RULES AND RELATED MATTERS
SEC Proposes Regulations to Implement Section 943 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 with respect to Asset-Backed Securities
On October 4, the Securities and Exchange Commission issued for public comment a proposed rule that would implement Section 943 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 relating to asset-backed securities. Proposed Rule 15Ga-1 would require securitizers to disclose fulfilled and unfulfilled repurchase requests relating to representations and warranties on new Form ABS-15G. The Commission is also revising certain proposals issued on April 7, 2010 (See Release No. 33-9117) in order to conform disclosures related to a sponsor's repurchase history in prospectuses and an issuer's repurchase history in ongoing reports to the tabular format proposed in Rule 15Ga-1. Proposed Rule 17g-7 would require nationally recognized statistical rating organizations to provide tabular disclosures on the use of representations, warranties and enforcement mechanisms in the market for asset-backed securities.
The Commission's proposal has been posted on the SEC Web site. See Release No. 33-9148; File No. S7-24-10. Public comments on the proposed rules must be received by the Commission by November 15, 2010. (Rels. 33-9148; 34-63029; File No. S7-24-10)
Victor R. Wahba, CPA, Reinstated to Appear and Practice Before the Commission as an Accountant
Pursuant to Rule 102(e)(5)(i) of the Commission's Rules of Practice, Victor R. Wahba, CPA, has applied for and been granted reinstatement of his privilege to appear and practice before the Commission as an accountant. Mr. Wahba was denied the privilege of appearing or practicing before the Commission on January 15, 2004. His reinstatement is effective immediately. (Rel. 34-63033; AAE Rel. 3195; File No. 3-11374).
America First Corp, et al.
On October 5, 2010, an Administrative Law Judge issued an Order Making Findings and Revoking Registrations by Default (Default Order) as to America First Associates Corp., American Eco Corp., American Income 2 LP, American Income 3 LP, American International Assets, Inc., American Leasing Investors V-C, American Sensors, Inc., and Americana Hotels & Realty Corp. in America First Associates Corp., Admin. Proc. 3-14032. The Default Order finds that each Respondent had a class of securities registered with the Securities and Exchange Commission pursuant to Section 12(g) of the Securities Exchange Act of 1934 (Exchange Act) and each Respondent failed to comply with Section 13(a) of the Exchange Act and Exchange Act Rules 13a-1 and 13a-13 or 13a-16 because it failed to make periodic filings for a number of years. Based on these findings, the Default Order revoked the registration of each class of each Respondent's registered securities, pursuant to Section 12(j) of the Exchange Act. (Rel. 34-63037; File No. 3-14032)
In the Matter of Robert P. Pinkas
On October 5, 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 Robert P. Pinkas, who was the CEO of business development company Brantley Capital Corp.
In the Order the Commission finds that on Sept. 28, 2010 , the United States District Court for the Northern District of Ohio entered a final judgment permanently enjoining Pinkas, by consent, from violating Securities Exchange Act of 1934 (Exchange Act) Sections 10(b) and 13(b)(5) and Rules 10b-5, 13a-14, 13b2-1, and 13b2-2 and Investment Advisers Act Sections 206(1) and 206(2), and from aiding and abetting violations of Exchange Act Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) and Rules 13a-1 and 13a-13. Pinkas was also ordered to pay disgorgement in the amount of $482,561, plus prejudgment interest thereon in the amount of $150,168, and a civil money penalty of $325,000. In addition, Pinkas was barred from serving as an officer or director of a publicly-traded company for five years. Pinkas consented to the entry of the final judgment without admitting or denying the allegations in the complaint.
The Commission's complaint alleges, among other things, that in Brantley Capital's Forms 10-Q, 10-K, and 8-K for the period 2002 to 2005, Pinkas knowingly or recklessly overstated the value of two companies, Flight Options International (FOI) and Disposable Products Company (DPC), that together represented over one-half of Brantley Capital's investment portfolio. The Complaint alleges that Pinkas also knowingly or recklessly made material misrepresentations and failed to make required disclosures regarding FOI and DPC to Brantley Capital's board of directors, independent auditors, and to investors in Brantley Capital's public filings.
Based on the above, the Order bars Pinkas from association with any investment adviser with the right to reapply for association after one year from the date of the Order. Pinkas consented to the issuance of the Order without admitting or denying the findings in the Order. [SEC v. Brantley Capital Management, LLC, Robert Pinkas, and Tab Keplinger, Civil Action No. 1:09-CV-01906 (JSG) (N.D. Ohio)] (LR-21670). (Rel. IA-3097; File No. 3-14085)
SEC Brings Emergency Action Against Investment Adviser Carlo G. Chiaese and His Firm, C.G.C. Advisors, LLC
The Securities and Exchange Commission announced today that it filed an emergency enforcement action to halt a fraudulent scheme by investment adviser, Carlo G. Chiaese, age 38 and resident of Springfield, New Jersey, and his company, C.G.C. Advisors, LLC. The Commission also charged Chiaese's wife, Micol Chiaese, age 38 and resident of Chester, New Jersey, as a relief defendant for her unjust enrichment from the scheme.
