Closed Meeting - Thursday, September 16, 2010 - 3:00 p.m.
The subject matter of the Closed Meeting scheduled for Thursday, Sept. 16, 2010, will be: institution and settlement of injunctive actions; institution and settlement of administrative proceedings; an opinion; and other matters relating to enforcement proceedings.
At times, changes in Commission priorities require alterations in the scheduling of meeting items. For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact: The Office of the Secretary at (202) 551-5400.
In the Matter of Kenneth Bruce Baker
On September 8, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 And Notice of Hearing against Kenneth Bruce Baker (the Order).
In the Order, the Division of Enforcement alleges that in March 2009, the Commission filed a civil injunctive action against Baker and others in Securities and Exchange Commission v. SkyWay Global LCC, et al., Civil Action Number 09-CV-455, in the United States District Court for the Middle District of Florida. The Commission's Complaint alleged, among other things, that from 2003 until 2005, Baker acted as an unregistered broker-dealer in connection with SkyWay stock. SkyWay retained Baker and agreed to pay him a 5% commission (later raised to 7% and then 10%) on any investor funds Baker helped raise. Pursuant to an agreement with SkyWay, Baker also received S-8 stock as a commission for all stock sales his business associate and his sales agents made. In addition, Baker promoted SkyWay through various meetings he arranged with brokers, market makers, and investors. In exchange for these efforts, SkyWay paid Baker commissions of at least $1.9 million ($315,000 in cash and the balance in stock). To conceal SkyWay's use of S-8 stock to pay Baker's commissions, SkyWay and its CEO, James Kent, signed a bogus agreement dated July 1, 2003 that stated Baker would not be paid for promoting SkyWay or raising money for the company.
The Division also alleges that on July 29, 2010, the Court entered a default judgment against Baker and permanently enjoined him from violating Section 15(a)(1) of the Securities Exchange Act of 1934 by acting as a broker-dealer and promoting the purchase of a security without first registering with the Commission.
A hearing will be scheduled to determine whether the allegations in the Order are true, and to provide the Respondent an opportunity to dispute the allegations, and to determine what, if any, remedial action is appropriate in the public interest against Baker. (Rel. 34-62868; File No. 3-14038)
In the Matter of Gregory Vincent Cronin
On September 8, 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 Gregory Vincent Cronin. The Order finds that on May 7, 2010, Cronin, age 49, pled guilty to one count of mail fraud in violation of Title 18 United States Code, Section 1341 and one count of securities fraud in violation of Title 18 United States Code, Section 1348 before the United States District Court for the Eastern District of Virginia, in United States v. Gregory Vincent Cronin, Crim. Information No. 1:10 CR 154 (LOG) (May 7, 2010). The Order also finds that the criminal information to which Cronin pled guilty alleged, among other things, that from approximately 2002 through September 2009, Cronin sought clients by falsely claiming that he would establish individual accounts for them at Innovative Investment Advisors, Inc. (IIA), an investment adviser, and would invest their funds in well-known publicly traded companies and stock index options. In exchange for managing their funds, Cronin would receive management fees of up to 1.5% of assets under management. Cronin sent clients fictitious periodic reports which purported to show that each client had an individual account; IIA had purchased and/or sold shares of stock of well-known public companies on their behalf; IIA was actively trading in stock index options on their behalf; and IIA's trading was successful. In reality, Cronin did not purchase shares of stock of well-known companies or generate positive returns trading in options as represented. Instead, he lost a majority of the clients' funds trading in options and repaying earlier clients. In addition, Cronin did not establish individual accounts for clients but instead pooled funds in one account in the name of IIA which he controlled. In total, Cronin raised approximately $10 million and caused losses of approximately $6.7 million. As part of his plea, Cronin agreed to pay restitution for the full amount of the victims' losses.
Based on the above, the Order bars Cronin from association with any investment adviser. Cronin consented to the issuance of the Order without admitting or denying any of the findings contained in the Order except for his criminal conviction, which he admitted. (Rel. IA-3080; File No. 3-14039)
In the Matter of UB&T Financial Services Corp.
An Administrative Law Judge has issued an Order Making Findings and Revoking Registrations by Default as to Four Respondents (Default Order) in UB&T Financial Services Corp., Administrative Proceeding No. 3-13990. The Order Instituting Proceedings (OIP) alleged that five Respondents failed repeatedly to file required annual and quarterly reports while their securities were registered with the Securities and Exchange Commission (Commission). The Default Order finds these allegations to be true as to four Respondents. It revokes the registrations of each class of registered securities of UB&T Financial Services Corp., United Community Holdings, Inc., United Homes, Inc., and United Shields Corp., pursuant to Section 12(j) of the Securities Exchange Act of 1934.
