SEC News Digest

COMMISSION ANNOUNCEMENTS

Roundtable on Modernizing the Securities and Exchange Commission's Disclosure System

The Commission will hold a Roundtable on Modernizing the Securities and Exchange Commission's Disclosure System on Wednesday, Oct. 8, 2008, beginning at 9:00 a.m.

The Roundtable will take place in the Auditorium of the Commission's headquarters at 100 F Street, NE, Washington D.C. The Roundtable will be open to the public with seating on a first-come, first-served basis. Doors will open at 8:30 a.m. Visitors will be subject to security checks.

The roundtable will consist of an open discussion on the Commission's financial disclosure system, including the information needs of investors, public companies, and others and the capabilities of modern information technology to improve transparency and ease of use. The roundtable will be organized as two panels, each consisting of investors, issuers, academics, and other parties with experience with the Commission's financial disclosure system.

For further information, please contact the Office of the Secretary at (202) 551-5400.

Closed Meeting on Monday, September 29, 2008, at 3:00 p.m.

The subject matter of the closed meeting held on Monday, September 29, was: matters related to the financial markets.

At times, changes in Commission priorities require alterations in the scheduling of meeting items. For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact: The Office of the Secretary at (202) 551-5400.

ENFORCEMENT PROCEEDINGS

In the Matter of Urs Kamber, CA

On September 26, 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 Urs Kamber, CA, who was the chief financial officer of Centerpulse Ltd. (Centerpulse). The Order finds that on Aug. 1, 2008, a final judgment was entered against Kamber, permanently enjoining him from future violations of Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (the Exchange Act) and Rules 10b-5, 13a-14 and 13b2-1 thereunder, and from aiding and abetting future violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-16 thereunder, in the civil action entitled Securities and Exchange Commission v. Urs Kamber, et al., Civil Action Number 1:07-cv-01867 (JDB), in the United States District Court for the District of Columbia. Kamber was also ordered to pay $65,013 in disgorgement of ill-gotten gains, $22,824 in prejudgment interest, and a $50,000 civil money penalty.

According to the Order, the Commission finds that the Commission's complaint alleged that Kamber and others engaged in a fraudulent scheme to inflate Centerpulse's reported earnings during the second half of 2002 by manipulating reserves and refusing to recognize expenses and liabilities. The complaint also alleged that, as a result of the scheme, Centerpulse issued and furnished to the Commission false and misleading earnings releases for the third and fourth quarters of 2002, and issued and filed with the Commission a false and misleading annual report for fiscal 2002, which materially overstated Centerpulse's third quarter 2002 reported pretax income by approximately $32 million, and its fourth quarter 2002 and fiscal year 2002 reported pretax income by at least $26.4 million.

Based on the above, the Order suspends Kamber from appearing or practicing before the Commission as an accountant, with a right to apply for reinstatement after five years from the date of the Order. Kamber consented to the issuance of the Order without admitting or denying any of the findings of the Commission's Order, other than to admit the entry of the injunction against him. (Rel. 34-58662; AAE Rel. 2889; File No. 3-13240)

In the Matter of Mitchell Steinberg

On September 26, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities and Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions (Order) against Mitchell Steinberg. The Order finds that on September 26, 2006, Steinberg pleaded guilty to one count of conspiracy in violation of Title 18 United States Code § 371 before the United States District Court for the Southern District of New York in U.S. v. Steinberg, Crim. Information No. 1:06-CR-852 (JGK).

The criminal information to which Steinberg pleaded guilty alleged, inter alia, that from at least in our about October 2004 through in or about April 2005, Steinberg defrauded investors by artificially manipulating the market for Millennium National Events, Inc.'s stock, which is a penny stock. The information alleged that in engaging in the foregoing conduct Steinberg created materially false and misleading press releases concerning Millennium and caused them to be published for the purpose of fraudulently increasing the price of Millennium's stock to defraud the investing public, and that in connection with the foregoing, Steinberg used the means and instrumentalities of interstate commerce, the mails, and the facilities of national securities exchanges.

Based on the above, the Order bars Mitchell Steinberg from participating in any offering of a penny stock, including: acting as a promoter, finder, consultant, agent or other person who engages in activities with a broker, dealer or issuer for purposes of the issuance or trading in any penny stock, or inducing or attempting to induce the purchase or sale of any penny stock. Mitchell Steinberg consented to the issuance of the Order without admitting or denying any of the findings in the Order. (Rel. 34-58663; File No. 3-13241)

In the Matter of Arthur S. Redler

On September 26, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities and Exchange Act of 1934, and Notice of Hearing (Order) against Arthur S. Redler.

