Chairman Schapiro Statement on FASB-IASB Decision to Modify Timing of Certain Convergence Projects
In February, the Securities and Exchange Commission laid out its position regarding global accounting standards, making it clear that the Commission continues to believe that a single set of high-quality globally accepted accounting standards would benefit U.S investors.
At that time, the Commission directed its staff to execute a Work Plan, the results of which will aid the Commission in its evaluation of the impact that the use of International Financial Reporting Standards (IFRS) by U.S. companies would have on the U.S. securities market. Included in this Work Plan is consideration of IFRS, as it exists today and after the completion of various convergence projects currently underway between U.S. and international accounting standards-setters. By the end of 2011, the Commission will decide whether to incorporate IFRS into the U.S. financial reporting system, and if so, when and how.
On June 2, 2010, the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) announced modifications to their timetable for and prioritization of standards being developed under those boards' joint agenda.
In response, SEC Chairman Mary Schapiro issued the following statement:
"The boards believe that the modified plan will contribute to increased quality in the standards because it provides additional time for stakeholders to thoroughly consider the proposals and give both boards quality feedback. I view this as time that is well invested.
"Quality financial reporting standards established through an independent process are threshold criteria against which the Commission's future consideration of the role of IFRS in the U.S. reporting system will be based. I foresee no reason that the adjustment to the targeted timeline for certain joint projects should impact the staff's analyses under the Work Plan issued in February 2010, particularly when that adjustment is designed to enhance the quality of the standards. Indeed, focused efforts on those standards the boards consider highest priority for the improvement of U.S. GAAP and IFRS will facilitate the staff's analyses.
"Accordingly, I am confident that we continue to be on schedule for a Commission determination in 2011 about whether to incorporate IFRS into the financial reporting system for U.S. issuers." (Press Rel. 2010-96)
In the Matter of Amalgamated Explorations, Inc.
An Administrative Law Judge has issued an Initial Decision as to World Transport Authority, Inc. (Initial Decision), in Amalgamated Explorations, Inc., Administrative Proceeding No. 3-13804. The Order Instituting Proceedings alleged that World Transport Authority, Inc., failed repeatedly to file required annual and quarterly reports while its securities were registered with the Securities and Exchange Commission.
The proceeding has ended as to all other Respondents. Amalgamated Explorations, Inc., Exchange Act Release Nos. 61845 (April 6, 2010), 61870 (April 8, 2010).
The Initial Decision finds that World Transport Authority, Inc., repeatedly failed to file its required periodic reports, depriving investors of access to key financial information. As a sanction, it revokes the registration of each class of registered securities of World Transport Authority, Inc., pursuant to Section 12(j) of the Securities Exchange Act of 1934. (Initial Decision No. 397; File No. 3-13804)
In the Matter of David W. Wehrs
On June 3, 2010, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 203(f) of the Investment Advisers Act of 1940, Making Findings and Imposing Remedial Sanctions (Order) against David W. Wehrs (Wehrs). The Order finds that on May 28, 2010, a final judgment was entered by consent against Wehrs, permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1), 206(2), and 206(4) of the Advisers Act and Rule 206(4)-8 thereunder.
Based on the above, the Order bars Wehrs from association with any investment adviser. Wehrs consented to the issuance of the Order without admitting or denying any of the findings in the Order, except he admitted the entry of the injunction. (Rel. IA-3034; File No. 3-13920)
In the Matter of Institutional Capital Management
The Securities and Exchange Commission announced the filing of a civil injunctive action in Nashville, Tennessee on June 2, 2010, charging Aaron Donald Vallett (Vallett), a registered representative in Brentwood, Tennessee operating through A.D. Vallett & Co. LLC (Vallett & Co.), a state-registered investment adviser, with violations of the federal securities laws in connection with a trio of unregistered investment pools.
The Commission's complaint alleges that between September 2008 and April 2010, Vallett raised approximately $5.5 million from 19 investors while making misrepresentations to them about how the funds would be invested. While claiming that the investments were for investments in securities and real estate, Vallett in fact used some investor funds for personal expenses and paid off certain investors in his first offering with funds received to invest in one of his later offerings. Vallett also claimed that the investments were for notes to be secured with his personal assets and asset of entities that he owned. However, during a recent examination by Financial Institutions Regulatory Authority (FINRA), he provided false documentation suggesting that the collateral exceeded the amount raised.
In its Complaint, the Commission alleges that Vallett and Vallett & Co. violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. Also on June 2, the court issued an order temporarily restraining Vallett and Vallett & Co. from violating these provisions, freezing their assets, providing for expedited discovery, prohibiting the destruction of documents and directing that they provide an accounting for the funds received. A hearing on the Commission's request for a preliminary injunction will be held on a date yet to be determined.
The Commission wishes to acknowledge the assistance of FINRA's District 5 Office in New Orleans, Louisiana in this matter. [SEC v. Aaron Donald Vallett and A.D. Vallett & Co. LLC, Case No. 3:10-CV-00551 (M.D.Tenn.)] (LR-21546)
Anthony James Convicted of Mail and Wire Fraud Relating to Multimillion Dollar Misappropriation and Ponzi Scheme
The Securities and Exchange Commission announced today that on April 15, 2010, after a three day jury trial prosecuted by the United States Attorney's Office in Detroit, Michigan, Anthony A. James, an investment adviser from Parkland, Florida, was convicted of seven counts of mail fraud, six counts of wire fraud, and one count of theft or embezzlement from an employee benefit plan in connection with his multi-million dollar misappropriation of client funds. Sentencing is scheduled for Aug. 17, 2010. James faces a maximum sentence of 22 years in prison and up to several million dollars in restitution.
The Commission previously filed a civil injunctive action against James and his investment advisory firm, James Asset Advisory LLC (James Asset) based on similar conduct. According to the Commission's complaint, from at least April 2001 through January 2008, James and James Asset received at least $5.2 million from 44 clients whom they misled into believing their funds would be invested in stocks, bonds, and mutual funds. However, James never invested any client funds. Instead, the complaint alleged, James misappropriated almost $2.4 million to fund personal expenses, including the purchase of a six-bedroom, 5,000 square foot home, a luxury condominium, a Porsche sports car, and season tickets to the Miami Heat games.
On March 23, 2009, the Honorable Cecilia M. Altonaga, United States District Judge for the Southern District of Florida, entered a final judgment ordering Anthony A. James to pay $2,390,487.45 in disgorgement, plus prejudgment interest of $84,620.10 and a $130,000 civil penalty in connection with his scheme to misappropriate client funds and operate a Ponzi scheme. Previously, the Commission dismissed, with prejudice, its claims for disgorgement, prejudgment interest and a civil penalty against James Asset because the company is defunct and had no assets from which a judgment could be collected. For further information, please see Litigation Release No. 20741 (Sept. 25, 2008), Litigation Release No. 20842 (Jan. 6, 2009), and Litigation Release No. 20966 (Mar. 23, 2009). [U.S. v. Anthony A. James, Criminal Action No. 08-20674 (E.D. Mi.); SEC v. Anthony A. James and James Asset Advisory, L.L.C., Civil Action No. 08-6156 (S.D. Fla.)] (LR-21547)
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