SEC Issues Notice of Proposed Distribution Plan and Opportunity for Comment in the Matter of J.P. Morgan Securities Inc.
The Securities and Exchange 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. § 201.1103, that the Division of Enforcement has filed a proposed plan (Distribution Plan) for the distribution of monies in the matter of J.P. Morgan Securities Inc.
The Distribution Plan provides for distribution of the $25,000,000.00 penalty and $1.00 of disgorgement paid by J.P. Morgan Securities Inc., plus any accumulated interest, less any federal, state, or local taxes on the interest and tax administrator fees. The proposed plan provides for distribution of the monies to Jefferson County, Alabama.
A copy of the Distribution Plan may be obtained by submitting a written request to Teresa J. Verges, Assistant Regional Director, United States Securities and Exchange Commission, 801 Brickell Ave., Suite 1800, Miami, FL 33131. Interested parties may also print a copy of the proposed Distribution Plan from the Commission's public website, http://www.sec.gov. Any person or entity wishing to comment on the Distribution Plan may do so in writing by submitting their comments within 30 days of the date of the Notice (i) to the Office of the Secretary, United States Securities and Exchange Commission, 100 F Street, N.E., Washington, DC 20549-1090; or (ii) via the Commission's Internet comment form (www.sec.gov/litigation/admin.shtml); or (iii) by sending an e-mail to firstname.lastname@example.org. Comments submitted by e-mail or via the Commission's website should include the Administrative Proceeding File Number (Admin. Proc. File No. 3-13673) in the subject line. Comments received will be publicly available. Persons should submit only information that they wish to make publicly available. (Rel. 34-62738; File No. 3-13673)
In the Matter of State of New Jersey
On Aug. 18, 2010, the Commission issued an Order Instituting Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933, Making Findings, and Imposing a Cease-and-Desist Order (Order) against the State of New Jersey (State). The Order finds that the State misrepresented and failed to disclose material information regarding its under funding of New Jersey's two largest pension plans, the Teachers' Pension and Annuity Fund (TPAF) and the Public Employees' Retirement System (PERS), in the offer and sale of over $26 billion in municipal bonds in 79 offerings from August 2001 through April 2007. The Order finds that the State did not adequately disclose that it was under funding TPAF and PERS, why it was under funding TPAF and PERS, or the potential effects of the under funding.
According to the Order, the State's misrepresentations and omissions created the fiscal illusion that TPAF and PERS were being adequately funded and masked the fact that New Jersey was unable to make contributions to TPAF and PERS without raising taxes or cutting other services, or otherwise impacting the budget. The Order also finds that disclosure documents failed to provide adequate information for investors to evaluate the State's ability to fund TPAF and PERS or the impact of the State's pension obligations on the State's financial condition.
The Order finds that the State had no written policies or procedures relating to the review or update of the bond offering documents and that the State did not provide training to its employees concerning the State's disclosure obligations under the accounting standards or the federal securities laws. Accordingly, the Order finds that the State's procedures were inadequate for ensuring that material information concerning TPAF and PERS or the State's financing of TPAF and PERS was disclosed and accurate in bond offering documents.
Based on the above, the Order requires the State to cease and desist from committing or causing any violations and any future violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act. The State consented to the issuance of the Order without admitting or denying the findings in the Order. (Rel. 33-9135; File No. 3-14009).
In the Matter of Ezra C. Levy
On Aug. 18, 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 Ezra C. Levy (Respondent).
The Order finds that from approximately 2000 until October 2009, Respondent was the Chief Financial Officer of Boston Provident, L.P., an unregistered investment adviser located in New York, New York (Boston Provident). On March 11, 2010, Respondent pled guilty to one count of securities fraud in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and one count of wire fraud in violation of Title 18 of the United States Code, Section 1343, before the United States District Court for the Southern District of New York, in U.S. v. Ezra Levy, Case No. 10-CR-199 (PKC). On June 29, 2010, a judgment in the criminal case was entered against Respondent. Respondent was sentenced to a prison term of 67 months followed by three years of supervised release and ordered to make restitution in the amount of $2,987,000, and to pay a fine of $12,500 and an assessment of $200. The counts of the criminal information to which Respondent pled guilty alleged, inter alia, that, first, in June 2009, Respondent caused his employer firm to purchase stocks at inflated prices from Respondent's personal brokerage account, resulting in a gain to Respondent of over $537,000; and, second, that between February 2006 and October 2009, Respondent diverted approximately $2.45 million owed to his employer into a bank account that Respondent controlled and then used that money to, among other things, pay personal expenses.