In the Order, the Division of Enforcement alleges that from October 2004 through September 2006, Redler was a registered representative of Newbridge Securities Corp., a registered broker-dealer headquartered in Fort Lauderdale, Florida. On September 28, 2006, Redler pleaded guilty to one count of securities fraud in violation of Title 15 United States Code §§ 78j(b) and 78ff and 17 C.F.R. 240.10b-5, and aiding and abetting in violation of Title 18 United States Code § 2, before the United States District Court for the Southern District of New York, in United States v. Arthur Redler, Crim. Information No. 1:06-CR-878 (LBS).

The one count criminal information to which Redler pleaded guilty alleged, inter alia, that from at least in our about October 2004 through at least in or about November 2005, Redler defrauded investors by artificially manipulating the market for the stock of Millennium National Events, Inc., which is a penny stock, and that in engaging in the foregoing conduct, Redler posted bids and conducted trades in Millennium's stock at artificially inflated prices to create the false appearance in the marketplace that there was actual market demand for Millennium's stock at those inflated prices, by the use of the means and instrumentalities of interstate commerce, the mails, and the facilities of national securities exchanges.

A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide the Respondent an opportunity to establish any defenses to such allegations, and to determine what, if any, remedial action is appropriate in the public interest, and whether it is appropriate and in the public interest to bar Respondent from participating in any offering of penny stock, including: acting as a promoter, finder, consultant, agent or other person who engages in activities with a broker, dealer or issuer for purposes of the issuance or trading in any penny stock; or inducing or attempting to induce the purchase or sale of any penny stock.

The Order requires the Administrative Law Judge to issue an initial decision no later than 210 days from the date of service of this Order, pursuant to Rule 360(a)(2) of the Commission's Rules of Practice. (Rel. 34-58664; File No. 3-13242)

In the Matter of David D. Klasna

On September 26, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 203(f) of the Investment Advisers Act of 1940, Making Findings and Imposing Remedial Sanctions as to David D. Klasna (the "Order") of Omaha, Nebraska.

The Order finds that on September 9, 2008, the United States District Court for the District of Nebraska permanently enjoined Klasna from violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Securities and Exchange Commission v. Presidents Trust LLC, et al, No. 8:03CV545 (D. Neb.) The Commission's complaint alleged that during August and September 2003, Klasna participated in the offer and sale of an unregistered security issued by Presidents Trust, formerly a state-chartered trust company headquartered in Omaha. The complaint alleged that, contrary to representations in the offering materials that investors' funds would be invested in a diversified portfolio which would guarantee not only annual income but the return of their invested principal, Klasna and other defendants invested the offering proceeds in various speculative ventures. The complaint further alleged that, as President of the company, Klasna acted as an investment adviser because he was involved in authorizing the use of Trust funds to purchase investment products. Klasna consented to the issuance of the Order without admitting or denying any of the findings in the Order, except he admitted the entry of the injunction.

Based on the above, the Order bars Klasna from association with any investment adviser. (Rel. IA-2789; File No. 3-13244)

In the Matter of Victoire Finance Capital LLC

On September 26, the Commission issued an Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934 and Section 203(e) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (Order) against Victoire Finance Capital LLC (VFC). The Order finds that from February 2004 until August 2005, VFC willfully violated Rule 105 of Regulation M on eighteen occasions. On each occasion, in connection with a follow-on offering, VFC sold securities short within five business days before the pricing of the offering, and covered the short sale, in whole or in part, with shares purchased in the offering. As a result of covering the restricted period short sales with the offered securities, VFC generated profits of $168,139.50 for its hedge-fund client.

Based on the above, the Order censures VFC, and orders it to cease and desist from committing or causing any violations or any future violations of Rule 105 of Regulation M and to pay disgorgement of $168,139.50 and prejudgment interest of $47,491.53 and a civil penalty of $85,000. VFC consented to the issuance of the Order without admitting or denying the Commission's findings, except as to the Commission's jurisdiction over it and the subject matter of these proceedings. (Rels. 34-58670; IA-2790; File No. 3-13247)

Court Enters Permanent Injunction and other Relief Against Carole Argo in Stock Options Backdating Case

The Commission today announced that on Sept. 24, 2008, the Honorable Richard Roberts of the United States District Court for the District of Columbia entered a Final Judgment of permanent injunction and other relief, including a ten year officer and director bar, against Carole Argo (Argo), the former president, Chief Financial Officer and Chief Operating Officer of SafeNet, Inc. (SafeNet). Without admitting or denying the Commission's allegations, Argo consented to the entry of the Final Judgment. The judgment settles the Commission's claims against Argo in a civil action filed on August 1, 2007, in which the Commission alleged that Argo engaged in a fraudulent scheme to backdate option grants while she was an officer of SafeNet.

