Commission to Hold Compliance Outreach Program for Investment Companies and Investment Advisers
The Securities and Exchange Commission (Commission) today announced the opening of registration for its compliance outreach program’s national seminar for investment companies and investment advisers. The event is intended to help these firms’ Chief Compliance Officers (CCOs) and other senior personnel to enhance their compliance programs for the protection of investors.
The SEC’s Office of Compliance Inspections and Examinations (OCIE), Division of Investment Management, and the Asset Management Unit of the Division of Enforcement jointly sponsor the compliance outreach program. The national seminar will be held on January 30 at the SEC’s Washington, D.C., headquarters from 8:30 a.m. to 5:30 p.m. ET. In-person attendance is limited to 500; a live webcast will be available at www.sec.gov
The seminar agenda is here. Topics to be discussed include program priorities in 2014, private fund advisers, registered investment companies, valuation, and the role of the CCO.
“The compliance outreach program is an important part of the Commission’s initiative to share information about observed risks to assist firms in assessing and enhancing their compliance and control programs,” said OCIE Director Andrew Bowden. “Past compliance outreach program events have been well attended and well received, and we look forward to a candid exchange of ideas with participants at our upcoming event.”
“Mutual funds and investment advisers are the pathways through which most Americans access the securities markets. It is important that regulators take proactive steps such as sponsoring this seminar to work with the asset management industry to promote compliance and protect investors,” said Division of Investment Management Director Norm Champ.
Investment adviser and investment company senior officers may register online for the event here. If registrations exceed capacity, investment company and investment adviser CCOs will be given priority on a first-registered basis. Registration instructions also will be sent to SEC-registered advisers using the e-mail account on the adviser’s most recent Form ADV filing. For more information, contact: ComplianceOutreach@sec.gov (Press Rel. 2013-262)
Commission Suspends Trading in the Securities Of Makism3d Corp.
The Commission today announced the temporary suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934, of trading in the securities of Makism3D Corp. (“Makism3D”), at 9:30 a.m. EST on December 13, 2013 through 11:59 p.m. EST on December 27, 2013.
The Commission temporarily suspended trading in the securities of Makism3D because of concerns regarding the accuracy and adequacy of information in the marketplace and potentially manipulative transactions in Makism3D’s common stock. Makism3D is quoted on OTCBB and OTC Link under the ticker symbol MDDD. The Commission acknowledges the assistance of the Financial Industry Regulatory Authority. See In the Matter of Makism3D Corp. (Rel. 34-71071 / December 13, 2013). (Rel. 34-71071)
Commission Charges Seven Individuals and Six Entities Involved in Prime Bank Fraud
The Commission filed a civil injunctive action on December 12, 2013, in the United States District Court for the District of Colorado against Colorado resident Daniel Dirk Coddington, his company Golden Summit Investors Group, Ltd and others who carried out a Prime Bank Fraud that raised more than $31 million from 2010 through 2012.
The SEC alleges that Coddington, Jesse W. Erwin, Merlyn C. “Curt” Geisler, Marshall D. Gunn, Lewis P. Malouf, Golden Summit, Extreme Capital Ltd, Fidelity Asset Service Corp., Geisco FNF, LLC and SouthCom Management, LLC claimed to have access to special programs that would provide annual returns of more than 250 percent by obtaining loans against a financial instrument known as a collateralized mortgage obligation, or CMO, and then investing the loan proceeds in a purported CMO trading program. The complaint alleges that the above individuals and entities never obtained any loans against CMOs or placed investor funds in a CMO trading program, but instead misappropriated investor funds for their own use. The complaint also alleges that Seth A. Leyton, Michael B. Columbia and Stonerock Capital Group LLC aided and abetted the fraud by selling CMOs held for the benefit of investors and funneling those proceeds back to Coddington.
