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U.S. Securities and Exchange Commission

SEC News Digest

Issue 2010-192
October 12, 2010


Karen Garnett and Mark Kronforst Named Associate Directors in SEC Division of Corporation Finance

The Securities and Exchange Commission today announced that Karen Garnett and Mark Kronforst have been named Associate Directors in the Division of Corporation Finance.

In their new positions, Ms. Garnett and Mr. Kronforst will join Associate Directors Paul Belvin, Jim Daly and Barry Summer in overseeing the Division's full disclosure program under the leadership of Shelley Parratt, the Deputy Director of Disclosure Operations.

"Karen and Mark each bring critically important skills and experience to their new roles, and they will enhance our ability to protect investors through our full disclosure program," said Meredith Cross, Director of the SEC's Division of Corporation Finance. "With the addition of Karen and Mark, the broad and varied experience of the full disclosure leadership team will serve us well during this time of significant change."

Ms. Garnett has served as the Assistant Director of the Division's Office of Real Estate and Business Services since 2000. She previously served as a Special Counsel and as an Attorney Advisor in the Divisions of Corporation Finance and Investment Management. Prior to joining the SEC, Ms. Garnett was an associate at the law firm of Wright, Lindsey & Jennings. She earned her undergraduate degree from Dartmouth College and her law degree from the University of Texas Law School. Ms. Garnett received the agency's Byron Woodside Award for 2005 in recognition of her contributions to the SEC's full disclosure program.

Mr. Kronforst has served as the Division's Deputy Chief Accountant since 2009. He previously served as a Branch Chief and Assistant Chief Accountant in the Division's Office of Computers and Online Services. Prior to joining the SEC, Mr. Kronforst was the Director of Financial Reporting at Solectron Corporation and an Audit Senior Manager at the accounting firm KPMG LLP. He received his Bachelor of Accounting degree from the University of Minnesota Duluth. Mr. Kronforst received the agency's Andrew Barr Award for 2009 in recognition of his outstanding service as an accountant. (Press Rel. 2010-188)

SEC Proposes New Family Office Definition Under Dodd-Frank Act

The Securities and Exchange Commission today proposed a new rule, based on requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act, that would help those managing their own family's financial portfolios determine whether their "family offices" can continue to be excluded from the Investment Advisers Act of 1940.

Family offices are entities established by wealthy families to manage their money and provide tax and estate planning and similar services.

Historically, family offices have not been required to register with the SEC under the Advisers Act because of an exemption provided to investment advisers with fewer than 15 clients. The Dodd-Frank Act removes that exemption to enable the SEC to regulate hedge fund and other private fund advisers, but includes a new provision requiring the SEC to define family offices in order to exempt them from regulation under the Advisers Act.

The Commission is proposing to define a family office as any firm that:

  • Provides investment advice only to family members, as defined by the rule; certain key employees; charities and trusts established by family members; and entities wholly owned and controlled by family members.
  • Is wholly owned and controlled by family members.
  • Does not hold itself out to the public as an investment adviser.

Public comments on the proposed rule should be received by the Commission by Nov. 18, 2010. (Press Rel. 2010-189)


Securities and Exchange Commission Orders Hearing on Registration Revocation Against Eight Public Companies for Failure to Make Required Periodic Filings

On October 7, the Commission instituted public administrative proceedings to determine whether to revoke or suspend for a period not exceeding twelve months the registrations of each class of the securities of eight companies for failure to make required periodic filings with the Commission:

  • Andain, Inc.
  • Aquest Minerals Corp. (n/k/a Anderson Energy Ltd.)
  • Ariel Resources, Ltd.
  • Asensia, Inc.
  • ATG, Inc. (ATGCQ)
  • Audre Recognition Systems, Inc. (a/k/a eXtr@ct, Inc.) (XTRC)
  • Axis.Com, Inc.
  • Aztek Technologies, Inc. (n/k/a Aztek Resource Development, Inc.)