The Commission's complaint alleged that among other things, Argo was aware that SafeNet routinely granted in-the-money options, and she knowingly or recklessly failed to cause SafeNet to record a compensation expense as required by Generally Accepted Accounting Principles. Consequently, SafeNet reported materially misstated financial results for periods beginning in late-2000 through early-2006. The complaint further alleges that Argo regularly prepared, reviewed, and/or signed proxy statements, periodic reports, and registration statements that she knew, or was reckless in not knowing, contained materially false and misleading statements and omissions concerning SafeNet's financial condition and options granting practices.

The Final Judgment (i) permanently enjoins Argo from future violations of the antifraud provisions of the federal securities laws, Section 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Exchange Act Rule 10b-5; the periodic report certification provision, Section 13a-14 of the Exchange Act; the prohibitions against public company officers and directors falsifying accounting records and making false or misleading statements to an issuer's auditors, Exchange Act Rules 13b2-1 and 13b2-2; the prohibition on false or misleading statements in proxy statements filed by an issuer, Exchange Act Rule 14a-9; and the beneficial ownership of securities reporting provision, Exchange Act Rule 16a-3; and from aiding and abetting violations of the issuer periodic reporting, books and records, and internal controls provisions, Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act, and Exchange Act Rules 12b-20, 13a-1, and 13a-13, (ii) imposes a ten year officer and director bar, and (iii) orders Argo to pay a civil penalty of $50,000 (which will be offset by any payment Argo makes toward the $1,000,000 fine that was imposed upon her in a parallel criminal prosecution).

As part of the settlement, the Commission today issued an administrative order, pursuant to Rule 102(e)(3) of the Commission's Rules of Practice, suspending Argo from appearing or practicing before the Commission as an accountant. Argo consented to the issuance of the order, without admitting or denying the Commission's findings.

The Commission acknowledges the assistance of the United States Attorney's Office for the Southern District of New York and the United States Postal Inspection Service, which conducted a separate parallel criminal investigation.

For additional information, please see Litigation Release No. 20221 (August 1, 2007). [SEC v. Carole Argo, Civil Case No. 07-1397 (RWR) (D.D.C.)] (LR-20752); Rel. 34-58668; AAE Rel.. 2891; File No. 3-13246)

In the Matter of Kevin Morano

On September 29, 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 against Kevin Morano (CPA) (Order). The Order finds that Morano, a certified public accountant and former Chief Financial Officer at Lumenis, Ltd., consented to a final judgment in United States District Court for the Southern District of New York permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 10b-5, 13a-14, 13b2-1 and 13b2-2 thereunder, and from aiding and abetting future violations of Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, 13a-11, and 13a-13 thereunder.

Based on the above, the Order suspends Morano from appearing or practicing before the Commission as an accountant, providing that he may apply for reinstatement after five years. Morano consented to the issuance of the Order without admitting or denying any of the findings in the Order, except he admitted the entry of the injunction. (Rel. 34-58672; AAE Rel. 2982; File No. 3-13248)

In the Matter of David William Thomas

On September 29, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions (Order) against David William Thomas (Thomas), based on the entry of a permanent injunction. The Order finds that, on September 19, 2008, a judgment was entered by consent against Thomas enjoining him from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder in a civil action filed in the United States District Court for the District of Colorado.

The Commission's complaint alleged, among other things, that from at least 2002 through 2005, Thomas, operating through Global Marketing Consultants, LLC (GMC), used material misrepresentations to raise approximately $6.3 million from over 140 investors, including seniors, in two pooled investment schemes. The complaint alleged that Thomas' representations to investors regarding the use of their funds and the security of the investments were false. Further, the complaint also alleged that Thomas sent false account statements indicating that investors' funds were fully invested and made Ponzi payments to investors. The complaint also alleged that Thomas misappropriated a large portion of the funds he received to invest in undisclosed prime bank trading programs. The complaint further alleged that Thomas sold unregistered securities and acted as an unregistered broker-dealer.

Based on the above, the Order bars Thomas from association with any broker-dealer. Thomas consented to the issuance of the Order without admitting or denying any of the findings therein, except as to the Commission's jurisdiction over him, the subject matter of these proceedings, and the entry of a final judgment on September 19, 2008.