The SEC’s complaint alleges that Coddington, Erwin, Geisler, Gunn, Malouf, Extreme Capital, Geisco, Golden Summit, SouthCom, and Fidelity Asset violated the antifraud provisions of the securities laws in Section 17(a) of the Securities Act of 1933, Section 10(b) of the Exchange Act of 1934 and Rule 10b-5 thereunder; and that Coddington, Erwin, Leyton, Columbia, and Stonerock Capital also aided and abetted these violations. The complaint also alleges that Coddington, Geisler, Gunn, Malouf, Extreme Capital, Geisco, Golden Summit, and SouthCom violated the security registration provisions of the securities laws in Sections 5(a) and (c) of the Securities Act. Also, the complaint alleges that Coddington, Geisler, Gunn, Malouf, Extreme Capital, Geisco, Golden Summit, and SouthCom violated Section 15(a) of the Exchange Act by acting as unregistered broker-dealers. The SEC’s complaint seeks permanent injunctions, disgorgement plus prejudgment interest, third-tier penalties, and other relief against all of the defendants. Additionally, the complaint seeks disgorgement plus prejudgment interest from relief defendants Daniel S. “Scott” Coddington, Coddington Family Trust, Joanna I. Columbia, Vincent G. Farris, and Vincent G. Farris Co., L.P.A. [SEC v. Daniel D. Coddington, et al., Civil Action No. 1:13-cv-3363 (U.S. District Court for the District of Colorado)] (LR-22889 / December 13, 2013)
The SEC’s investigation was conducted in the Denver Regional Office by John C. Martin, Kerry M. Matticks and James A. Scoggins. Leslie J. Hughes will lead the SEC’s litigation. The SEC acknowledges the assistance and cooperation of the Federal Bureau of Investigation and the Financial Industry Regulatory Authority. [SEC v. Daniel Dirk Coddington, et al., Civil Action No. 1:13-cv-3363 (D. Colo., filed December 12, 2013)] (LR-22889)
Massachusetts Investment Adviser Sentenced to 36 Months in Jail for Defrauding Investors
The Commission announced that, on December 11, 2013, Judge Denise J. Casper of the United States District Court for the District of Massachusetts sentenced former Plymouth, Massachusetts investment adviser Jeffrey A. Liskov (Liskov) to serve a prison term of 36 months, followed by a supervised probationary period of 3 years, and to pay $3,003,147 in restitution. The sentence was imposed in connection with Liskov’s guilty plea in July 2013 to a one-count criminal Information charging him with willfully violating Section 206 of the Investment Advisers Act of 1940 (Advisers Act).
The Commission previously filed a civil action against Liskov and his former advisory firm, EagleEye Asset Management, LLC (EagleEye), for defrauding their clients in connection with foreign currency exchange (forex) investments. The factual allegations in the criminal Information are substantially similar to those in the Commission’s complaint in the civil case. The Commission’s complaint, filed on September 8, 2011, alleged that, between at least November 2008 and August 2010, Liskov made material misrepresentations to several advisory clients to induce them to liquidate investments in securities and instead invest in forex. The forex investments resulted in client losses totaling nearly $4 million, while EagleEye and Liskov pocketed over $300,000 in performance fees. The Commission alleged that Liskov’s strategy was to generate temporary profits on client forex investments to enable him to collect performance fees, after which client forex investments invariably quickly declined in value.
According to the Commission’s complaint, Liskov made material misrepresentations or failed to disclose material information to clients concerning the nature of forex investments, the risks involved in forex, and Liskov’s poor track record in forex trading for himself and other clients. The Commission’s complaint further alleged that, as to two clients, without their knowledge or consent, Liskov liquidated securities in their brokerage accounts and transferred the proceeds to their forex trading accounts where he lost nearly all their funds, but not before first collecting performance fees on temporary profits in these clients’ forex accounts. The complaint alleged that Liskov accomplished the unauthorized transfers by using “white out” correction fluid to change dates, amounts, and other data on asset transfer documentation. Liskov also opened multiple forex trading accounts in the name of one client, without obtaining the client’s consent, thereby maximizing his ability to earn performance fees on the client’s forex investments.
As result of the foregoing conduct, the Commission alleged that EagleEye and Liskov violated Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder and Sections 206(1) and 206(2) of the Advisers Act. The Commission also alleged that EagleEye failed to maintain certain books and records required of investment advisers in violation of Section 204 of the Advisers Act and Rule 204-2 thereunder, and that Liskov aided and abetted EagleEye’s violations of these recordkeeping provisions.
After an eight-day trial in the Commission’s civil case, on November 26, 2012, a jury found that EagleEye and Liskov violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and Section 206(1) of the Advisers Act. After a further hearing, United States District Court Judge William G. Young found that EagleEye and Liskov violated Section 204 of the Advisers Act and Rule 204-2 thereunder, concerning recordkeeping obligations relating to EagleEye’s business. On December 12, 2012, the Court entered a final judgment against EagleEye and Liskov in the Commission’s action, ordering that they be permanently enjoined from future violations of the foregoing provisions of the securities laws. The Court also ordered EagleEye and Liskov to pay, jointly and severally, disgorgement of their ill-gotten gains in the amount of $301,502.26, plus pre-judgment interest on that amount of $29,603.59, and each to pay a civil penalty of $725,000.
