Securities and Exchange Commission Suspends Trading in Green Energy Resources, Inc. Because of Questions About Accuracy of Statements Concerning Involvement in Gulf of Mexico Cleanup Effort
The United States Securities and Exchange Commission announced the temporary suspension of trading in the securities of Green Energy Resources, Inc. (Green Energy), commencing at 9:30 a.m. EDT on June 22, 2010, and terminating at 11:59 p.m. EDT on July 6, 2010. The Commission temporarily suspended trading in the securities of Green Energy due to a lack of current and accurate information concerning the securities of Green Energy because of questions regarding the accuracy of statements by Green Energy in press releases concerning, among other things, the company's involvement in the Gulf of Mexico oil spill cleanup effort. 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 suspension, no quotation may be entered relating to the securities of Green Energy unless and until the broker or dealer has strictly complied 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 Green Energy 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, Jonathan P. Scott of the Fort Worth Regional Office of the Securities and Exchange Commission should be telephoned at (817) 978-3821.
The Commission acknowledges the assistance of the Financial Industry Regulatory Authority (FINRA).
The staff of the Securities and Exchange Commission and FINRA recently issued an investor alert to warn investors about potential scams that exploit the Gulf oil spill and related cleanup efforts. The alert, with tips for avoiding potential oil cleanup scams, is available at http://www.sec.gov/investor/alerts/oil.htm. (Rel. 34-62347)
SEC Announces $5.4 Million Distribution of Inviva/Jefferson National Fair Fund
The Securities and Exchange Commission today announced the distribution of approximately $5.4 million in Fair Funds to eligible investment company portfolios that were harmed by the actions of certain market timers that Inviva, Inc. and Jefferson National Insurance Company permitted to market time Jefferson National variable annuities despite prospectus disclosures between October 2002 and September 2003.
The SEC's previous enforcement action against Inviva and Jefferson National in August 2004 was the first enforcement action charging insurance companies with securities fraud for facilitating market timing of mutual funds through the sale of variable annuities. The prospectuses through which the Jefferson National annuities were sold represented that the annuities were not designed for professional market timing organizations, but failed to disclose that Jefferson National was selling the products to market timing customers and was facilitating the market timers in carrying out a market timing strategy. Inviva and Jefferson National profited by the fees earned from the variable annuities while they were allowing market timing. The Fair Fund was created after Inviva and Jefferson National agreed to pay $3.5 million in penalties and $1.5 million disgorgement for a total payment of $5 million to settle the SEC charges.
The Sarbanes-Oxley Act of 2002 (SOX) gave the SEC authority to increase the amount of money returned to injured investors by allowing the addition of penalties to create a Fair Fund distribution. Before SOX, only disgorgement could be returned to investors.
The Independent Distribution Consultant and Fund Administrator responsible for this distribution is William Randolph Thompson. Questions regarding the distribution may be directed to Mr. Thompson by emailing him at WRT924@comcast.net.
Delinquent Filers' Stock Registrations Revoked
The registrations of the registered securities of Alpha Resources, Inc., Amber's Stores, Inc., American BioMed, Inc., American Completion Program 1983-3, and Amtronics Enterprises, 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. 34-62345; File No. 3-13922)
Commission Revokes Registration of Securities of Monaco Finance, Inc. for Failure to Make Required Periodic Filings
On June 22, 2010, the Commission revoked the registration of each class of registered securities of Monaco Finance, Inc. (Monaco Finance) 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, Riverside 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 Monaco Finance, Inc. 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 Monaco Finance's securities pursuant to Section 12(j) of the Exchange Act. This order settled the proceedings brought against Monaco Finance in In the Matter of Miracor Diagnostics, Inc., et al., Administrative Proceeding File No. 3-13921.
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 Miracor Diagnostics, Inc., et al., Administrative Proceeding File No. 3-13921, Exchange Act Release No. 62219, June 4, 2010. (Rel. 34-62346; File No. 3-13921)
SEC Charges Palm Beach County Investment Adviser With Running a Ponzi Scheme and Stealing Client Funds
The Securities and Exchange Commission today charged an investment adviser in Palm Beach Gardens, Florida and two of its managing members with fraud for running a Ponzi scheme and stealing client funds.
