Securities Act of 1933 and Sections 10(b) and 15(a)(1) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition to the emergency relief already obtained, the complaint seeks preliminary and permanent injunctions, disgorgement, and civil penalties from Gagnon.
The Honorable George Caram Steeh of the U.S. District Court for the Eastern District of Michigan issued an Order freezing all of Gagnon's assets and scheduling an evidentiary hearing for June 23, 2010, on the Commission's motion for a preliminary injunction.
[SEC v. Matthew J. Gagnon, Case No. 2:10-cv-11891 (E.D. Mich.) (LR-21532)
SEC v. Christopher W. Bass, et al.
On May 24, 2010, the Securities and Exchange Commission filed an injunctive action charging Albany, New York resident Christopher W. Bass and various entities he controlled with conducting a Ponzi scheme through which Defendants fraudulently obtained approximately $5.9 million from over 400 investors.
The Commission's complaint, filed in the United States District Court for the Northern District of New York, alleges that from at least January 2007 through at least June 2009, Bass told prospective investors that he could pool their money and have European money managers invest the funds in various enterprises in Europe. Bass claimed that these managers historically had generated monthly returns ranging from 2.8 % to 6 %. Bass conducted his scheme through a company called Swiss Capital Harbor-USA LLC (SCH) and three limited partnerships, Swiss Capital Harbor Fund A Partners, L.P., Swiss Capital Harbor Fund B Partners, L.P. and Swiss Capital Harbor Fund C Partners, L.P. (SCH LPs).
According to the Commission's complaint, Bass's representations were false, and Bass did not invest investors' money as claimed. Instead, Defendants used most of the funds to pay Bass's personal expenses, to pay the operating expenses of SCH and the SCH-LPs, and to satisfy investors' redemption requests.
The Complaint charges Bass, SCH and the SCH LPs 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 and Rule 10b-5 thereunder.
The Commission seeks a final judgment enjoining Defendants from committing future violations of the foregoing federal securities laws and ordering them to disgorge ill-gotten gains plus prejudgment interest thereon and assessing civil penalties.
The Commission acknowledges the assistance of the United States Attorney's Office for the Northern District of New York. [SEC v. Christopher W. Bass, Swiss Capital Harbor-USA, LLC, Swiss Capital Harbor Fund A Partners, L.P., Swiss Capital Harbor Fund B Partners, L.P., and Swiss Capital Harbor Fund C Partners, L.P., Civil Action No. 1 0-CV-00606 (LEK) (DRH) (NDNY)] (LR-21533)
SEC Obtains Preliminary Injunction in Ponzi Scheme Targeting Retired Bus Drivers
The Securities and Exchange Commission today announced that it obtained a preliminary injunction against Thomas L. Mitchell, (Mitchell), Mitchell, Porter & Williams, Inc. (MPW), the Adivanala AA Investment Trust (AAA Trust) and AB3, Inc., (AB3). The Honorable Philip S. Gutierrez, United States District Judge, also granted additional relief that the Commission sought, including an order freezing assets.
The Commission's complaint, filed March 3 in federal court in Los Angeles, alleges that Mitchell advised MPW's clients, many of whom were retired Los Angeles-area bus drivers, to invest their retirement money in a promissory note offered by the AAA Trust and AB3. The complaint further alleges that the promissory note offering carried fixed interest returns ranging between 10-15% per year for 3-6 year terms. The complaint alleges that Mitchell made various claims to investors as to how he could generate such large returns, including investing in stocks, bonds, and real estate. Rather than making any actual investments, the complaint alleges that Mitchell and the other defendants in fact operated a Ponzi scheme, in which new investor money was used to pay interest to existing investors. The complaint also alleges that between April 2009 and December 2009, the AAA Trust raised approximately $1.4 million from 6 investors. According to the complaint, $1.1 million of these funds were used to pay interest to existing investors, and another $300,000 was diverted to MPW, which Mitchell used to pay his living expenses. The complaint further alleges that during this time, the AAA Trust only invested $32,000 worth of investor funds.
The Commission's complaint charges the defendants with violating the antifraud, securities registration and broker-dealer registration provisions of the federal securities laws.
On March 3, 2010, the Honorable Philip S. Gutierrez, United States District Judge, granted the Commission's application for a temporary restraining order against the defendants and issued orders freezing their assets and prohibiting the destruction of documents.
For further information, see Litigation Release No. 21432 (March 4, 2010). [SEC v. Mitchell, Porter & Williams, Inc., The Adivanala AA Investment Trust, AB3, Inc., Thomas L. Mitchell, United States District Court for the Central District of California, Case No. 10-CV-01576 PSG (FFM)] (LR-21535)
Approval of Proposed Rule Change
The Commission approved a proposed rule change (SR-FINRA-2010-007) submitted by the Financial Industry Regulatory Authority, (FINRA) (f/k/a National Association of Securities Dealers, Inc. (NASD) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 related to amendments the By-Laws of NASD Dispute Resolution. Publication is expected in the Federal Register during the week of May 24. (Rel. 34-62156)
Proposed Rule Change
The Commission issued notice of a proposed rule change submitted by the Financial Industry Regulatory Authority (SR-FINRA-2010-027) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 relating to the Restated Certificate of Incorporation of Financial Industry Regulatory Authority. Publication is expected in the Federal Register during the week of May 24. (Rel. 34-62160)
Order Granting Approval of Accelerated Delivery of Supplement to the Options Disclosure Document and Amendment to the Options Disclosure Document Inside Front Cover
The Commission granted approval to the accelerated delivery of a supplement to the options disclosure document, submitted by The Options Clearing Corporation (SR-ODD-2010-01) pursuant to Rule 9b-1 under the Securities Exchange Act of 1934, regarding disclosures on options on conventional index-linked securities and amendment to the options disclosure document inside front cover. Publication is expected in the Federal Register during the week of May 24. (Rel. 34-62161)
Order Approving Proposed Rule Change and Notice of Filing and Order Granting Accelerated Approval to Amendment No. 1
The Commission noticed Amendment No. 1 to a proposed rule change (SR-CBOE-2008-88) and granted accelerated approval of the proposed rule change, as modified by Amendment No. 1, submitted by Chicago Board Options Exchange relating to the demutualization of Chicago Board Options Exchange, Incorporated. Publication is expected in the Federal Register during the week of May 24. (Rel. 34-62158)
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