Commission Files Civil Injunctive Action against Charles Raymond Langston III for Insider Trading and Rule 105 Violations
The Securities and Exchange Commission (Commission) today charged a Miami-based trader with insider trading in the stock of a Chinese company and conducting illegal short sales in the securities of three other companies.
The SEC alleges that Charles Raymond Langston III learned confidential information in advance of a public announcement that significantly decreased the value of AutoChina International"s stock." Langston was solicited by placement agents to invest in a secondary offering of AutoChina stock."Despite agreeing to keep information confidential and not trade on it, he promptly sold short 29,000 shares of AutoChina stock in advance of the company"s public announcement that it had completed the secondary offering."To avoid detection, Langston made the trades through an entity he owned using a different broker and different account than he used to purchase shares in AutoChina"s initial offering."Langston made $193,108 in illegal profits by trading on inside information.
The SEC complaint filed in federal court in Miami further alleges that Langston, and two of his companies, Guarantee Reinsurance and CRL Management"violated Rule 105 of Regulation M, which prohibits the short sale of an equity security during a restricted period – generally five business days before a public offering – and the purchase of that same security through the offering."The rule addresses illegal short selling that can reduce offering proceeds received by companies by artificially depressing the market price shortly before the company prices its public offering."The SEC alleges that Langston through Guarantee Reinsurance and CRL Management made short sales in advance of separate secondary offerings by Wells Fargo, Mitsubishi UFJ Financial Group, and Alcoa, and he purchased shares in the same offerings."Langston and his companies" violations of Rule 105 resulted in unlawful gains of more than $1.3 million."
The SEC"s complaint charges Langston with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 ('Exchange Act") and Rule 10b-5 by engaging in illegal insider trading."Langston has agreed to settle these charges, without admitting or denying the allegations, and he has agreed to pay disgorgement of $193,108, prejudgment interest of $22,204, and a civil money penalty of $193,108 for the insider trading violation."Langston, Guarantee Reinsurance, and CRL Management have also agreed to be enjoined from violating Rule 105 of Regulation M of the Exchange Act."Monetary sanctions against the defendants for the Rule 105 violations will be determined by the court at a later date."
In September, the SEC announced enforcement actions against 23 firms for Rule 105 violations as a part of a crackdown on potential stock manipulation in advance of stock offerings."The SEC"s National Examination Program simultaneously issued a risk alert that highlights risks to firms from non-compliance with Rule 105.
The SEC"s case against Langston and his companies was investigated by Andre J. Zamorano and Kathleen Strandell in the Miami office, and supervised by Thierry Olivier Desmet."The SEC"s litigation will be led by Christopher E. Martin."The SEC acknowledges the assistance of the Financial Industry Regulatory Authority. (Press Rel. 2013-254; Rel. LR-22882)
District Court Enters Final Judgment of Permanent Injunction and Orders a Penny Stock and Officer-And-Director Bar against Thomas Gaffney
The Commission announced that on November 20, 2013, the United States District Court for the Southern District of Florida entered a final judgment by consent against Defendant Thomas Gaffney, enjoining him from violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 ('Exchange Act") and Exchange Act Rule 10b-5(a)."The final judgment also permanently bars Gaffney from (i) participating in an offering of penny stock, including engaging in activities with a broker, dealer, or issuer for purposes of issuing, trading, or inducing or attempting to induce the purchase or sale of any penny stock, and (ii) acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act or that is required to file reports pursuant to Section 15(d) of the Exchange Act.
The Commission commenced this action by filing its Complaint on August 14, 2013, against Gaffney and Health Sciences Group, Inc. ('HESG")."The Complaint alleged the defendants engaged in a fraudulent scheme involving HESG"s stock, illicit kickbacks, and phony agreements to mask those kickbacks. (Rel. LR-22883)
An Administrative Law Judge issued an Initial Decision on Default as to Galena Acquisition Corp. (Galena) in G-Cats Acquisition Corp.
The Initial Decision found that Galena has securities registered with the Securities and Exchange Commission pursuant to Section 12(g) of the Securities Exchange Act of 1934, and failed to file required periodic reports for nearly twelve years." Considering its delinquency and default, the Initial Decision found it was necessary and appropriate for the protection of investors to revoke the registration of each class of Galena"s registered securities. (Rel. ID-537)
An Administrative Law Judge has issued an Initial Decision in Newtech Resources Ltd.
The Order Instituting Proceedings alleged that Respondent repeatedly failed to file timely periodic reports while its securities were registered with the Securities and Exchange Commission."The Initial Decision finds these allegations to be true and revokes the registration of each class of Respondent"s registered securities, pursuant to Section 12(j) of the Securities Exchange Act of 1934."(Rel. ID-538)
In the Matter of Corey Ribotsky
The Commission announced the issuance of 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 Corey Ribotsky, age 42 and a resident of Glen Head, New York."The Order finds that from November 1999 through the present, Ribotsky has been the managing member and control person of The NIR Group, LLC ('NIR"), an unregistered investment adviser."NIR was briefly registered with the Commission for several months in 2006 but chose to withdraw the firm"s registration."The Order further finds that on August 17, 2012, the Commission filed an amended complaint ('Complaint") against Ribotsky and NIR in the United States District Court for the Eastern District of New York alleging that they violated antifraud provisions of the federal securities laws, SEC v. The NIR Group, LLC, et al., 11-cv-4723 (JFB)(GRB)."The Commission"s Complaint alleges, among other things, that from 2007 through 2009 Ribotsky knowingly made material misrepresentations and omissions concerning the liquidity and performance of various hedge funds he managed (the 'AJW Funds")."The Complaint also alleges Ribotsky mislead investors when forming the AJW Master Fund in May 2007."The Complaint further alleges that from July 2004 through June 2009, Ribotsky misappropriated for his personal use over $1,000,000 of assets from one of the AJW Funds he managed through NIR."The Order further finds that on November 14, 2013 2013, the court entered a final consent judgment against Ribotsky and NIR, inter alia, permanently enjoining them from violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1930 and Rule 206(4)-8 thereunder. "
Based on the above, the Order bars Ribotsky from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization; with the right to apply for reentry after four years to the appropriate self-regulatory organization, or if there is none, to the Commission. (Rel. IA-3730)
Investment company orders
Transamerica Life Insurance Company, et al.