In this Order, the Division of Enforcement (Division) alleges that the eight issuers are delinquent in their required periodic filings with the Commission.

In this proceeding, instituted pursuant to Exchange Act Section 12(j), a hearing will be scheduled before an Administrative Law Judge. At the hearing, the Administrative Law Judge will hear evidence from the Division and the Respondents to determine whether the allegations of the Division contained in the Order, which the Division alleges constitute failures to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 or 13a-16 thereunder, are true. The Administrative Law Judge in the proceeding will then determine whether the registrations pursuant to Exchange Act Section 12 of each class of the securities of these Respondents should be revoked or suspended for a period not exceeding twelve months. The Commission ordered that the Administrative Law Judge in this proceeding issue an initial decision not later than 120 days from the date of service of the order instituting proceedings. (Rel. 34-63062; File No. 3-14087)

Stephen J. Brace Sanctioned

Stephen J. Brace (Brace) has been barred from association with any broker or dealer. The sanction was ordered in an administrative proceeding before an administrative law judge in Stephen J. Brace, Administrative Proceeding No. 3-14000. In October 2008, Brace pled guilty to one count of aggravated white collar crime under Florida law based on his involvement to sell or offer unregistered securities and defrauding investors.

Brace sold or offered to sell securities that were not registered with Florida's Office of Financial Regulation of the Financial Services Commission and defrauded investors in rendering investment advice or the offer, sale, or purchase of securities. Brace's conduct "victimized 10 or more elderly persons or 20 or more persons." During part of the time in which he engaged in this conduct, Brace was a registered representative and was associated with a registered broker-dealer. (Rel. 34-63069; File No. 3-14000)

Delinquent Filers' Stock Registrations Revoked

The registrations of the registered securities of Electronic Publishing Technology Corporation, Elkhorn Gold Mining Corp., Ememberdirect, Inc., Emerald Homes, L.P, Encore Wireless, Inc., and EntrePort Corporation 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. 34-63074; File No. 3-14046)

In the Matter of Speed of Thought Trading Corp.

An Administrative Law Judge has issued an Order Making Findings and Revoking Registrations by Default (Default Order) in Speed of Thought Trading Corp., Administrative Proceeding No. 3-14047. The Order Instituting Proceedings (OIP) alleged that seven Respondents each failed repeatedly to file required annual and quarterly reports while their securities were registered with the Securities and Exchange Commission.

The Default Order finds the allegations of the OIP to be true and revokes the registrations of each class of registered securities of Speed of Thought Trading Corp. (f/k/a Emperor Penguin, Inc.), Sports/Entertainment Group, Inc., Standard Automotive Corp., Starmet Corp., Stearman Enterprises, Inc., Streamline.com, Inc., and Supradur Companies, Inc., pursuant to Section 12(j) of the Securities Exchange Act of 1934. (Rel. 34-63075; File No. 3-14047)


American Capital, Ltd.

An order has been issued under Section 61(a)(3)(B) of the Investment Company Act on an application filed by American Capital, Ltd. The order approves applicant's proposal to grant certain stock options to non-employee directors under applicant's 2009 stock option plan. (Rel. IC-29460 - October 8)


Approving Proposed Rule Change

The Commission approved a proposed rule change submitted by NYSE Arca (SR-NYSEArca-2010-78) relating to listing and trading of shares of the Jefferies Commodity Real Return ETF. Publication is expected in the Federal Register during the week of October 11. (Rel. 34-63067)

Proposed Rule Change

BATS Y-Exchange filed a proposed rule change (SR-BYX-2010-001) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 to amend BYX Rule 11.8, entitled "Obligations of Market Makers." Publication is expected in the Federal Register during the week of October 11. (Rel. 34-63068)

Immediate Effectiveness of Proposed Rule Change

A proposed rule change (SR-Phlx-2010-129), filed by NASDAQ OMX PHLX relating to rebates and fees for adding and removing liquidity 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 October 11. (Rel. 34-63070)





Modified: 10/12/2010