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COMMISSION ANNOUNCEMENTSRoundtable on International Financial Reporting StandardsThe Commission will hold a Roundtable on International Financial Reporting Standards on Monday, Aug. 4, 2008, at 1:00 p.m. The Roundtable will take place in the Auditorium of the Commission's headquarters at 100 F Street, N.E., Washington D.C. The Roundtable will be open to the public with seating on a first-come, first-served basis. Doors will open at 12:30 p.m. Visitors will be subject to security checks. The roundtable will consist of an open discussion on International Financial Reporting Standards (IFRS) and an update on IFRS developments, including the experience with use of IFRS during the recent period of market turmoil. The roundtable will be organized as two panels, each consisting of investors, issuers, auditors and other parties with experience in IFRS reporting. For further information, please contact: John Heine, Office of Public Affairs, at (202) 551-4120. ENFORCEMENT PROCEEDINGSIn the Matter of Viragen, Inc. and Viragen International, Inc.On July 25, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 12(j) of the Securities Exchange Act of 1934 (Order) against Viragen, Inc. (Viragen) and Viragen International, Inc. (Viragen Int'l) to determine whether the registrations of their securities should be suspended for a period not exceeding twelve months or revoked for failure to file required periodic reports pursuant to Section 12(j) of the Securities Exchange Act of 1934 (Exchange Act). In the Order, the Division of Enforcement (Division) alleges that Viragen and Viragen Int'l failed to comply with Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder by failing to file periodic reports required by these provisions. A hearing will be scheduled before an Administrative Law Judge to provide Viragen and Viragen Int'l an opportunity to respond to the allegations of the Division contained in the Order, to determine whether those allegations are true, and to determine whether it is necessary and appropriate for the protection of investors to suspend for a period not exceeding twelve months or to revoke the registrations of Viragen's and Viragen Int'l's securities. The Commission ordered that the Administrative Law Judge in these proceedings issue an initial decision not later than 120 days from the date of service of the Order. (Rel. 34-58231; File No. 3-13101) In the Matter of Frances M. JewelsOn July 25, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Rule 102(e) of the Commission's Rules of Practice, Making Findings, and Imposing Remedial Sanctions (Order) against Frances M. Jewels. The Order finds that Jewels, age 43, is and has been an attorney licensed to practice in the Commonwealth of Massachusetts, and has been a certified public accountant licensed to practice in the State of New York. Jewels served as Chief Financial Officer, Vice President of Finance and Administration, Secretary and Treasurer of Sycamore Networks, Inc. (Sycamore) from approximately mid-1999 until October 2004. Sycamore at all relevant times was a Delaware corporation based in Chelmsford, Massachusetts engaged in the business of developing and marketing optical networking products whose stock traded on the Nasdaq National Market System. The Order finds that on July 10, 2008, a final judgment was entered by consent against Jewels, permanently enjoining her from future violations of Section 17(a) of the Securities Act of 1933 and Sections 10(b), 13(b)(5), 14(a) and 16(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5, 13b2-1, 13b2-2, 13a-14, 14a-9 and 16a-3 thereunder, and aiding and abetting violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11 and 13a-13 thereunder, in the civil action entitled Securities and Exchange Commission v. Sycamore Networks, Inc., et al., Civil Action Number 08-CA-11166(DPW), in the United States District Court for the District of Massachusetts. Jewels was also ordered to pay $30,000 in disgorgement, together with prejudgment interest thereon in the amount of $4,980.04; to reimburse Sycamore in the amount of $190,000, consisting of certain cash bonuses she received; to pay a $230,000 civil money penalty; and was barred from serving as an officer or director of a public company for five years. The Order finds that the Commission's complaint alleged, among other things, that Jewels, in connection with the granting of "in-the-money" stock options and resulting underreporting of expenses, made materially false and misleading statements in various Form 10-K annual reports, Form 10-Q quarterly reports, Form 8-K current reports, and proxy statements during periods including fiscal years 2000 through 2004. The complaint further alleged that Jewels made "in-the-money" options grants to employees in connection with company-wide grants which were issued on dates on which the market price of Sycamore's stock was at or near the low for the period, but failed to record associated stock-based compensation expenses, and backdated other grants, such as new hire and promotional grants, which had significant options expense implications that she disregarded. The