On December 27, 2012, the Commission instituted public administrative proceedings against each of EagleEye and Liskov to determine what sanctions against them, if any, would be appropriate and in the public interest. On July 24, 2013, an administrative law judge revoked EagleEye’s registration as an investment adviser and barred Liskov from, among other things, associating with any investment adviser. On September 23, 2013, the Commission issued orders of finality in the administrative proceedings against EagleEye and Liskov.
The Commission acknowledges the assistance of Secretary of the Commonwealth of Massachusetts William F. Galvin’s Securities Division and the United States Commodity Futures Trading Commission, both of which filed cases against EagleEye and Liskov in September 2011.
For additional information see: Litigation Release Numbers 22086 (September 8, 2011), 22546 (November 27, 2012), 22570 (December 14, 2012), and 22743 (July 1, 2013); Advisers Act Release Numbers 3527 and 3528 (December 27, 2012) and 3675 and 3676 (September 23, 2013); and Initial Decision Release Numbers 497 and 498 (July 24, 2013).
[SEC v. EagleEye Asset Management, LLC and Jeffrey A. Liskov, No. 11-CV-11576 (D. Mass.); United States v. Jeffrey A. Liskov, No. 13-CR-10206 (D. Mass.)] (LR-22888)
In the Matter of Craig Berkman d/b/a Ventures Trust LLC et al.
The Commission announced the issuance of an Order Making Findings and Imposing Remedial Sanctions and a Cease-and-desist Order Pursuant to Section 8A of the Securities Act of 1933, Section 21C of the Securities Exchange Act of 1934, Sections 203(f) and 203(k) of the Investment Advisers Act of 1940 and Section 9(b) of the Investment Company Act of 1940 (Order) against Craig Berkman d/b/a Ventures Trust LLC (Berkman). The Order was issued pursuant to an offer of settlement made by Berkman. In the Order, the Commision finds as follows: From approximately October 2010 through September 2012, Berkman fraudulently raised at least $13.2 million from approximately 120 investors by selling membership interests in limited liability companies that Berkman controlled. Berkman made material misrepresentations he knew were false to investors in three different sets of offerings. In one set of offerings, Berkman told investors that their funds would be used to acquire highly coveted, pre-initial public offering (pre-IPO) shares of Facebook, Inc., LinkedIn, Inc., Groupon, Inc., and Zynga Inc. In another offering, Berkman told investors that their money would be used either to purchase pre-IPO shares of Facebook or to acquire a company that held pre-IPO Facebook shares. In a third offering, Berkman told investors that he would use their money to fund various new, large-scale, technology ventures. Instead of using the investor funds to acquire pre-IPO shares or fund technology ventures, Berkman misappropriated most of the offering proceeds. By virtue of this conduct, Berkman willfully violated, and willfully aided and abetted and caused violations of, Section 17(a) of the Securities Act of 1933 (Securities Act), Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act), and Rule 10b-5 thereunder, and Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940 (Advisers Act) and Rule 206(4)-8 thereunder.
The Order directs Berkman to cease and desist from committing or causing any violations and any future violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1), 206(2), and 206(4) of the Advisers Act and Rule 206(4)-2 promulgated thereunder; bars him from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization; and from participating in any offering of a penny stock; and prohibits him from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter. (Rel. 33-9495)
Commission Revokes Registration of Securities of Klondike Star Mineral Corporation for Failure to Make Required Periodic Filings
On December 13, 2013, the Commission revoked the registration of each class of registered securities of Klondike Star Mineral Corporation (KDSM) 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, KDSM 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 Klondike Star Mineral Corporation 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 KDSM’s securities pursuant to Section 12(j) of the Exchange Act. This order settled the charges brought against KDSM in In the Matter of Heritage Worldwide, Inc., et al., Administrative Proceeding File No. 3-15596.
