SEC News Digest

ENFORCEMENT PROCEEDINGS

In the Matter of Steven Altman, Esq.

On January 30, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 4C of the Securities Exchange Act of 1934 and Rule 102(e) of the Commission's Rules of Practice against Steven Altman, Esq. of New York City, New York. The Office of the General Counsel alleges in the Order that in the course of representing a witness in a Commission administrative proceeding, Altman engaged in improper professional conduct. The action alleges that Altman told the attorney for the respondents that his client likely would not cooperate with attorneys from the Commission's Enforcement Division or would not remember relevant facts if one of the respondents provided her with certain benefits she sought. The Office of the General Counsel alleges that through his conduct, Altman violated the New York Code of Professional Responsibility, to which he was subject during the relevant period. An administrative hearing will be scheduled to determine whether the allegations in the Order are true, to provide Altman an opportunity to establish any defenses to the allegations, and to determine what sanctions, if any, are appropriate and in the public interest. As directed by the Commission, the administrative law judge shall issue an initial decision in this matter no later than 300 days from the date of service of the Order. (Rel. 34-57240; File No. 3-12944)

In the Matter of Thomas J. Dudchik and Rodney R. Schoemann

On January 30, the Commission issued an Order Instituting Cease-And-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933 (Order) against Thomas J. Dudchik and Rodney R. Schoemann (Respondents). In the Order, the Division of Enforcement alleges that Respondents violated Sections 5(a) and (c) of the Securities Act of 1933 (Securities Act) by participating in an unregistered distribution of the common stock of Stinger Systems, Inc. In November 2004, immediately after Stinger's shares began public trading, Respondents sold Stinger shares in the over-the-counter market when no registration statement was in effect or filed with the Commission. Furthermore, Respondents cannot establish an applicable exemption from the securities registration requirements of Section 5 of the Securities Act.

A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide Respondents an opportunity to establish any defenses to such allegations, and to determine what sanctions, if any, are appropriate and in the public interest. As directed by the Commission, an administrative law judge shall issue an initial decision in this matter no later than 300 days from the date of service of the Order. (Rel. 33-8886; File No. 3-12943)

Commission Sanctions Accountant Gregory M. Dearlove for Improper Professional Conduct During Audit of Adelphia

The Commission found that Gregory M. Dearlove, a certified public accountant and former partner at Deloitte & Touche, LLP, engaged in improper professional conduct within the meaning of Rule of Practice 102(e) during the audit of the financial statements of Adelphia Communications Corporation for the fiscal year ended Dec. 31, 2000. The Commission found that Adelphia's financial statements did not comply with generally accepted accounting principles in several respects and that Dearlove, who served as the engagement partner on the audit, failed to conduct an adequate audit of four major accounts despite circumstances requiring heightened care and scrutiny. The Commission concluded that Dearlove engaged in repeated instances of at least unreasonable conduct, each resulting in a violation of applicable standards, that indicate a lack of competence to practice before the Commission. Dearlove was denied the privilege of appearing or practicing before the Commission with a right to apply for reinstatement after four years.

The Commission also found that Dearlove, who signed Deloitte's unqualified audit opinion filed with Adelphia's 2000 financial statements, was a cause of Adelphia's violations of the reporting provisions of the Exchange Act and related rules. Dearlove was ordered to cease and desist from causing further violations of those provisions. (Rel. 34-57244; AAE Rel. 2779; File No. 3-12064)

Commission Sanctions John A. Carley, Eugene C. Geiger, Thomas A. Kaufmann, Edward H. Price, and Christopher H. Zacharias

The Commission has found that John A. Carley and Christopher H. Zacharias, formerly officers and directors of Starnet Communications International, Inc., violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Sections 10(b) and 13(a) of the Securities Exchange Act of 1934, and Exchange Act Rules 10b-5, 12b-20, 13a-1, and 13a-11. The Commission also found that Zacharias violated Exchange Act Section 16(a) and Exchange Act Rule 16a-3. The Commission ordered Carley to disgorge $2,489,740 and Zacharias to disgorge $1,451,128.55, plus prejudgment interest, and imposed cease-and-desist orders on Carley and Zacharias.

The Commission found further that Thomas A. Kaufmann and Eugene C. Geiger, associated persons of Spencer Edwards, Inc., a registered broker-dealer, willfully violated Securities Act Sections 5(a) and 5(c). The Commission barred Geiger from association with any broker or dealer, barred Kaufmann from association with any broker or dealer with a right to reapply after five years, ordered that Geiger and Kaufmann each disgorge $873,146.84, plus prejudgment interest, ordered that Geiger and Kaufmann each pay a civil money penalty of $110,000, and imposed cease-and-desist orders on Geiger and Kaufmann.