complaint further alleged that Jewels was the recipient of at least two grants of "in-the-money" stock options to Company officers issued as of the same dates as company-wide grants and, although Jewels did not directly authorize the grants to herself and other officers, she knew that the favorable grant dates that she selected for the company wide grants would be applied to her options as well, and failed to record compensation expenses related to the officer grants. Based on the above, the Order suspends Jewels from appearing or practicing before the Commission as an attorney or an accountant for a period of five years. After five years from the date of the Order, Jewels has the right to request reinstatement to appear or practice before the Commission as an attorney or accountant. Jewels consented to the issuance of the Order without admitting or denying any of the findings therein except as to the final judgment entered against her, which she admits. (Rel. 34-58232; AAE Rel. 2848; File No. 3-13102) In the Matter of Robin A. Friedman, Esq.On July 25, the Commission issued an Order Instituting Public Administrative Proceedings Pursuant to Rule 102(e) of the Commission's Rules of Practice, Making Findings, and Imposing Remedial Sanctions (Order) against Robin A. Friedman, Esq. The Order finds that Friedman, age 44, is and has been an attorney licensed to practice in the Commonwealth of Massachusetts. Friedman was employed by Sycamore Networks, Inc. (Sycamore) from approximately mid-2000 through December 2003 where, in or about January 2001, she served as Senior Director of Employment Affairs. Sycamore at all relevant times was a Delaware corporation based in Chelmsford, Massachusetts engaged in the business of developing and marketing optical networking products whose stock traded on the Nasdaq National Market System. The Order finds that on July 10, 2008, a final judgment was entered by consent against Friedman, permanently enjoining her from future violations of Section 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 13b2-1 and 13b2-2 thereunder, and aiding and abetting violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, in the civil action entitled Securities and Exchange Commission v. Sycamore Networks, Inc., et al., Civil Action Number 08-CA-11166(DPW), in the United States District Court for the District of Massachusetts. Friedman was also ordered to pay a $40,000 civil money penalty. The Order finds that the Commission's complaint alleged, among other things, that Sycamore, in connection with the underreporting of expenses related to stock option grants, filed materially false and misleading financial statements in various Form 10-K annual reports and Form 10-Q quarterly reports for fiscal years 2000 through 2005. The complaint further alleged that, in or around January 2001, Friedman substantially participated in carrying out a plan, devised by others, to grant in-the-money stock options to a group of approximately five employees at the lowest closing price of the quarter. The complaint further alleged that, in connection with the plan, Friedman altered or created, or caused to be altered or created, personnel and payroll-related documents, all in an effort to create the impression that the employees had started at Sycamore on dates they had not. The complaint further alleged that Friedman knew, or was reckless in not knowing, that the actions she undertook would prevent Sycamore's auditors from detecting the true start dates of the employees and the in-the-money nature of the option grants. Based on the above, the Order suspends Friedman from appearing or practicing before the Commission as an attorney for a period of two years. After two years from the date of the Order, Friedman has the right to reapply for reinstatement to appear or practice before the Commission as an attorney. Friedman consented to the issuance of the Order without admitting or denying any of the findings therein except as to the final judgment entered against her, which she admits. (Rel. 34-58233; File No. 3-13103) Commission Sustains FINRA's Findings of Violation Against and Imposition of a Bar on John D. AudifferenThe Commission has sustained FINRA's findings that John D. Audifferen, formerly a registered representative with FINRA member firm May Davis Group, Inc., violated prohibitions against the improper extension of credit to the account of one of his customers, engaged in "free riding" in the customer's account, received the beneficial use of improper extensions of credit to the customer account, and improperly shared in the profits of his customer's account. The Commission also sustained FINRA's findings that, by submitting insufficient funds checks as payment for securities purchases in his personal brokerage accounts, Audifferen caused May Davis to extend credit to him improperly and enjoyed the beneficial use of these improper credit extensions. The Commission found that FINRA's imposition of a bar on Audifferen for these violations was appropriate. The Commission also sustained FINRA's finding that Audifferen had violated FINRA's rules by failing to disclose a customer complaint on a Form U4 he submitted in connection with his association with FINRA member firm J.P. Turner & Company, LLC. (Rel. 34-58230; File No. 3-12892) In the Matter of Guy P. RiordanAn Administrative Law Judge has issued an Initial Decision in the matter of Guy P. Riordan finding that Guy P. Riordan (Riordan) has violated the antifraud provisions of the federal securities statutes by giving cash kickbacks to the State Treasurer of New Mexico for securities transactions by the Treasurer's Office, and by participating in what he knew to be a non-competitive bidding process in the period 1996 through 2002. Based on the findings of illegal conduct and public interest factors, Chief Administrative Law Judge Brenda P. Murray has:
(Initial Decision No. 353; File No. 3-12829) SEC Obtains Emergency Asset Freeze Against Unknown Call Options PurchaserThe Commission today filed an emergency action in the United States District Court for the Southern District of New York against one or more unknown purchasers of the call options for the common stock of DRS Technologies, Inc. and American Power Conversion Corp. (Unknown Purchaser). The Commission's complaint alleges that the Unknown Purchaser reaped more than $3 million in profits by engaging in illegal insider trading, prior to announcements related to the acquisitions of DRS and APCC, through an account with UBS AG. The Commission also filed an application for a temporary restraining order in order to freeze the Unknown Purchaser's assets. The Honorable Alvin K. Hellerstein, United States District Judge in the Southern District of New York, issued a temporary restraining order freezing the Unknown Purchaser's assets. The Commission's complaint alleges that while in possession of material, nonpublic information regarding merger talks between DRS and Finmeccanica S.p.A, the Unknown Purchaser acquired DRS call options. According to the complaint, between April 29, 2008 and May 7, 2008, the Unknown Purchaser bought 1,820 DRS call options that were out-of-the-money and set to expire in the near term for slightly more than $456,200. The complaint alleges these purchases constituted a very significant percentage of the series volume for DRS call options on the days in question. The Commission's complaint further alleges that immediately following a May 8th Wall Street Journal article reporting the advanced merger negotiations between Finmeccanica and DRS, and after confirmation by DRS that it was engaged in talks regarding a potential strategic transaction, the Unknown Purchaser liquidated all DRS call options and made an ill-gotten profit of approximately $1.6 million. Finmeccanica later announced on May 12, 2008 that it would acquire DRS for $5.2 billion, or $81 a share. Additionally, the Commission's complaint alleges that, while in possession of material, nonpublic information regarding Schneider Electric SA's plans to acquire APCC, the Unknown Purchaser acquired APCC call options. According to the complaint, between September 21 and Oct. 20, 2006, the Unknown Purchaser bought 2,830 APCC call options at a cost of approximately $343,000. The complaint alleges these purchases constituted a very significant percentage of the series volume for APCC call options on the days in question. The Commission's complaint further alleges that following Schneider's announcement on October 30, 2006, that it would acquire all of APCC's outstanding shares for $31 a share, the Unknown Purchaser liquidated all APCC call options and made an ill-gotten profit of approximately $1.7 million. By virtue of the conduct described above, the Commission alleges in its complaint that the Unknown Purchaser violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks a permanent injunction, disgorgement of ill-gotten gains with prejudgment interest, and civil money penalties. The Commission previously filed a complaint alleging that an Italian citizen engaged in insider trading in DRS securities ahead of the same May 8th disclosure of the merger negotiations between DRS and Finmeccanica. For more information see SEC v. Cristian De Colli, 08 Civ. 4520 (PAC) (S.D.N.Y. May 16, 2008); Litigation Release No. 20581. The Commission's investigation is continuing. [SEC v. One or More Unknown Purchasers of the Call Options for the Common Stock of DRS Technologies, Inc. and American Power Conversion Corp., United States District Court for the Southern District of New York, Civil Action No. 08-cv-6609 (UA) (S.D.N.Y.)] (LR-20654) SEC Brings Emergency Action to Halt an Ongoing Offering Fraud and Obtains Temporary Restraining Order and Asset FreezeThe Commission announced today that on July 23, 2008, it filed an emergency action to halt an alleged ongoing fraud involving the sale of stock by Florida-based Aerokinetic Energy Corporation (Aerokinetic), and its president, Randolph E. Bridwell, a resident of Sarasota, Florida. Acting on the Commission's request for emergency relief, on July 24, 2008, Judge James David Whittemore of the United States District Court for the Middle District of Florida issued a temporary restraining order, an asset freeze over Aerokinetic's bank account, and other relief against the defendants. The