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 . . . . (Rel. 34-71072)
Wells Fargo Funds Trust, et al
A notice has been issued giving interested persons until January 7, 2014 to request a hearing on an application filed by Wells Fargo Funds Trust, et al. for an order exempting applicants from Section 15(a) of the Investment Company Act of 1940 (Act) and Rule 18f-2 under the Act. The order would permit the applicants to enter into and materially amend subadvisory agreements without shareholder approval and would grant relief from certain disclosure requirements. (Rel. IC- 30830)
Immediate Effectiveness of Proposed Rule Change
A proposed rule change filed by the Topaz Exchange, LLC (SR-Topaz-2013-13) to amend the Schedule of Fees 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 16th. (Rel. 34-71074)
A proposed rule change filed by the Topaz Exchange, LLC (SR-Topaz-2013-14) to amend the Schedule of Fees 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 16th. (Rel. 34-71077)
A proposed rule change filed by NASDAQ OMX PHLX LLC relating to fee rebates for transactions in Qualified Contingent Cross orders (SR-Phlx-2013-119) 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 16th. (Rel. 34-71078)
A proposed rule change filed by NASDAQ OMX PHLX LLC (SR-Phlx-2013-116) to establish fees under the PHLX Pricing Schedule for use of the Carteret testing facility test environment 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 16th. (Rel. 34- 71036)
Notice of Proposed Rule Change
NYSE Arca, Inc. has filed a proposed rule change (SR-NYSEArca-2013-116) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 and Rule 19b-4 thereunder relating to listing and trading of shares of AdvisorShares International Gold ETF; AdvisorShares Gartman Gold/Yen ETF; AdvisorShares Gartman Gold/British Pound ETF; and AdvisorShares Gartman Gold/Euro ETF under NYSE Arca Equities Rule 8.600. Publication is expected in the Federal Register during the week of December 16th. (Rel. 34-71076)
Approval of a Proposed Rule Change
The Commission approved a proposed rule change (SR-CBOE-2013-102) submitted by the Chicago Board Options Exchange, Incorporated pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 to establish modified Hybrid Opening System opening procedures for all volatility index constituent options. Publication is expected in the Federal Register during the week of December 13th. (Rel. 34-71073)
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.
F-1 Celsus Therapeutics Plc., 53 DAVIES STREET, LONDON, X0, W1K 5JH, 646-878-0804 - 0 ($11,500,000.00) Equity, (File 333-192783 - Dec. 12) (BR. 01B) S-8 HENRY SCHEIN INC, 135 DURYEA RD, MELVILLE, NY, 11747, 6318435500 - 0 ($468,867,000.00) Equity, (File 333-192788 - Dec. 12) (BR. 09A) S-8 ACCELERON PHARMA INC, 128 SYDNEY STREET, CAMBRIDGE, MA, 02139, 617-649-9200 - 0 ($51,438,618.00) Equity, (File 333-192789 - Dec. 12) (BR. 01A) S-1 Care.com Inc, 201 JONES ROAD, SUITE 500, Waltham, MA, 02451, 781 642 5900 - 0 ($80,000,000.00) Equity, (File 333-192791 - Dec. 12) (BR. 11A) S-8 UniTek Global Services, Inc., 1777 SENTRY PARKWAY WEST, GWYNEDD HALL, SUITE 302, BLUE BELL, PA, 19422, 267-464-1700 - 2,958,617 ($4,663,817.62) Equity, (File 333-192792 - Dec. 12) (BR. 11C) S-8 PEREGRINE PHARMACEUTICALS INC, 14282 FRANKLIN AVE, TUSTIN, CA, 92780, 7145086000 - 7,000,000 ($9,100,000.00) Equity, (File 333-192794 - Dec. 12) (BR. 01B) S-3 VIRTUAL PIGGY, INC., 1221 HERMOSA AVENUE, SUITE 210, HERMOSA BEACH, CA, 90254, 310-853-1950 - 0 ($30,000,000.00) Equity, (File 333-192795 - Dec. 12) (BR. 03B) S-3 ARQULE INC, 19 PRESIDENTIAL WAY, WOBURN, MA, 01801, 781-994-0300 - 100,000,000 ($100,000,000.00) Equity, (File 333-192796 - Dec. 12) (BR. 01B) S-1 International Stem Cell CORP, 5950 PRIESTLY DRIVE, CARLSBAD, CA, 92008, 760-940-6383 - 0 ($3,400,000.00) Equity, (File 333-192797 - Dec. 12) (BR. 01A) N-2 HIGHLAND MLP INCOME FUND, 300 CRESCENT COURT, SUITE 700, DALLAS, TX, 75201, 972-419-2556 - 50,000 ($1,000,000.00) Equity, (File 333-192798 - Dec. 12) (BR. )
Form 8-K is used by companies to file current reports on the following events:
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