The Commission found further that Edward H. Price, the president, chief executive officer, and chief compliance officer of Spencer Edwards, failed to exercise reasonable supervision over Geiger and Kaufmann with a view to preventing their violations of the securities laws. The Commission barred Price from association with any broker or dealer in a supervisory capacity and ordered Price to pay a civil money penalty of $55,000. (Rels. 33-8888; 34-57246; File No. 3-11626)

SELF-REGULATORY ORGANIZATIONS

Proposed Rule Changes

A proposed rule change has been filed by the NYSE Arca (SR-NYSEArca-2008-08) relating to the imposition of fines for minor rule violations under Section 19(b)(2) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of Feb. 4, 2008. (Rel. 34-57220)

NYSE Arca, through its wholly owned subsidiary, NYSE Arca Equities, Inc., filed a proposed rule change (SR-NYSEArca-2008-12) relating to pricing information for components underlying Currency-Linked Securities pursuant to Rule 19b-4 under the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of Feb. 4, 2008. (Rel. 34-57227)

A proposed rule change has been filed by the International Securities Exchange (SR-ISE-2008-09) to amend exchange rules related to the imposition of fines for minor rule violations under Section 19(b)(2) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of Feb. 4, 2008. (Rel. 34-57229)

Immediate Effectiveness of Proposed Rule Changes

A proposed rule change filed by the NYSE Arca relating to listing standards for Index-Linked Exchangeable Notes in NYSE Arca Equities Rule 5.2(j)(4) (SR-NYSEArca-2008-13) 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 Feb. 4, 2008. (Rel. 34-57219)

A proposed rule change filed by NYSE Arca amending fees applicable to certain Exchange Traded Funds and rebates for Tape B Securities (SR-NYSEArca-2008-11) 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 Feb. 4, 2008. (Rel. 34-57221)

A proposed rule change filed by the Philadelphia Stock Exchange (SR-Phlx-2008-03) relating to the listing standards for Index-Linked Securities 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 Feb. 4, 2008. (Rel. 34-57224)

A proposed rule change (SR-FINRA-2007-042) filed by the Financial Industry Regulatory Authority relating to amendments to the Codes of Arbitration Procedure to remove the page limit on statements of claim filed through the online filing system has become immediately 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 Feb. 4, 2008. (Rel. 34-57225)

A proposed rule change filed by the New York Stock Exchange (SR-NYSE-2008-08) relating to Listed Company Manual Section 806.01 (Change of Specialist Unit Upon Request of Company) 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 Feb. 4, 2008. (Rel. 34-57232)

Approval of Proposed Rule Change

The Commission issued an order approving a proposed rule change submitted by the New York Stock Exchange as modified by Amendment No. 1 thereto (SR-NYSE-2007-110) to amend listing fees for structured products, short-term securities, and debt securities. Publication is expected in the Federal Register during the week of Feb. 4, 2008. (Rel. 34-57223)

Accelerated Approval of Proposed Rule Change

The Commission issued an order granting accelerated approval of a proposed rule change (SR-NYSEArca-2008-03), filed by NYSE Arca relating to rules 5.3 and 5.4 to enable the listing and trading of options on multiple fund and inverse fund shares. Publication is expected in the Federal Register during the week of Feb. 4, 2008. (Rel. 34-57226)

JOINT INDUSTRY PLAN RELEASES

Order Approving Proposed Amendments to the Plan for Reporting of Consolidated Options Last Sale Reports and Quotation Information

The Commission granted permanent approval to an amendment to the Plan for Reporting of Consolidated Options Last Sale Reports and Quotation Information, as modified by Amendment No. 1 thereto, (SR-OPRA-2007-03), submitted pursuant to Section 11A of the Securities Exchange Act of 1934 and Rule 608 thereunder by the Options Price Reporting Authority to modify various provisions of the OPRA Plan and the OPRA Fee Schedule to reflect the elimination of separate fees for access to market data concerning Foreign Currency Options. Publication is expected in the Federal Register during the week of Feb. 4, 2008. (Rel. 34-57230)

The Commission granted approval to an amendment to the Plan for Reporting of Consolidated Options Last Sale Reports and Quotation Information submitted pursuant to Section 11A of the Securities Exchange Act of 1934 and Rule 608 thereunder by the Options Price Reporting Authority (SR-OPRA-2007-05) to adopt a new form of rider to OPRA's vendor agreement for use by television companies that wish to disseminate OPRA data. Publication is expected in the Federal Register during the week of Feb. 4, 2008. (Rel. 34-57233)

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