For more information see [SEC v. David William Thomas, et al., Civil Action No. 08-CV-02026 (REB) (D. Colo.)] (LR-20728). (Rel. 34-58674; File No. 3-13249)

In the Matter of Kevin James Dunn, Jr.

On September 29, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Section 203(f) of the Investment Advisers Act of 1940, Making Findings and Imposing Remedial Sanctions (Order) against Kevin James Dunn, Jr. On September 23, 2008, an injunction was entered against Dunn in the civil action entitled Securities and Exchange Commission v. Kevin James Dunn, Jr., Civil Action Number 07-cv-4144, in the United States District Court for the Eastern District of New York, permanently enjoining Dunn from future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Order finds that the Commission's complaint alleged that between September 2005 and April 2007, Dunn, formerly a registered representative with MetLife Securities Inc., fraudulently misappropriated nearly $250,000 from a former brokerage customer of his, the widow of a Port Authority police officer who died on September 11, 2001, by creating a joint account in both of their names, forging the customer's signature on wire transfers from the joint account, and telling the customer outrageous lies about the status of her investments to deceive her into giving him blank checks that he deposited into his own bank account.

Based on the above, the Order bars Dunn from association with any broker, dealer or investment adviser. Dunn consented to the issuance of the Order without admitting or denying the findings in the Order, except he admitted the entry of the injunction. (Rels. 34-58675; IA-2791; File No. 3-13250)

In the Matter of Charles P. Trigilio

On September 29, the Commission issued 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 Charles P. Trigilio (Trigilio). The Order finds that on April 14, 2008, Trigilio pleaded guilty to two counts of wire fraud in violation of Title 18 United States Code Section 1343 and one count of contempt in violation of Title 18 United States Code Section 401 before the United States District Court for the Central District of California, in United States of America v. Charles Perry Trigilio, Criminal Action Number CR08-292 CAS. The counts of the criminal indictment to which Trigilio pled guilty alleged that Trigilio defrauded investors and obtained money and property by means of materially false and misleading statements, that he used wire and radio communication to falsely promise investors extraordinary returns on their investments, to misrepresent his qualifications to provide investment advice, to misrepresent the risks involved in his securities trading, and to misappropriate his clients' assets by taking for personal use assets to which he was not entitled.

Based on the above, the Order bars Trigilio from association with any investment adviser. Trigilio consented to the issuance of the Order without admitting or denying any of the Commission's findings in the Order except as to the jurisdiction of the Commission over him and that on April 14, 2008, Trigilio pleaded guilty to two counts of wire fraud in violation of Title 18 United States Code Section 1343 and one count of contempt in violation of Title 18 United States Code Section 401 before the United States District Court for the Central District of California, in United States of America v. Charles Perry Trigilio, Criminal Action Number CR08-292 CAS. (Rel. IA-2792; File No. 3-13251)

Man Sentenced to Over 127 Years in Prison for Orchestrating a Massive Securities Fraud Scheme that Targeted Seniors; Two Others also Sentenced

The Commission announced today that a judge in Riverside County, California, sentenced the last of three men to prison after they were convicted of 522 felony charges in a fraudulent scheme that was the subject of a prior enforcement action brought by the Commission, which raised more than $187 million from over 1,800 victims, mostly senior citizens and the elderly. Sentenced were Daniel William Heath, 51, formerly of Chino Hills, California, Denis Timothy O'Brien, 53, formerly of Yorba Linda, California, and Heath's father, John William Heath, now-deceased, formerly of Covina, California. Daniel Heath was sentenced on September 26, 2008 to 127 years and four months in state prison: O'Brien on April 4, to 40 years and four months; and John Heath on February 22, to 28 years and four months. Each defendant received the maximum sentence for their convictions and was ordered to pay a total of $117 million in restitution to the defrauded investors.

In 2004, the Riverside County District Attorney's Office arrested and charged the defendants with committing securities fraud, elder abuse, grand theft, money laundering, tax fraud, and conspiracy, all under California law. In January 2008, a Riverside County jury found Daniel Heath found guilty on 400 felony counts, O'Brien on 70 felony counts, and John Heath on 52 felony counts.