An order has been issued pursuant to Section 6(c) of the Investment Company Act of 1940, as amended ('1940 Act") to Transamerica Life Insurance Company, Separate Account VA B, Transamerica Financial Life Insurance Company, Separate Account VA BNY, and Transamerica Capital, Inc. granting exemptions from the provisions of Sections 2(a)(32), 22(c), and 27(i)(2)(A) of the 1940 Act and Rule 22c-1 thereunder, to the extent necessary to permit, under specified circumstances, the recapture of certain bonus credits applied to purchase payments made with respect to certain flexible premium variable annuity policies issued by Transamerica Life Insurance Company and Transamerica Financial Life Insurance Company."(Rel. IC-30816 - December 3, 2013).
Immediate Effectiveness of Proposed Rule Change
A proposed rule change filed by NYSE Arca, Inc. amending Commentary .06 to Rule 6.8 to extend the pilot program that eliminated the position limits for options on SPDR S&P 500 ETF (SR-NYSEArca-2013-130) 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 December 2nd."(Rel. 34-70968)
A proposed rule change filed by the International Securities Exchange, LLC to extend the pilot program that eliminated position and exercise limits for options on SPDR S&P 500 ETF (SR-ISE-2013-62) 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 December 2nd. (Rel. 34-70967)
A proposed rule change filed by BOX Options Exchange LLC to amend IM-3120-2 to Rule 3120 to extend the pilot program that eliminated the position limits for options on SPDR S&P 500 ETF (SR-BOX-2013-53) 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 December 2nd. (Rel. 34-70970)
A proposed rule change, (SR-MIAX-2013-54), filed by the Miami International Securities Exchange LLC, to extend the Penny Pilot Program 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 December 2nd. (Rel. 34-70972)
A proposed rule change filed by NASDAQ OMX PHLX LLC to the Customer Rebate Program (SR-Phlx-2013-114) 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 December 2nd. (Rel. 34-70969)
Approval of a Proposed Rule Change
The Commission issued an order approving a proposed rule change (SR-NYSE-2013-68) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 amending Section 907.00 of the Listed Company Manual to expand the suite of complimentary products and services that are offered to listed companies."Publication is expected in the Federal Register during the week of December 2nd. (Rel. 34-70971)
Order Instituting Proceedings to Determine Whether to Approve or Disapprove Proposed Rule Change as Modified By Amendment No. 1
The Commission instituted proceedings to determine whether to approve or disapprove a proposed rule change (SR-FINRA-2013-036), as modified by Amendment No. 1, submitted by the Financial Industry Regulatory Authority, Inc. pursuant to Rule 19b-4 under the Securities Exchange Act of 1934, relating to wash sale transactions and FINRA Rule 5210 (Publication of Transactions and Quotations)."Publication is expected in the Federal Register during the week of December 2nd. (Rel. 34-70966)
The following registration statements have been filed with the SEC under the Securities Act of 1933. The reported information appears as follows: Form, Name, Address and Phone Number (if available) of the issuer of the security; Title and the number and/or face amount of the securities being offered; Name of the managing underwriter or depositor (if applicable); File number and date filed; Assigned Branch; and a designation if the statement is a New Issue.
Registration statements may be viewed in person in the Commission's Public Reference Branch at 100 F Street, N.E., Washington, D.C. To obtain paper copies, please refer to information on the Commission's Web site at http://www.sec.gov/answers/publicdocs.htm. In most cases, you can view and download this information by using the search function located at http://www.sec.gov/edgar/searchedgar/companysearch.html.
S-1 BIOADAPTIVES, INC., 2251 NORTH RAMPART BLVD # 182, LAS VEGAS, NV, 89128, (702) 334 4424 - 2,005,000 ($240,600.00) Equity, (File 333-192619 - Dec. 2) (BR. 07) S-3ASR GT Advanced Technologies Inc., 243 DANIEL WEBSTER HIGHWAY, MERRIMACK, NH, 03054, (603)883-5200 - 0 ($0.00) Unallocated (Universal) Shelf, (File 333-192628 - Dec. 2) (BR. 10A) S-8 VONAGE HOLDINGS CORP, 23 MAIN STREET, HOLMDEL, NJ, 07733, 732-528-2600 - 11,000,000 ($35,695,000.00) Equity, (File 333-192629 - Dec. 2) (BR. 11A) S-1 Echo Therapeutics, Inc., 8 PENN CENTER, 1628 JFK BLVD, SUITE 300, PHILADELPHIA, PA, 19103, 215-717-4100 - 0 ($30,900,000.00) Equity, (File 333-192630 - Dec. 2) (BR. 10A) S-1 RetailMeNot, Inc., 301 CONGRESS AVENUE, SUITE 700, AUSTIN, TX, 78701, 512.777.2970 - 0 ($200,000,000.00) Equity, (File 333-192632 - Dec. 2) (BR. 11C) S-8 Towers Watson & Co., 875 THIRD AVENUE, NEW YORK, NY, 10022, (212) 725-7550 - 0 ($10,020,866.57) Equity, (File 333-192633 - Dec. 2) (BR. 08C)
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