The SEC alleges that Trade-LLC, and its managing members, Philip W. Milton and William Center, convinced three private investment clubs, with more than 800 members nationwide, to entrust Trade-LLC with money so that it can trade securities on the clubs' behalf using its purported proprietary software trading program. Trade-LLC raised almost $28 million from the clubs and throughout the course of the scheme, claimed that it was profitably trading securities for them. In fact, Trade-LLC was incurring significant trading losses and Milton and Center were allegedly using the funds Trade-LLC received from the clubs to pay fictitious trading profits to them. Milton and Center also misappropriated the clubs' monies to pay their salaries and other personal and business expenses.
According to the SEC's complaint, filed in the U.S. District Court for the Southern District of Florida, between 2007 and 2009, the three private investment clubs invested nearly $28 million of their members' funds with Trade-LLC based on promises that the firm can generate significant returns for them and their members. On a monthly basis, the clubs received reports from Trade-LLC purportedly showing that they were making returns of up to 8% a month, or approximately 100% on an annualized basis. In truth, Trade-LCC was consistently losing money from the trading it conducted on behalf of the clubs, which was directed by Milton, and in total sustained trading losses of more than $2 million.
The complaint further alleges that Trade-LLC, Milton, and Center were operating a Ponzi scheme by using the funds Trade-LLC received from the clubs to pay back to them more than $1 million in fictitious profits. Moreover, the SEC's complaint alleges that Milton and Center misappropriated millions of dollars belonging to the clubs. Specifically, Milton and Center used the clubs' funds to pay themselves salaries of more than $2 million and $1 million, respectively, and to cover more than $1.3 million in business and other unrelated expenses. Milton and Center also transferred, without any legitimate basis, over $4.8 million of the clubs' funds to three Florida companies they controlled.
The SEC's complaint charges Trade-LLC, Milton, and Center with violating Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. Center is also charged with violating Section 15(a) of the Exchange Act. The three companies controlled by Milton and Center that received proceeds from the fraudulent scheme, BD LLC, TWTT-LLC and CMJ Capital LLC, are named as relief defendants.
Trade-LLC, the relief defendants and Milton have agreed to settle the charges against them. Trade-LLC and the relief defendants have consented to asset freezes and being placed in receivership, and to disgorge all of the funds that the court determines they received from the fraudulent scheme. Trade-LLC has also consented to pay a civil money penalty to be determined by the court. Milton has consented to a court order permanently enjoining him from violating the antifraud provisions of the federal securities laws. The order also directs him to disgorge $2,351,963 in proceeds he received from Trade-LLC and to pay a $130,000 civil money penalty.
The SEC thanks the State of Florida - Office of Financial Regulation and the Commodity Futures Trading Commission for their assistance in this matter. [SEC v. Trade-LLC, et. al, Civil Action No. 9:10-cv-80737 (U.S. District Court for the Southern District of Florida] (LR-21564)
SEC Obtains Judgments Against Mobile Ready Entertainment Corporation, Michael H. Magolnick, and Craig A. Mora in Pump and Dump Stock Scheme
The Securities and Exchange Commission announced the entry of Final Judgments against Mobile Ready Entertainment Corp. (Mobile Ready), Michael H. Magolnick (Magolnick), and Craig A. Mora (Mora) which permanently enjoined Mobile Ready from future violations of Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. Mobile Ready consented to the issuance of the Final Judgment without admitting or denying any of the allegations in the Complaint.
The Final Judgments as to Magolnick and Mora permanently enjoined both Magolnick and Mora from committing further violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Section 5 of the Securities Act and imposed 5-year officer/director and penny stock bars against both Magolnick and Mora. They consented to the issuance of the Final Judgments without admitting or denying any allegations in the Complaint.
The Final Judgment as to defendant Magolnick determined that he was liable for disgorgement of $69,949.69 and prejudgment interest of $4,719.04. Based upon Magolnick's sworn financial statement, all but $40,000 of the disgorgement and prejudgment interest was waived and no civil penalty was imposed. Magolnick consented to the issuance of the Final Judgment without admitting or denying any of the allegations in the Complaint.