In 2004, the Commission filed a complaint against Daniel Heath and O'Brien alleging they fraudulently induced elderly investors through "free lunch" seminars to invest in "secured" notes that paid a "guaranteed" return. Final judgments of permanent injunction and other relief were entered enjoining them from violating the antifraud, securities registration, and broker-dealer registrations provisions of the federal securities laws for their role in the scheme and they were ordered to disgorge to the receiver their ill-gotten gains. The Commission also instituted administrative proceedings against Heath and O'Brien barring them from association with a broker or dealer and they consented to the entry of the final judgments and administrative orders without admitting or denying the Commission's allegations and findings. In September 2007, the Commission instituted separate administrative proceedings against two other men involved in the scheme that were barred from association with any broker or dealer and ordered to disgorge ill-gotten gains and they consented to the entry of the orders without admitting or denying the Commission's findings.

Administration of the court-order receivership over the Heath entities will continue.

The Commission wishes to acknowledge and thank the Riverside County District Attorney's Office for their substantial assistance in this matter.

For further information, see Litigation Release Nos. 18689 (May 3, 2004), 18703 (May 11, 2004), 18724 (May 24, 2004), 18777 (July 9, 2004), 19287 (June 28, 2005), 20438 (January 24, 2008), and Administrative Proceeding Release Nos. 34-51473 (April 4, 2005), 34-51922 (June 24, 2005), and 33-8838 (September 5, 2007). [SEC v. D.W. Heath & Associates, Inc. et al., No. CV 04-02949JFW(Ex)(C.D. Cal.) Superior Court of California, County of Riverside, Case No. RIF117775] (LR-20753)

SEC Files Settled Insider Trading Action Against Former Director of Brazilian Steel Producer

The Commission announced today that it has filed a settled enforcement action in U.S. District Court for the District of Massachusetts, charging Carlos J. Petry with insider trading in the stock of Texas-based Chaparral Steel Co., prior to the announcement of its acquisition by Florida-based Gerdau Ameristeel, S.A. on July 10, 2007. At the time of his trading, Petry was a director of Gerdau Ameristeel's Brazilian parent, Gerdau, S.A.

The Commission's Complaint alleges that in or about May 2007, through his position as a director of Gerdau, Petry learned that Gerdau Ameristeel had identified Chaparral as one of seven or eight possible acquisition targets. During early June 2007, again through his position as a director of Gerdau, Petry learned that Gerdau Ameristeel had begun conducting extensive due diligence work on Chaparral in connection with a possible acquisition and that Gerdau Ameristeel planned on requesting approval from the Gerdau board at its next meeting to make an acquisition proposal to Chaparral. According to the Complaint, On June 26, 2007, Petry attended the Gerdau board of directors meeting at which the Gerdau board authorized Gerdau Ameristeel to proceed with its bid to acquire Chaparral. The possible acquisition of Chaparral by Gerdau Ameristeel was material, nonpublic information that Petry was privy to by virtue of his position as a member of Gerdau's board of directors.

The Commission's Complaint further alleges that, between June 25 and 27, 2007, Petry, while in the possession of this material, non-public information concerning the possible acquisition of Chaparral by Gerdau Ameristeel, purchased 8,500 shares of Chaparral stock. On the afternoon of July 10, 2007, after the closing of the market, Gerdau Ameristeel issued a press release publicly announcing its acquisition of Chaparral. The closing price of Chaparral stock increased 11 percent the next day. As a result, the Complaint alleges that Petry profited by $105,044.

The Commission's complaint charges Petry with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. To settle these charges, Petry has consented, without admitting or denying the allegations in the Commission's Complaint, to the entry of a final judgment permanently enjoining him from committing future violations of these provisions. Petry also has agreed to pay disgorgement in the amount of $105,044, pre-judgment interest thereon in the amount of $8,765, and a civil penalty of $52,522, for a total payment of $166,331. Finally, Petry will be prohibited from acting as an officer or director of any publicly-traded company for a period of five (5) years from the date of the entry of the judgment. [SEC v. Carlos J. Petry, Civil Action No. 08-cv-11658 (D. MA.)] (LR-20754)

Receiver Appointed and Assets Frozen In Fraudulent "Joint Venture" Offering

On September 24, a Kansas U.S. District Judge appointed a receiver and froze the assets of four defendants and two relief defendants in an emergency injunctive action filed by the Securities and Exchange Commission. The charges stem from an alleged securities offering fraud that raised approximately $2.8 million from approximately 50 investors across the United States. The case is an off-shoot of a previously filed massive securities oil-and-gas related offering fraud case, SEC v. Michael J. McNaul, II, et al., pending in the United States District Court for the District of Kansas, Wichita Division, Civil Action No. 08-1159-JTM- DWB. Both cases involve the use of purported oil-and-gas equipment-leasing joint ventures that were allegedly structured to evade the securities laws. In truth, however, the investments are not joint ventures, but investment contracts, which meet the statutory definition of securities and fall within the scope of the federal securities laws.