Based on the above, the Order, pursuant to Section 203(f) of the Investment Advisers Act of 1940, bars Respondent from association with any investment adviser. Respondent consented to the issuance of the Order without admitting or denying any of the findings except the entry of the judgment. (Rel. IA-3069; File No. 3-14010)
Final Judgments of Permanent Injunction and Other Relief Entered Against Defendants Dallas L. Robinson, Troy K. Metz and John A. Mattera
The Commission announced that on Aug. 9, 2010, the Honorable James I. Cohn, United States District Court Judge for the Southern District of Florida, entered final judgments of permanent injunction and other relief against Defendants Dallas L. Robinson, Troy K. Metz and John A. Mattera. The final judgments enjoin Robinson and Metz from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The final judgment as to Mattera enjoins him from violating Sections 5(a) and 5(c) of the Securities Act of 1933 and Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder. In addition to the injunctive relief, both Robinson and Metz consented to a civil penalty of $25,000 and a five year penny stock bar, and Mattera consented to paying disgorgement of $70,000, plus prejudgment interest of $8,799.94, a civil penalty of $70,000, and a permanent penny stock bar. Robinson, Metz and Mattera consented to the entry of the final judgments without admitting or denying any of the allegations in the complaint and have fully escrowed the amounts they are required to pay.
The Commission commenced this action by filing its complaint on June 25, 2009, against Robinson, Metz, Mattera and others alleging that they participated in a fraudulent scheme in violation of the federal securities laws. [SEC v. Prime Time Group, Inc., et al., Civil Action No. 09-80952-CV-Cohn/Seltzer (S.D. Fla.)] (LR-21627)
Final Judgments of Permanent Injunction and Other Relief Entered Against Defendants Thompson Consulting, Inc., Kyle J. Thompson, David C. Condie and E. Sherman Warner
On Aug. 17, 2010, the Honorable Bruce S. Jenkins, United States District Court Judge for the District of Utah, entered final judgments of permanent injunction and other relief against Defendants Thompson Consulting, Inc. (Thompson Consulting), Kyle J. Thompson (Thompson), David C. Condie (Condie) and E. Sherman Warner (Warner). The final judgments against Thompson, Condie and Warner enjoin them from violating Sections 17(a)(2) and (3) of the Securities Exchange Act of 1933 (Securities Act).
The final judgment against Thompson Consulting enjoins Thompson Consulting from violations of Sections 17(a)(2) and (3) of the Securities Act and Section 206(2) of the Investment Advisers Act of 1940. In addition to the injunctive relief, Thompson Consulting is liable for disgorgement of $400,000. Thompson Consulting, Thompson, Condie and Warner consented to the entry of the final judgments without admitting or denying the allegations of the complaint.
The Commission commenced this action on March 4, 2008, alleging Thompson Consulting, a hedge fund adviser, and its principals Thompson, Condie and Warner violated the antifraud provisions of the securities laws by making undisclosed subprime and other high-risk investments which resulted in the near total asset losses of two hedge funds managed by the adviser. The Commission's complaint also alleged that Thompson Consulting's deviations from its stated investment policy resulted in substantial losses to the hedge funds. [SEC v. Thompson Consulting, Inc., Case Number 2:08-cv-00171 (Judge Bruce S. Jenkins)(D.Ut.)] (LR-21628)
INVESTMENT COMPANY ACT RELEASES
WisdomTree Asset Management, Inc., and WisdomTree Trust
A notice has been issued giving interested persons until Sept. 7, 2010, to request a hearing on an application filed by WisdomTree Asset Management, Inc., and WisdomTree Trust for an order exempting them from Section 15(a) of the Investment Company Act and Rule 18f-2 under the Act. The order would permit the applicants to enter into and materially amend subadvisory agreements without shareholder approval. (Rel. IC-29380 - August 13)
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