The Commission's complaint, filed in the District of New Jersey, alleges that, between 2008 and the present, Chiaese and CGC misappropriated at least approximately $2.5 million from at least six of their advisory clients, including a union pension trust fund for the benefit of approximately 880 members. Chiaese repeatedly made false and misleading statements to his clients regarding the clients' investments, including creating and providing to clients fictitious, self-generated account statements that (i) misrepresented the value of their investments and (ii) falsely stated that their investments were safely held at a broker-dealer, when in fact, Chiaese and CGC had misappropriated their clients' funds. Instead of investing these funds as Chiaese promised, he used much of his clients' funds to support his lavish lifestyle, including: mortgage payments on a million dollar home; approximately $32,000 on landscaping; approximately $70,000 on multiple country clubs; approximately $12,000 on his child's private school tuition; approximately $4,000 at a New York City hotel on New Year's Eve 2008; thousands of dollars on expensive cars; tens of thousands of dollars per month in living expenses; and numerous cash withdrawals. Micol Chiaese, an officer of CGC, benefited from this fraud by directly receiving at least $261,300 of clients' funds.
The Complaint charges Chiaese and CGC with violating 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) and 206(2) of the Investment Advisers Act of 1940.
The Commission is seeking, among other emergency relief, a temporary restraining order, which prohibits Chiaese and CGC from committing further violations of the federal securities laws and freezes the assets of Chiaese, Micol Chiaese and CGC. In its enforcement action, the Commission is seeking additional relief, including orders enjoining Chiaese and CGC, preliminarily and permanently, from committing future violations of the foregoing federal securities laws, and a final judgment ordering Chiaese, Micol Chiaese and CGC to disgorge their ill-gotten gains plus prejudgment interest, and assessing civil penalties against Chiaese and CGC.
The Commission acknowledges assistance provided by the United States Attorney's Office for the District of New Jersey, the FBI and the United States Postal Inspection Service. [SEC v. Carlo G. Chiaese, et al., Civil Action No. 10-cv-5110 (WJM) (D.N.J.)] (LR-21684)
INVESTMENT COMPANY ACT RELEASES
Dolby Laboratories, Inc.
A notice has been issued giving interested persons until October 26, 2010 to request a hearing on an application filed by Dolby Laboratories, Inc. for an order under Section 3(b)(2) of the Investment Company Act declaring applicant to be primarily engaged in a business other than that of investing, reinvesting, owning, holding or trading in securities. (Rel. IC-29454 - October 1)
Van Eck Associates Corporation, et al.
A notice has been issued giving interested persons until October 25, 2010, to request a hearing on an application filed by Van Eck Associates Corporation (Adviser), et al., for an order to amend an existing order (Prior Order) that permits: (a) series of an open-end management investment company (each a Fund, collectively, the Funds) to issue shares that can be redeemed only in large aggregations (Creation Units); (b) secondary market transactions in shares to occur at negotiated prices; (c) dealers to sell such shares to secondary market purchasers unaccompanied by a statutory prospectus when prospectus delivery is not required by the Securities Act of 1933; (d) under specified limited circumstances, certain Funds to pay redemption proceeds more than seven days after the tender of shares; (e) certain registered management investment companies and unit investment trusts outside of the same group of investment companies as the Funds to acquire shares; and (f) certain affiliated persons of the Funds to deposit securities into, and receive securities from, the Funds in connection with the purchase and redemption of Creation Units of such Funds. The amended order would permit certain Funds based on equity and/or fixed income securities indexes for which the Adviser or an "affiliated person" of the Adviser as defined in section 2(a)(3) of the Investment Company Act of 1940, is an index provider. In addition, the application modifies various other terms and conditions to the Prior Order. (Rel. IC-29455 - October 1)
Approval of Proposed Rule Change
The Commission approved a proposed rule change by the Financial Industry Regulatory Authority (SR-FINRA-2010-043) to reinstitute short exempt marking for trade reporting and OATS. Publication is expected in the Federal Register during the week of October 4. (34-63032)
Immediate Effectiveness of Proposed Rule Change
A proposed rule change filed by NASDAQ OMX PHLX (SR-Phlx-2010-124) to send certain information over the specialized quote feed 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 October 4. (34-63034)
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