Commission's complaint alleges that, from at least September 2006 through the present, the defendants raised at least $535,000 from 24 investors nationwide (and are currently seeking to raise an additional $575,000) by conducting a fraudulent offering of unregistered securities in the form of common stock. Aerokinetic, a Sarasota company, is purportedly in the business of researching, developing, and marketing alternative power technologies and other innovative products. According to the complaint, the defendants claimed to have developed new energy technologies, including a power generation station that is capable of creating electrical energy at a fraction of the cost of conventional or nuclear means, without generating any pollution. They further claim to have built an operating power generation station and to hold patents on these new technologies, as well as to have standing purchase orders for the finished product. In addition, the defendants have told investors and potential investors that they project millions of dollars of sales revenue within Aerokinetic's first years of operations and billions of dollars shortly thereafter. The Commission's complaint alleges that the defendants' claims are patently false. In contrast to its claims, Aerokinetic has no patents, license agreements, contracts, suppliers, customers, sales, revenue, or market share. In addition, Aerokinetic's purported energy technologies and products are, at best, in the early development stage and, therefore, its predictions of imminent financial success and financial projections lack any reasonable basis in fact. Moreover, contrary to the defendants' assurances that they would use investor funds to research and develop Aerokinetic's products, the complaint alleges that Bridwell has misappropriated investors' funds to pay his personal expenses, with approximately $230,000 in investor funds unaccounted for. The Commission's complaint alleges that Aerokinetic and Bridwell 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. The Court's July 24 Order provides that the temporary restraining order and asset freeze would remain in effect until Aug. 4, 2008. The Court further scheduled a hearing on the Commission's motion for a preliminary injunction on Aug. 1, 2008. In addition to the interim relief already granted by the Court, the Commission seeks a final judgment against the defendants enjoining them from future violations of the foregoing antifraud and securities registration laws, ordering them to disgorge all ill-gotten gains, and assessing civil penalties. [SEC v. Aerokinetic Energy Corporation and Randolph E. Bridwell, Civil Action No. 8:08-CV-1409-T27MSS (M.D. Fla.)] (LR-20655) INVESTMENT COMPANY ACT RELEASESThe Penn Mutual Life Insurance Company, et al.An order has been issued approving an application filed by The Penn Mutual Life Insurance Company, The Penn Insurance and Annuity Company, Penn Mutual Variable Annuity Account III, Penn Mutual Variable Life Account I, PIA Variable Annuity Account I (collectively, the Section 26 Applicants), and Penn Series Funds, Inc. (collectively with the Section 26 Applicants, the Section 17 Applicants). The Section 26 Applicants have been authorized under Section 26(c) of the Investment Company Act to substitute securities issued by certain registered investment companies for shares of certain other registered investment companies. The Section 17 Applicants have also been granted an exemption from Section 17(a) of the Act in order to engage in certain in-kind transactions in connection with the substitutions. (Rel. IC-28342 - July 25) SELF-REGULATORY ORGANIZATIONSAccelerated Approval of Proposed Rule ChangesThe Commission granted accelerated approval to a proposed rule change (SR-BSE-2008-29) filed by the Boston Stock Exchange relating to doing business with the public. Publication is expected in the Federal Register during the week of July 28. (Rel. 34-58221) The Commission granted accelerated approval to a proposed rule change, as modified by Amendments No. 1 and 3 thereto, submitted by the International Securities Exchange (SR-ISE-2007-94) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 relating to reduction of certain order handling and exposure periods from three seconds to one second. Publication is expected in the Federal Register during the week of July 28. (Rel. 34-58224) The Commission approved on an accelerated basis a proposed rule change, as modified by Amendment No. 1, filed by the Nasdaq Stock Market (SR-NASDAQ-2008-013) to adopt additional initial listing standards to list securities of special purpose acquisition companies, pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 28. (Rel. 34-58228) Immediate Effectiveness of Proposed Rule ChangeA proposed rule change filed by Financial Industry Regulatory Authority relating to amendments to NASD Rule 11890 (Clearly Erroneous Transactions) (SR-FINRA-2008-037) has become immediately 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 July 28. (Rel. 34-58226) SECURITIES ACT REGISTRATIONSRECENT 8K FILINGS
http://www.sec.gov/news/digest/2008/dig072808.htm
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