The Commission previously accepted a settlement offer from United Magazine Co., the fifth Respondent named in the OIP. (Rel. 34-62871; File No. 3-13990)
Commission Revokes Registration of Securities of TriStar Holdings, Inc. (f/k/a Silver Star Foods, Inc.) for Failure to Make Required Periodic Filings
On September 9, the Commission revoked the registration of each class of registered securities of TriStar Holdings, Inc. (f/k/a Silver Star Foods, Inc.) (SSTF) 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, SSTF 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 TriStar Holdings, Inc. (f/k/a Silver Star Foods, 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 SSTF's securities pursuant to Section 12(j) of the Exchange Act. This Order settled the charges brought against SSTF in In the Matter of Channel America Television Network, Inc., et al., Administrative Proceeding File No. 3-13946.
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 Channel America Television Network, Inc., et al., Administrative Proceeding File No. 3-13946, Exchange Act Release No. 62364 (June 23, 2010). (Rel. 34-62872; File No. 3-13946)
INVESTMENT COMPANY ACT RELEASES
WisdomTree Asset Management, Inc., and WisdomTree Trust
An order has been issued on an application filed by WisdomTree Asset Management, Inc., and WisdomTree Trust for an exemption from Section 15(a) of the Investment Company Act and Rule 18f-2 under the Act. The order permits the applicants to enter into and materially amend subadvisory agreements without shareholder approval. (Rel. IC-29412- September 8)
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change (SR-NYSEAmex-2010-87) filed by NYSE Amex to adopt Commentary .06 to Rule 935NY related to the exposure of Reserve Orders 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 September 13. (Rel. 34-62851)
A proposed rule change filed by the NYSE Amex (SR-NYSEAmex-2010-89) to extend the pilot program that allows Nasdaq Stock Market Securities to be traded on the Exchange pursuant to UTP has become effective. Publication is expected in the Federal Register during the week of September 13. (Rel. 34-62857)
A proposed rule change filed by BATS Exchange (SR-BATS-2010-023) related to fees for use of BATS Exchange, Inc. 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 September 13. (Rel. 34-62858)
Approval of Proposed Rule Changes
The Commission approved a proposed rule change [SR-FINRA-2010-030] filed by Financial Industry Regulatory Authority under Section 19(b)(1) of the Exchange Act. The approved rule change adopts the NASD Rule 11000 Series (Uniform Practice Code (UPC)) as FINRA rules in the consolidated FINRA rulebook, subject to certain amendments, and deletes NASD Rule 3370 (Purchases) and the following corresponding provisions in the Incorporated NYSE Rules and Interpretations: 176 (Delivery Time); 180 (Failure to Deliver); 282 (Buy-in Procedures) and its Supplementary Material paragraphs .10-.80; 291 (Failure to Fulfill Closing Contract); 292 (Restrictions on Members' Participation in Transaction to Close Defaulted Contracts); 293 (Closing Contracts in Suspended Securities); 294 (Default in Loan of Money); 387 (COD Orders) and its Supplementary Material paragraphs .10-.60; Rule 387 Interpretations /01 - /18; 430 (Partial Delivery of Securities to Customers on C.O.D. Purchases); and Rule 430 Interpretation /01. Publication is expected in the Federal Register during the week of September 13. (Rel. 34-62842)
The Commission has approved a proposed rule change (SR-NSCC-2010-07) filed by National Securities Clearing Corporation under Section 19(b)(1) of the Exchange Act to amend Addendum C of its Rules and Procedures to implement risk enhancements to its Stock Borrow Program. Publication is expected in the Federal Register during the week of September 13. (Rel. 34-62849)
The Commission granted approval of a proposed rule change (SR-NYSEArca-2010-68) submitted by NYSE Arca under Rule 19b-4 of the Securities Exchange Act of 1934 relating to listing and trading of shares of the PIMCO Build America Bond Strategy Fund under NYSE Arca Equities Rule 8.600. Publication is expected in the Federal Register during the week of September 13. (Rel. 34-62856)
Order Approving and Declaring Effective a Plan for the Allocation of Regulatory Responsibilities Between the Financial Industry Regulatory Authority, Inc. and the Chicago Stock Exchange, Inc.
The Commission approved and declared effective a proposed plan between the Financial Industry Regulatory Authority and Chicago Stock Exchange for the allocation of regulatory responsibilities pursuant to Rule 17d-2 (File No. 4-274). Publication is expected in the Federal Register during the week of September 13. (Rel. 34-62866)
SECURITIES ACT REGISTRATIONS
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