The Final Judgment as to defendant Mora determined that he was liable for disgorgement of $72,589.32 and prejudgment interest of $4,897.12. Based upon Mora's sworn financial statement, all but $15,000 payment of the disgorgement and prejudgment interest was waived and no civil penalty was imposed. Mora consented to the issuance of the Final Judgment without admitting or denying any of the allegations in the Complaint. [SEC v. Mobile Ready Entertainment Corp., Michael H. Magolnick, and Craig A. Mora, Civil Case No. 1:08-CV-2263-JEC, U.S.D.C., N.D. Ga. (Atlanta)] (LR-21565)
SEC Files Charges Against Second Canopy Financial, Inc. Co-Founder for $75 Million Offering Fraud
The Securities and Exchange Commission announced that on June 22, 2010, it filed a complaint in the U.S. District Court for the Northern District of Illinois against Anthony T. Banas (Banas), a co-founder and former Chief Technology Officer of privately-held Canopy Financial, Inc. (Canopy), for engaging in a scheme to defraud investors in a $75 million private placement offering and for misappropriating investor funds. The Complaint alleges that:
In addition to seeking a permanent injunction against Banas for violating the antifraud provisions of the Securities Act of 1933 [Section 17(a)] and the Securities Exchange Act of 1934 [Section 10(b) and Rule 10b-5 thereunder], the Commission's Complaint seeks the disgorgement of ill-gotten gains, plus prejudgment interest thereon, and a civil penalty.
Banas, a resident of Chicago, IL, has offered to settle the charges against him without admitting or denying the allegations. The Commission and Banas have filed a motion with the District Court seeking entry of an Order of Final Judgment imposing a permanent injunction against Banas, ordering Banas to pay $975,548.25 in disgorgement and $32,910.45 in prejudgment interest thereon, and a civil penalty in an amount to be determined by the Court at a later date.
The Commission first filed a related emergency action against Canopy and Jeremy J. Blackburn (Blackburn) on Nov. 30, 2009. SEC v. Canopy Financial, Inc., et al., Case No. 09-CV-7429, USDC, N.D.IL (LR-21324).
The Commission's investigation is continuing. The Commission acknowledges the assistance of the U.S. Attorney's Office of the Northern District of Illinois in this matter. [SEC v. Anthony T. Banas, Case No. 10-cv-3877 USDC, N.D. IL] (LR-21566)
INVESTMENT COMPANY ACT RELEASES
Pruco Life Insurance Company, et al.
A notice has been issued giving interested persons until July 13, 2010, to request a hearing on an application filed by Pruco Life Insurance Company (Pruco Life), Pruco Life Insurance Company of New Jersey (PLNJ, and collectively with Pruco Life, the Insurance Companies), Pruco Life Flexible Premium Variable Annuity Account (Pruco Life Account); Pruco Life of New Jersey Flexible Premium Variable Annuity Account (Pruco Life of New Jersey Account, and collectively with Pruco Life Account, the Accounts), and Prudential Annuities Distributors, Inc. (PAD, and collectively with the Insurance Companies, and the Accounts, the Applicants). Applicants seek an order under Section 6(c) of the Act, exempting them from Sections 2(a)(32), and 27(i)(2)(A) of the Act and Rule 22c-1 thereunder, to permit the recapture of credits previously applied to purchase payments under certain variable flexible premium deferred annuity contracts issued by the Insurance Companies. (Rel. IC-29302 - June 18)
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change, as modified by Amendment Nos. 1 and 2 (SR-ISE-2010-15), filed by the International Securities Exchange related to the Price Improvement Mechanism 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 June 21. (Rel. 34-62316)
A proposed rule change filed by NASDAQ OMX PHLX relating to FLEX Equity Options (SR-Phlx-2010-85) 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 June 21. (Rel. 34-62325)
Proposed Rule Changes
The Commission issued notice of a proposed rule change submitted by The NASDAQ Stock Market (SR-NASDAQ-2010-068) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 to establish a revenue sharing program with Correlix, Inc. Publication is expected in the Federal Register during the week of June 21. (Rel. 34-62326)
The Commission issued notice of a proposed rule change submitted by Financial Industry Regulatory Authority (SR-FINRA-2010-021) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 to amend FINRA Rule 8210 to require information provided via portable media device be encrypted. Publication is expected in the Federal Register during the week of June 21. (Rel. 34-62318)
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