Named as defendants in the Commission's case are Delta Onshore Management, LLC (Delta Management), an Oklahoma company that served and the managing entity for the Delta Onshore Leasing Joint Venture (Delta Venture); Jerry P. Jackson (Jackson), of Wichita, Kansas, the principal of Delta Management; and three unlicensed salesmen who sold interests in the Delta Venture: Peter J. Brooks (Brooks), of Woodland Hills, California; Daniel Cohen (Cohen), of Calabasas, California; and Jason Hertz (Hertz), of Tarzana, California. The complaint also named two entities formed by Brooks and Cohen as relief defendants: Onshore Leasing, LLC (Onshore) and PJB Enterprises, Inc. (PJB).

The complaint alleges that defendants Delta Management and Jackson offered and sold securities in the same fraudulent manner as the defendants in the McNaul case, including using offering materials that are virtually identical to the materially false and misleading materials used by the McNaul defendants. Moreover, the complaint alleges that approximately half of the funds raised from investors was used to pay exorbitant sales commissions to unlicensed securities salesmen, including defendants Brooks, Cohen and Hertz, who "cold called" unsuspecting investors, over half of whom are 60 years old or older.

The complaint alleges that Jackson and Delta Management violated the anti-fraud provisions of Section 17(a) of the Securities Act of 1933 (Securities Act), and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, as well as the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act. The complaint also alleges that Brooks, Cohen and Hertz violated Section 5(a) and 5(c) of the Securities Act, and the broker-dealer registration provision of Section 15(a) of the Exchange Act. The complaint seeks preliminary and permanent injunctions, disgorgement together with prejudgment interest, and civil penalties. The complaint further alleges that the relief defendants identified above received ill-gotten gains from the fraudulent offering.

The Court has frozen the assets of defendants Delta Management, Brooks, Cohen and Hertz, as well as the assets of relief defendants Onshore and PJB. A receiver has also been appointed to recover and conserve assets for the benefit of defrauded investors.

Without admitting or denying the allegations set forth in the complaint, Jackson and Delta Management have consented to the entry of an order permanently enjoining them from engaging in the violations set forth above, and deferring any monetary relief until a later date.

[SEC v. Delta Onshore Management, LLC, Jerry P. Jackson, Peter J. Brooks, Daniel Cohen, and Jason Hertz, Defendants, and Onshore Leasing, LLC and PJB Enterprises, Inc., Relief Defendants, Civil Action No. 08-1278-MLB-DWB (U.S.D.C./D. Kansas, Wichita Division)])] (LR-20755)

SELF-REGULATORY ORGANIZATIONS

Immediate Effectiveness of Proposed Rule Changes

A proposed rule change filed by NYSE Arca (SR-NYSEArca-2008-99) relating to the ProShares Trust II 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 September 29. (Rel. 34-58647)

A proposed rule change filed by the New York Stock Exchange to modify its policy with respect to legal opinions in connection with listings of securities (SR-NYSE-2008-82) 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 September 29. (Rel. 34-58649)

Approval of Proposed Rule Changes

The Commission approved a proposed rule change (SR-Amex-2008-65) submitted by American Stock Exchange to allow issuers of exchange-traded funds (ETFs) and structured products who are voluntarily delisting the securities from the Exchange and re-listing on another national securities exchange to submit to the Exchange a letter from an authorized officer of the issuer rather than a certified copy of board of directors resolutions. Publication is expected in the Federal Register during the week of September 29. (Rel. 34-58650)

The Commission approved a proposed rule change (SR-FINRA-2008-027) filed by the Financial Industry Regulatory Authority relating to the adoption of FINRA rule 3220 (Influencing or Rewarding Employees of Others) and FINRA rule 2070 (Transactions Involving FINRA Employees) in the consolidated FINRA rulebook, pursuant to Section 19(b)(2) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of September 29. (Rel. 34-58660)

The Commission approved a proposed rule change (SR-FINRA-2008-030) filed by the Financial Industry Regulatory Authority, Inc., relating to the adoption of NASD Rule 3013 (Annual Certification of Compliance and Supervisory Processes) and IM-3013 (Annual Compliance and Supervision Certification) as FINRA Rule 3130 in the consolidated FINRA rulebook, pursuant to Section 19(b)(2) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of September 29. (Rel. 34-58661)

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