Commission Bars David G. Ghysels and Kenneth E. Mahaffy, Jr. Following Convictions for Participating in a Conspiracy to Commit Securities Fraud
The Commission has barred David G. Ghysels and Kenneth E. Mahaffy, Jr. from association with any broker, dealer, or investment adviser following their criminal convictions for participating in a conspiracy to commit securities fraud. The Commission found that Ghysels and Mahaffy had been convicted for receiving bribes to participate in a scheme to provide day traders with access to confidential information transmitted over brokerage firms' internal speaker systems, i.e., squawk boxes. In December 2009, the United States District Court for the Eastern District of New York sentenced Mahaffy to two years of incarceration and Ghysels to three years of probation, including six months of home detention. Based on the facts underlying Ghysels and Mahaffy's convictions, the Commission determined that the public interest requires that they be barred, finding that their participation "in a criminal conspiracy to profit from confidential information" had "demonstrated their unfitness to participate in the [securities] industry." (Rel. 34-62937; File No. 3-14056)
In the Matter of Jeffrey M. Zamorsky
On September 20, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Notice of Hearing (Order) against Jeffrey M. Zamorsky (J. Zamorsky).
In the Order, the Division of Enforcement alleges that on March 31, 2009, the U.S. District Court for the District of Colorado entered a final judgment against J. Zamorsky, permanently enjoining him from future violations of Sections 5(a), 5(c) and 17(a) of the of the Securities Act of 1933 and Section 10(b), 15(a) of the Securities Exchange Act of 1934 and Rule 10(b)(5) thereunder. SEC v. Icon World Corporation (d/b/a Icon World Resources and Icon Corporation), et al., Civil Action No. 08-cv-01088-MSK-CBS, in the United States District Court for the District of Colorado.
The Division alleges that from approximately May 2007 to March 2008, J. Zamorsky through the Icon/SUNCO oil and gas securities offerings, raised $1,373,995 from 23 investors in at least 11 states through the fraudulent and unregistered sale of interests in oil and gas wells. During this time, J. Zamorsky acted as an unregistered broker-dealer by using the means of interstate commerce, including the telephone and the mails, to effect purchases and sales of the fraudulent and unregistered securities for the accounts of others.
The Order directed that a hearing will be scheduled before an Administrative Law Judge to determine whether the allegations contained in the Order are true, to provide J. Zamorsky an opportunity to respond to these allegations, and to determine what sanctions, if any, are appropriate and in the public interest. The Order also directs that the Administrative Law Judge shall issue an initial decision no later than 210 days from the date of service of the Order. (Rel. 34-62938; File No. 3-14056)
In the Matter of David A. Swoish
On September 20, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings and Imposing Remedial Sanctions (Order) against David A. Swoish. The Order finds that on Aug. 5, 2009, Swoish, a former divisional controller of CTS Corporation, was convicted of several counts of corporate embezzlement, grand theft, filing a false tax return and taking more than $150,000 in violation of California Penal Code §§ 487,186.11(a)(1),12022.6(a)(2) and 12022.6(B), California Financial Code §3531, and California Revenue and Taxation §19795(a)(1). The Order finds that Swoish's criminal conduct occurred in 2005 and 2006 while Swoish was a registered representative of Fenwick Securities, Inc., a registered broker dealer.
Based on the above, the Order bars Swoish from association with any broker or dealer. Swoish consented to the issuance of the Order without admitting or denying any of the findings therein, except he admitted that he pled guilty to the criminal charges and was sentenced to 4 years, 8 months in prison and ordered to pay $369,389 in restitution. (Rel. 34-62939; File No. 3-14057)
SEC v. BIH Corporation, et al.
The Securities and Exchange Commission filed a civil action in the United States District Court for the Middle District of Florida against BIH Corporation, Wayne A. Burmaster, Jr. and Edward W. Hayter, for antifraud and registration violations and against North Bay South Corporation, Bimini Reef Real Estate, Inc., Riverview Capital, Inc., Christopher L. Astrom, and Damian B. Guthrie for registration violations.
The SEC alleges Burmaster and Hayter implemented a pump-and-dump scheme involving BIH stock. The SEC further alleges Burmaster and Hayter illegally distributed BIH's stock to North Bay, Bimini Reef, and Riverview, which were controlled by Burmaster, Astrom, and Guthrie, respectively.
The SEC alleges that BIH, Burmaster, and Hayter violated 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, and aided and abetted BIH's violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The SEC also alleges Section 5(a) and 5(c) violations against North Bay, Bimini Reef, Riverview, Astrom, and Guthrie. The complaint seeks a judgment against all defendants providing for injunctions, disgorgement with prejudgment interest, civil money penalties, and penny stock bars against Burmaster, Hayter, Astrom, and Guthrie. The complaint also seeks disgorgement with prejudgment interest against relief defendants Baron International, Inc., Beaver Creek Financial Corporation, and The Caddo Corporation.
The Commission acknowledges the assistance of the Financial Industry Regulatory Authority (FINRA) in this matter. [SEC v. BIH Corporation, et al., Civil Action No. 2:10-CV-577-FTM-29DNF, USDC, M.D. FL] (LR-21656)
Immediate Effectiveness of Proposed Rule Change
A proposed rule change (SR-CBOE-2010-082) filed by the Chicago Board Options Exchange to withdraw Regulatory Circular RG01-61 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 20. (Rel. 34-62933)
Notice of Filing of Proposed Minor Rule Violation Plan
BATS Y-Exchange filed a proposed Minor Rule Violation Plan (File No. 10-198) pursuant to Section 19(d)(1) of the Securities Exchange Act of 1934 and Rule 19d-1(c)(2) thereunder. Publication is expected in the Federal Register during the week of September 20. (Rel. 34-62924)
Proposed Rule Change
The Financial Industry Regulatory Authority filed a proposed rule change under Rule 19b-4 (SR-FINRA-2010-046) relating to exemptions from the trading activity fee. Publication is expected in the Federal Register during the week of September 20. (Rel. 34-62927)
Approval of Proposed Rule Changes
The Commission has approved a proposed rule change filed by EDGA Exchange (SR-EDGA-2010-09) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 relating to a revenue sharing program with Correlix, Inc. Publication is expected in the Federal Register during the week of September 20. (Rel. 34-62928)
The Commission has approved a proposed rule change filed by EDGX Exchange (SR-EDGX-2010-09) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 relating to a revenue sharing program with Correlix, Inc. Publication is expected in the Federal Register during the week of September 20. (Rel. 34-62929)
Notice of Filing of Proposed Plan for the Allocation of Regulatory Responsibilities Pursuant to Rule 17d-2
The Financial Industry Regulatory Authority and BATS-Y Exchange filed a proposed plan for the allocation of regulatory responsibilities pursuant to Rule 17d-2 under the Securities Exchange Act of 1934 (File No. 4-613). Publication is expected in the Federal Register during the week of September 20. (Rel. 34-62935)
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